notice of convocation of the 31st ordinary general …...2016/05/26 · notice of convocation of...

Notice of Convocation of the 31st Ordinary General

Meeting of Shareholders

Shareholders’ Meeting Information

■ Date and Time

Tuesday, June 21, 2016

10:00 a.m.

■ Place

4-1, Shibaura 3-chome, Minato-ku, Tokyo

Granpark Plaza Bldg. 3F Conference Room

■ Matters to be resolved

First Item Distribution of Surplus as Dividends

Second Item Partial Amendment of the Articles of Incorporation

Third Item Election of Fourteen Directors

NTT Urban Development Corporation

(Cord: 8933, First Section of TSE)

Table of contents

P2 Notice of Convocation

P4 (Reference) Exercising Your Voting Rights

P5 Reference Materials for the Ordinary General

Meeting of Shareholders

【Attachments to the Notice of Convocation】

P15 Business Report

P43 Consolidated Financial Statements

P48 Financial Statements (Non-consolidated)

P51 Auditors’ Report

(Reference)

P57 【Topics】

Urbannet Nihonbashi 2-Chome Building (Chuo-ku, Tokyo)

1

May, 2016

To Our Shareholders

Please let me take this opportunity to thank our shareholders for your continued generous support.

We celebrated the 30th anniversary of our founding on January 21, 2016. I would like to take this

opportunity to express my sincere gratitude for the long-standing support of our shareholders and many

other stakeholders. We will continue to seek to enhance the corporate value of the Company by fully

adopting a customer and market-centered orientation, pursuing innovations in accordance with the

Medium-Term Vision 2018 - For Further Growth.

Looking back on business in the fiscal year under review, the leasing business enjoyed higher revenue and

income primarily due to an increase in rent income associated with an improvement in vacancy rates of

existing properties and the sale of properties. In the fiscal year under review, Urbannet Nihonbashi

2-Chome Building and Urbannet Ginza 1-Chome Building were completed, and contracts have been

settled on all the floors in the both buildings.

In the residential business, sales remained generally firm, and both revenue and income increased, thanks

mainly to the contribution of high-end properties in central Tokyo, which offset a rise in sales prices

associated with higher construction costs and concerns about the adverse effects of data manipulation

problems in the piling works of some condominiums.

We will aim to achieve steady growth by promoting the development of mixed-used properties of offices,

housing and commercial facilities and the acquisition of profitable properties overseas. We will also enter

into the hotel and resort business and the used house renovation market and continue to work on

developing serviced senior housing in cooperation with the NTT Group.

Sadao Maki

President and Chief Executive Officer

2

May 27, 2016

To Shareholders


(Code: 8933, First Section of TSE)

14-1, Sotokanda 4-chome, Chiyoda-ku, Tokyo

Sadao Maki

President and Chief Executive Officer

Notice of Convocation of the 31st Ordinary General Meeting of Shareholders

You are hereby notified that the 31st Ordinary General Meeting of Shareholders will be held as stated

below.

Your attendance is respectfully requested.

In the event you are unable to attend the meeting, it is possible to exercise your voting rights using

either of the methods outlined below. You are requested to study the attached Reference Materials

for the Ordinary General Meeting of Shareholders and exercise your voting rights by 5:30 p.m. on

Monday, June 20, 2016 (Japan Standard Time).

[Voting via mail]

Please indicate your approval or disapproval of the resolutions on the enclosed voting right exercise form

and return it, so that it arrives before the deadline indicated above.

[Voting via the Internet, etc.]

Please access the designated website “Voting Exercise Website” (http://www.it-soukai.com/) using the

voting exercise code and password printed on the enclosed voting right exercise form, and indicate your

approval or disapproval of the resolutions by following the instructions on the screen by the deadline

indicated above.

If you exercise your voting rights via the Internet, etc., please refer to “Exercising your voting rights via

the Internet, etc.” on pages 4.

If you exercise your voting rights both via mail and via the Internet, only the vote placed via the Internet

will be treated as valid. If you vote more than once via the Internet, only the last vote placed will be

treated as valid.

NTT Urban Development Corporation (the “Company”) utilizes the electronic voting rights exercise

platform operated by ICJ, Inc. for institutional investors.

http://www.it-soukai.com/

3

Particulars

1. Date and Time: 10:00 a.m. on Tuesday, June 21, 2016

2. Place: 4-1, Shibaura 3-chome, Minato-ku, Tokyo

Granpark Plaza Bldg. 3F Conference Room

3. Purpose of the Meeting:

Matters to be reported

1. Report on the business report, consolidated financial statements and audit results of

the consolidated financial statements by the independent auditors and the Board of

Corporate Auditors for the 31st fiscal year (from April 1, 2015 to March 31, 2016)

2. Report on the non-consolidated financial statements for the 31st fiscal year (from

April 1, 2015 to March 31, 2016)

Matters to be resolved




End

1. When attending the meeting in person, you are kindly requested to submit the enclosed voting right

exercise form to the receptionist at the place of the meeting.

2. Since the Company has posted “Notes to Consolidated Financial Statements” and “Notes to

Non-Consolidated Financial Statements” on its website (http://www.nttud.co.jp/english/) pursuant to

the provisions of relevant laws and regulations and Article 15 of its Articles of Incorporation, it has

not included these in the documents attached to the convocation notice for the 31st Ordinary

Shareholders’ Meeting.

Consolidated financial statements and non-consolidated financial statements audited by the

accounting auditor are the documents stated in those attached to the convocation notice for the 31st

Ordinary Shareholders’ Meeting, as well as the “Notes to Consolidated Financial Statements” and the

“Notes to Non-Consolidated Financial Statements” posted on the Company’s website.

3. Any subsequent revisions to the Reference Materials for the Ordinary General Meeting of

Shareholders, the business report, the consolidated financial statements and the non-consolidated

financial statements will be posted on our website on the Internet.

4

(Reference) Exercising your voting rights via the Internet, etc.

1. Exercising your voting rights via the Internet

(1) Instead of exercising your voting rights in writing, you can exercise your rights via the designated website, Voting

Exercise Website, (see the URL below). If you prefer to exercise your voting rights via the website, you can log in,

entering your voting exercise code and password, which are provided on the right side of the enclosed voting right

exercise form, and enter the necessary information, following the instructions on the screen. For security reasons,

you will need to change the password when you log in for the first time.

http://www.it-soukai.com/

(2) The deadline for exercising your voting rights is 5:30 p.m., Monday, June 20, 2016, and you are requested to

complete your entry by that time. We ask you to exercise your rights early.

(3) If you exercise your voting rights both via mail and via the Internet, only the vote placed via the Internet will be

treated as valid. If you exercise your voting rights more than once, only the last vote placed will be valid.

(4) Your passwords (including the one with which you will replace the initial password) will only be valid for the

upcoming general meeting of shareholders. A new password will be issued for the next general meeting of

shareholders.

(5) Internet connection costs are payable by the shareholder.

(Note)

・The password is provided as a means to confirm the identification of the voter. The Company will never ask you for

your password.

・If you enter the wrong password more than a certain times, the screen will be locked. If the screen is locked, please

follow the on-screen instructions.

・We have confirmed the operation capabilities of the Voting Exercise Website, using devices widely used to connect to

the Internet. However, you may not be able to use the website depending on the device you use.

2. Inquiries

If you have any questions, please contact the Stock Transfer Agency Department of Mizuho Trust & Banking, the

shareholder register administrator, at the telephone numbers below.

(1) Inquiries about the operation of the Voting Exercise Website:

0120-768-524 (toll free; 9:00 a.m. to 9:00 p.m. on weekdays)

(2) Inquiries about other administrative stock-related matters:

0120-288-324 (toll free; 9:00 a.m. to 5:00 p.m. on weekdays)

(For reference)

Institutional investors will be able to use the electronic voting rights exercise platform operated by ICJ,

Inc.

End

5

Reference Materials for the Ordinary General Meeting of Shareholders

Resolutions and matters for reference


In addition to increasing corporate value over the medium- and long-term, the Company has identified the

return of profits to shareholders as an important management goal.

In determining the level of dividends, the company, while giving consideration to stability and

sustainability, takes into account a full range of factors, including business performance, financial standing

and dividend payout ratio.

Under the policy, the Company proposes to distribute year-end dividends as stated below.

1. Type of asset to be distributed: Cash

2. Matters relating to allotment of dividends and total amount of dividends to be distributed:

Per one share of common stock: 9 yen

Total amount of dividends: 2,962,080,000 yen

In addition to the interim dividend of ¥8 per share, an annual dividend will be ¥17 per share.

3. Date on which the dividend becomes effective: June 22, 2016

6


1. Reasons of amendment

The Company decided to add provisions describing business purposes in case of future business

diversification and to amend provisions describing purposes according to the current status of the business

lines of the Company and its subsidiaries.

2. Details of the amendment

(Underlined part indicates amendments)

Before Amendment After Amendment

(PURPOSES) (PURPOSES)

Article 2. The purpose of the Company shall be to

engage in the following businesses:

Article 2. The purpose of the Company shall be to

engage in the following businesses:

(a) through (g) (Provisions omitted) (a) through (g) (Same as the current Articles of

Incorporation)

(h) Type 2 financial instruments and exchange

business and investment advisory and agency business

pursuant to the Financial Instruments and Exchange

Act;

(h) Type 2 financial instruments and exchange business

and investment advisory and agency business and

investment management business pursuant to the

Financial Instruments and Exchange Act;

(i) (Provisions omitted) (i) (Same as the current Articles of

Incorporation)

(Newly established) (j) Fee-based homes for the elderly business, and home

care service business and preventive long-term care

service business pursuant to the Long-Term Care

Insurance Act;

(j) Any and all businesses incidental or related to any

of the preceding items.

(k) Any and all businesses incidental or related to any

of the preceding items.

7


The term of office for all Directors will expire at the conclusion of this Ordinary General Meeting of

Shareholders. Accordingly, the Company is seeking approval for the election of fourteen Directors.

The candidates for Directors are as follows:

Candi-

date No.

Name

(Date of birth) Resume and major concurrent posts

Number of shares held

1

Sadao Maki

(August 19, 1952)

<Reappointed>

Apr. 1975 Joined Nippon Telegraph and Telephone Public Corporation

Jun. 2004 Executive Manager, Corporate Planning, NTT Communications Corporation

Jun. 2005 Senior Vice President, First Sales Division, NTT Communications

Corporation

Aug. 2006 Senior Vice President, First Sales Division of Enterprise Business Division,

NTT Communications Corporation

Apr. 2007 Senior Vice President, Enterprise Business Division, First Sales Division,

NTT Communications Corporation

Jun. 2007 Senior Vice President, Enterprise Business Division, First Sales Division, and

Global Business Division, NTT Communications Corporation

Jun. 2008 Executive Vice President, Global Business Division, NTT Communications

Corporation

Jun. 2010 Senior Executive Vice President, Global Business Division, in charge of

Corporate Affairs, NTT Communications Corporation

Aug. 2011 Senior Executive Vice President, in charge of Global Business Division, in

charge of Corporate Affairs, NTT Communications Corporation

Jun. 2012 Senior Executive Vice President, NTT Urban Development Corporation

Jun. 2013 President and Chief Executive Officer, NTT Urban Development Corporation

(present post)

17,097

(Reason for the Selection of Candidate Director)

He has been leading the management of the Company as the President and Chief Executive Officer since 2013 and has

been strongly advancing management reforms, including the strengthening of corporate governance, by actively taking on

new challenges such as revamping the corporate philosophy and creating and expanding into new business domains,

without being bound by old approaches and business models. The Company has determined that his extensive knowledge

and capability in management will be indispensable to its sustainable growth and the enhancement of its corporate value

and has made him a candidate for Director.

2

Hiroshi Nakagawa

(March 24, 1955)

<Newly appointed>


Jul. 2006 Executive Manager, General Affairs and Personnel Department, Medical and

Health Administration Center of General Affairs and Personnel, Nippon

Telegraph and Telephone East Corporation

Jun. 2007 Senior Vice President, General Affairs and Personnel Department, Medical

and Health Administration Center of General Affairs and Personnel, Nippon


Jun. 2008 Senior Vice President, Corporate Strategy Planning Department, General

Affairs and Personnel Department, Medical and Health Administration Center

of General Affairs and Personnel, Nippon Telegraph and Telephone East

Corporation

Jun. 2009 Senior Vice President, Corporate Strategy Planning Department, Accounts

and Finance Department, Nippon Telegraph and Telephone East Corporation

(retired on Jul. 2010)

Jun. 2011 Executive Vice President, Corporate Strategy Planning Department, Nippon


Jun. 2012 Senior Executive Vice President, Consumer Business Headquarters, Nippon


Jun. 2012 President, NTT EAST PROPERTIES, INC. (scheduled to retire on June 16,

2016)

Jun. 2012 President, NTT VIETNAM CORPORATION (scheduled to retire on June 16,

2016)

Jul. 2013 Senior Executive Vice President, Corporate Strategy Planning Department,

Nippon Telegraph and Telephone East Corporation

Jun. 2015 Senior Executive Vice President, Nippon Telegraph and Telephone East

Corporation（scheduled to retire on June 17, 2016）

0

8

Candi-

date No.

Name



(Reason for the Selection of Director Candidates)

He has been engaging in management at the NTT Group companies for many years and has extensive knowledge and

experience in fields such as finance, corporate planning and human affairs. He was also an outside director of the

Company from 2005 to 2006 and has been leading the management of a real estate company by concurrently serving as

President and Chief Executive Officer of NTT East Properties, Inc. since 2012. Anticipating that his extensive and

broad-based knowledge, experience and achievements will be utilized for its management, the Company made him a

candidate for Director.

Candi-

date No.

Name



3

Masayuki

Kusumoto (August 19,

1955)

<Reappointed>


Apr. 2004 Director, Property Development, NTT Urban Development Corporation

Apr. 2009 Senior Vice President, Commercial Properties Development, NTT Urban

Development Corporation

Jun. 2011 Senior Vice President, Commercial Properties Development, NTT Urban


Feb. 2013 Senior Vice President, Commercial Properties Development, Global Business,


Jun. 2013 Senior Vice President, Commercial Properties Development, Global Business,

Regional Businesses (Chugoku and Kyushu) , NTT Urban Development

Corporation

Jun. 2014 Senior Vice President, Commercial Properties Development, Global Business

Office, Regional Businesses (Chugoku and Kyushu), NTT Urban


Jul. 2014 Senior Vice President, Commercial Properties Development, Global Business,

Regional Businesses (Chugoku and Kyushu), NTT Urban Development

Corporation

Oct. 2014 Senior Vice President, Commercial Properties Development, Global Business,


Jun. 2015 Executive Vice President, Commercial Business, Global Business, NTT

Urban Development Corporation

Oct. 2015 Executive Vice President, Commercial Business Headquarters, Hotel and

Resort Business, Design Management Office, Global Business, NTT Urban

Development Corporation (present post)

14,830


He has supported the business base of the Company by starting up the development and property management business

of urban commercial properties as the Executive Vice President of Commercial Business Headquarters and expanding

global business as the Senior Vice President of the Global Business. He also contributes to creating innovations in

business with high capability and expertise in the fields of technology and design as the Chief Design Officer. The

Company has determined that his extensive and broad-based knowledge, experience and achievements will be

indispensable to its management and has made him a candidate for Director.

4

Akiyoshi Kitamura (May 26, 1957)

<Reappointed>


Jun. 2000 Senior Manager, Human Resource Management, NTT Communications

Corporation

Jun. 2006 General Manager, Kanto Hospital of Medical and Health Administration

Center of General Affairs and Personnel, Nippon Telegraph and Telephone

East Corporation

Jun. 2011 Senior Vice President, Solution Business Headquarters, Solution Business 1

and 2 of the Solution Business Headquarters, Regional Businesses (Tokai,

Chugoku, Kyushu and Hokkaido), NTT Urban Development Corporation

Jul. 2011 Senior Vice President, Assets Solution Promotion, Regional Businesses

(Tokai, Chugoku, Kyushu and Hokkaido)

Jun. 2012 Senior Vice President, Residential Development, NTT Urban Development

Corporation

Oct. 2015 Senior Vice President, Residential Business Headquarters, NTT Urban


9,840


He contributes to the expansion of the revenue base of the Company, holding positions as the Vice President of Assets

Solution Promotion and the Senior Vice President of Residential Business Headquarters at the Company and steadily

developing business in the fields of real estate solutions and residential development such as condominiums, residential

rots and senior residences. The Company has determined that his extensive knowledge, experience and achievements will

be indispensable to its management and has made him a candidate for Director.

9

Candi-

date No.

Name



5

Kanya Shiokawa (April 16, 1958)

<Reappointed>


Apr. 2003 Senior Manager, Real Estate Planning Office, General Affairs Department,

Nippon Telegraph and Telephone West Corporation

Apr. 2005 General Manager, Building Engineering, Kansai Regional Headquarters, NTT

FACILITIES CO., LTD.

Jul. 2008 General Manager, Real Estate Planning Office, Accounts and Finance

Department, Nippon Telegraph and Telephone East Corporation

Apr. 2010 Director, Property Development, NTT Urban Development Corporation

Jun. 2012 Kansai Regional Business (General Manager of Kansai Branch), NTT Urban


Jun. 2013 Senior Vice President, Kansai Regional Business (General Manager of Kansai

Branch), NTT Urban Development Corporation (present post)

5,325


He plays an important role in developing business in the fields of urban development and redevelopment, engaging in a

number of real estate development and other key projects at the Company. The Company has determined that his

extensive and broad-based knowledge, experience and achievements will be indispensable to its management and has

made him a candidate for Director.

6

Shigehito Katsuki (January 11, 1960)

<Reappointed>


Apr. 2001 Senior Manager, Department IV, Nippon Telegraph and Telephone

Corporation

May 2005 General Manager, Investor Relations Office, Department IV, Nippon

Telegraph and Telephone Corporation

Aug. 2007 General Manager, Strategic Technology Investment Department, International

Business Department, NTT FINANCE CORPORATION

Jul. 2010 Executive Manager, Accounts and Finance Department, Nippon Telegraph

and Telephone East Corporation

Jul. 2013 Senior Manager, Accounting and Finance Department, NTT Urban


Jun. 2014 Senior Vice President, Accounting and Finance Department, NTT Urban


3,808


He has extensive experience and broad-based knowledge in overall finance, serving for many years as the senior manager

of the finance department at the Company and the NTT Group companies. He has also been making a significant

contribution to strengthening the financial standing of the Company as the Senior Executive Manager of the Accounting

and Finance Department. The Company has determined that his knowledge, experience and achievements will be


10

Candi-

date No.

Name



7

Yoshihito Kichijo (May 14, 1960)

<Reappointed>


Apr. 2001 General Manager, Strategy Planning, Gifu Branch, Nippon Telegraph and

Telephone West Corporation

May 2002 General Manager, Marketing Planning, Gifu Branch, Nippon Telegraph and

Telephone West Corporation

Jun. 2003 Senior Manager, Personnel, Nippon Telegraph and Telephone East

Corporation (seconded to NTT Urban Development Corporation)

Apr. 2004 Senior Vice President, Accounting Department, NTT Urban Development

Corporation

Jul. 2005 Director, Corporate Strategy and Planning Department, NTT Urban


Sep. 2009 Director, Residential Development Department, NTT Urban Development

Corporation

Jun. 2013 Senior Vice President, Real Estate Investment Department, NTT Urban


Jun. 2014 Senior Vice President, General Affairs, Real Estate Investment Department,


Oct. 2014 Senior Vice President, General Affairs, Real Estate Investment, NTT Urban


Jul. 2015 Senior Vice President, General Affairs, Real Estate Investment Department,


Nov. 2015 Senior Vice President, General Affairs, NTT Urban Development Corporation

(present post)

13,333


He has extensive knowledge in overall corporate strategies through his many years of work experience at the corporate

strategy and planning and accounting department of the Company and the NTT Group companies. He has also been

advancing human resource management reforms as the Senior Vice President of General Affairs at the Company. In

addition, he also has practical experience in business divisions of the Company, such as promoting the securitization of

real estate and the residential business. The Company has determined that his extensive knowledge, experience and

achievements will be indispensable to its management and has made him a candidate for Director.

8

Hideyuki

Yamasawa

(April 17, 1960)

<Reappointed>


Oct. 2000 Senior Manager, Global Division, NTT Communications Corporation (second

to NTT Europe Ltd.)

Deputy Managing Director, NTT Europe Ltd.

Jul. 2004 Vice President, Public Relations Office, NTT Communications Corporation

Jul. 2007 Senior Vice president, General Affairs, NTT Communications Corporation

Jul. 2010 Senior Manager, Global Business, NTT Communications Corporation (second

to NTT America, Inc.)

Senior Executive Director, NTT America, Inc.

Apr. 2015 Senior Manager, Global Business, NTT Urban Development Corporation

Jun. 2015 Senior Vice President, Global Business, NTT Urban Development

Corporation (present post)

1,716


He has extensive and broad-based knowledge and experience in global business as he served as the senior manager of

global business at the Company and the NTT Group companies as well as local subsidiaries for many years. He has also

been making a contribution to the promotion and expansion of business of the Company as the Senior Vice President of

Global Business of the Company. The Company has determined that his knowledge, experience and achievements will be


11

Candi-

date No.

Name



9

Hirotoshi

Shinohara (December 30, 1960)

<Reappointed>


Apr. 2008 Senior Manager, Real Estate Planning Office, Accounts and Finance

Department, Nippon Telegraph and Telephone West Corporation

Jul. 2010 General Manager, Chugoku Branch, NTT FACILITIES, INC.

Jul. 2013 Senior Vice President, Office Building Business Headquarters and Disaster

Risk Management Office, NTT Urban Development Corporation

Jun. 2014 Senior Vice President, Office Building Business Headquarters, Disaster Risk

Management Office and Project Management, NTT Urban Development

Corporation

May. 2015 Senior Vice President, Office Building Business Headquarters and Project

Management, NTT Urban Development Corporation

Jun. 2015 Senior Vice President, Project Management, NTT Urban Development

Corporation

Jul. 2015 Senior Vice President, Project Management, Aoyama Development, NTT

Urban Development Corporation (present post)

(Major concurrent posts)

Representative Director, Harumi 4-chome City Planning Design Co.

1,098


He has extensive and board-based knowledge and experience in real estate business cultivated through his work at the

Company and the NTT Group companies for many years. He has also been making a contribution to urban development

by engaging in a number of real estate development and leading various projects as the Senior Vice President of the

Project Management Department. The Company has determined that his knowledge, experience and achievements will be


10

Nobuyuki Fukui (March 28, 1963)

<Newly appointed>


Dec. 2006 Director, Financial Sales Department of First Sales Division of Enterprise

Business Division, NTT Communications Corporation

Jun. 2009 Director, Global Business Division, NTT Communications

Corporation(second to NTT Singapore Pte LTD）

President, NTT Singapore Pte

Jul. 2010 Senior Manager, First Sales Department and Third sales Department of First

Sales Division of Enterprise Business Division, First Sales Division of

Enterprise Business Division

Jul. 2012 Deputy Senior Vice President, Third Sales Division, NTT Communications

Corporation

Jul. 2013 Senior Vice President, Office Building Business Headquarters, NTT Urban


1,181


He has extensive and broad-based knowledge and experience in real estate solutions and the fields of corporate sales and

global business cultivated through this work at the Company and the NTT Group companies for many years. The

Company has determined that his knowledge, experience and achievements will be used to its management and has made

him a new candidate for Director.

12

Candi-

date No.

Name



11

Tomoyuki Sakaue (December 27,1964)

<Newly appointed>


Oct. 2008 Director, Property Development, NTT Urban Development Corporation

Apr. 2009 Senior Vice President, Property Development Department of Kansai Branch,


Jul. 2011 Director, Property Development, NTT Urban Development Corporation

Oct. 2013 Director, Project Management, NTT Urban Development Corporation

Jul. 2014 Senior Vice President, Project Management, NTT Urban Development

Corporation

Oct. 2014 Senior Vice President, Project Management, Commercial Properties

Development, NTT Urban Development Corporation

Oct. 2015 Senior Vice President, Project Management, Design Management Office,

NTT Urban Development Corporation (present post)

0


He has extensive and broad-based knowledge and experience in the fields of architecture, design and real estate

development cultivated through this work at the Company and the NTT Group companies for many years. The Company

has determined that his knowledge, experience and achievements will be used to its management and has made him a

new candidate for Director.

12

Akira Komatsu (March 24, 1948)

< Reappointed >

<Outside Director> <Independent

Officer>

Apr. 1972 Research Associate, Faculty of Economics, Saitama University

Jan. 1989 Professor, Faculty of Economics, Saitama University

Apr. 1992 Professor, Faculty of Commerce and Management, Hitotsubashi University

Apr. 2000 Professor, Graduate School of Commerce and Management, Hitotsubashi

University

Apr. 2011 Professor Emeritus, Hitotsubashi University (present post)

Professor, Department of Political Science and Economics, Faculty of

Political Science and Economics, Musashino University, Professor, Graduate

School of Political Science and Economics, Musashino University (present

post)

Apr. 2012 Professor, Department of Business Administration, Faculty of Political

Science and Economics, Musashino University

Jun. 2013 Senior Vice President, NTT Urban Development Corporation (present post)

Apr. 2014 Professor, Department of Business Administration, Faculty of Economics,

Musashino University (present post)


Professor Emeritus, Hitotsubashi University

Professor, Department of Business Administration, Faculty of Economics, Musashino

University

Professor, Graduate School of Political Science and Economics, Musashino University

0

(Reason for the Selection of Outside Director Candidates)

He is currently an Outside Director of the Company and has extensive knowledge in the fields of business structure,

management finance and management philosophy as a business administration professor at universities and a graduate

school. The Company has determined that his high degree of expertise and extensive and broad-based knowledge and

experience will continue to strengthen the supervisory function over the execution of business from an independent

standpoint and has made him a candidate for Outside Director.

Although he does not have experience in company management beyond becoming an outside director, the Company has

determined that he will be able to execute his duties as an outside director appropriately for the reasons above.

He will have held the post as director of the Company for three years after taking office at the conclusion of this general

meeting of shareholders.

13

Candi-

date No.

Name



13

Toshio Koujitani

(March 7, 1944)

< Reappointed >

<Outside Director> <Independent

Officer>

Jun. 1982 Joined JGC CORPORATION

Feb. 1994 Deputy General Manager, Construction Project, No.2 Business Division, JGC

CORPORATION

Jul. 1999 Chief Engineer, No.2 Business Division, JGC CORPORATION

Jul. 2002 Chief Engineer, Industrial Project Management Division, JGC

CORPORATION

Jul. 2007 Principal Architect, No.2 Business Division, JGC CORPORATION

Jun. 2011 Principal Architect, Project Division, JGC CORPORATION

Jul. 2014 Principal Architect, Business Development Department, No.3 Business

Division, JGC CORPORATION (present post)


Apr. 2016 Corporate Adviser, Principal Architect, CM Plus Corporation (present post)


Corporate Adviser, Principal Architect, CM Plus Corporation (present post)

0

(Reason for the Selection of Outside Director Candidates)

He is currently an Outside Director of the Company and has profound expertise in both the hardware and software of

architecture and extensive knowledge and experience in planning and design through his participation in many projects in

Japan and overseas as the principal architect at JGC CORPORATION, etc. The Company has determined that his high

degree of expertise and extensive and broad-based knowledge and experience will continue to strengthen the supervisory

function over the execution of business from an independent standpoint and has made him a candidate for Outside

Director.

Although he does not have experience in company management beyond becoming an outside director, the Company has

determined that he will be able to execute his duties as an outside director appropriately for the reasons above.

He will have held the post as director of the Company for one year after taking office at the conclusion of this general

meeting of shareholders.

14

Koichi Takami

(August 19, 1964)

< Reappointed >

Apr. 1988 Joined Nippon Telegraph and Telephone Corporation

Jun. 2007 Senior Manager, Corporate Management Strategy Division, Nippon

Telegraph and Telephone Corporation

Jun. 2008 Senior Manager, Corporate Strategy Planning Department, Nippon Telegraph

and Telephone Corporation

Jul. 2011 Senior Manager, General Affairs and Personnel Department, Nippon

Telegraph and Telephone East Corporation (second to NTT Solco

Corporation)

Jun. 2012 Senior Vice President, Executive Manager, Corporate Strategy Planning

Department, NTT Solco Corporation

Jul. 2014 Vice President of Business Planning, Nippon Telegraph and Telephone

Corporation（present post）



Vice President of Business Planning, Nippon Telegraph and Telephone Corporation

0


He has extensive and broad-based knowledge and experience in corporate planning and overall strategies cultivated

through his work at the NTT Group companies for many years and now actively gives the Company useful advice on

business and corporate strategies from the standpoint of a director of the Company. The Company has determined that his

expertise, experience and achievements will be indispensable to its management and has made him a candidate for

Director.

(Note 1) Nippon Telegraph and Telephone Corporation is the parent company of the Company, and NTT

Communication Corporation, Nippon Telegraph and Telephone East Corporation, NTT EAST

PROPERTIES, INC., NTT VIETNAM CORPORATION,NTT America, Inc., NTT FACILITIES, INC.,

and NTT Solco Corporation are subsidiaries of Nippon Telegraph and Telephone Corporation.

(Note 2) The Company does not have any special interests with the candidates.

(Note 3) The Company has notified Tokyo Stock Exchange, Inc. that Mr. Akira Komatsu and Mr. Toshio Koujitani

are Independent Officers set out in the provisions of Tokyo Stock Exchange, Inc. If the two persons are

reappointed, the Company will continue to make them Independent Officers. They have not have any

kind of relationship with the Company that may present a conflict of interest risk with shareholders,

including personal relationship, capital relationship, business relationship or any other interests. (Note 4) The Company has concluded liability limitation with Mr. Akira Komatsu, Mr. Toshio Koujitani and Mr.

Koichi Takami within th limits prescribed by law under the provision of Article 427, Paragraph 1 of the Companies Act. If the three persons are reappointed, the Company will continue the contract with them. An outline of the contract is as follows: If the Outside Director is without knowledge and is not grossly negligent in performing his duties, he will

14

be liable for up to the minimum liability amount stipulated in Article 425, Paragraph 1 of the Companies Act in relation to the liability specified in Article 423, Paragraph 1 of the Companies Act.

15

(Attached Materials)

Business Report (from April 1, 2015 to March 31, 2016)

1. Matters concerning the current state of the NTT Urban Development Group (the

“Group”)

(1) Business development and results

During the fiscal year under review, the Japanese economy continued to follow a moderate recovery trend,

albeit with continued weakness. Looking ahead, the economy is expected to continue to recover modestly,

reflecting the ongoing improvements in the employment and income environments, thanks partly to

government policies. However, concerns remain in overseas economies, and weaker-than-expected

economies in emerging countries in Asia, including China and resource-rich countries, could place

downward pressure on the Japanese economy. Given these conditions, attention needs to be paid to rising

uncertainty over political and economic situations overseas and the effects of negative interest rates

adopted by the Bank of Japan and changes in the financial and capital markets.

In the office leasing market, the vacancy rate continued to improve, and market rents have bottomed out,

with some rents showing an upward trend. In the condominium sales market, sales remained generally

firm, despite concerns about the adverse effects of data manipulation problems in piling works of some

condominiums.

In this environment, the Company and its subsidiaries (collectively, the Group) operated their business

steadily, aiming for sustainable growth based on the Group’s Medium-Term Vision 2018 – For Further

Growth. In the leasing business, revenue and income increased, mainly due to a rise in rent income

associated with the improved vacancy rate of existing buildings and the sales of buildings. In the

residential business, revenue and income also increased, primarily reflecting the contribution of high-end

properties in central Tokyo.

As a consequence, operating revenue amounted to ¥183,016 million (up ¥30,964 million, or 20.4% year

on year). Operating income was ¥37,771 million (up ¥12,934 million, or 52.1%), and ordinary income was

¥33,832 million (up ¥13,437 million, or 65.9%). Profit attributable to owners of parent was ¥16,557

million (up ¥322 million, or 2.0%).

16

(2) Status of each segment

Operating revenue by business

Business segment Amount Year-on-year

Percentage of

operating

revenue

Leasing 120,966 million yen Up 29,226 million yen, or 31.9% 63.9%

Residential property sales 48,865 million yen Up 2,239 million yen, or 4.8% 25.8%

Other 19,600 million yen Up 774 million yen, or 4.1% 10.3%

Eliminations (6,416 million yen) – –

Total 183,016 million yen Up 30,964 million yen, or 20.4% –

(Note) “Eliminations” refers to intra-group revenues and transfers of funds duplicated in more than one segment.

17

Leasing Business

In the leasing business, the Company worked to acquire new properties, including Shinagawa Season

Terrace (Minato-ku, Tokyo), and improve the vacancy rate of existing properties.

Operating revenue increased ¥29,226 million, or 31.9% year on year, to ¥120,966 million, mainly due to

the contribution of new properties, the improved vacancy rate of existing buildings and the expansion in

sales of property. Operating income rose ¥13,155 million, or 55.8%, to ¥36,722 million, reflecting an

improvement in revenue and expenditure of existing buildings and property sales, despite an increase in

costs such as depreciation due to the completion of new buildings.

In the fiscal year under review, Urbannet Nihonbashi 2-Chome Building (Chuo-ku, Tokyo) and Urbannet

Ginza 1-Chome Building (Chuo-ku, Tokyo), among others, were completed, and contracts have been

settled on all the floors in the both buildings. Ongoing development projects include Otemachi 2-Chome

Area Urban Redevelopment Project Type 1 Building A (Chiyoda-ku, Tokyo). For the hotel business for

which demand is increasing, the Company strengthened its efforts for small luxury hotels based on the

business alliance with Hiramatsu Inc. as well as measures for Universal City Station Project (Osaka-shi,

Osaka) and Shinpukan Redevelopment Project (Kyoto-shi, Kyoto), etc.

Urbannet Ginza 1-Chome Building

Building

＊ For new buildings, the leased floors counted on contract base.

Percentage of Operating Revenue of the Company

Photographed by Forward Stroke Inc.

Urbannet Nihonbashi 2-Chome Building

Photographed by SS Tokyo Co., Ltd.

18

Residential Business

In the residential property sales business, sales remained generally firm and both the number of

condominiums delivered (1,054 units) and the average per-unit price (¥41 million) remained almost

unchanged from the previous fiscal year, despite a rise in sales prices associated with higher construction

costs and concerns about the adverse effects of data manipulation problems in the piling works of some

condominiums

Operating revenue amounted to ¥48,865 million (up ¥2,239 million, or 4.8% year on year) in the fiscal

year under review. Operating income stood at ¥5,074 million, an increase of ¥669 million, or 15.2%,

thanks to the impact of highly profitable properties in central Tokyo such as Wellith Ginza 2-Chome.

Wellith Ginza 2-Chome Building


19

Other Business

Operating revenue in other business (commissioned interior construction for tenants and building

management, etc.) in the fiscal year under review increased ¥774 million, or 4.1% year on year, to

¥19,600 million, and operating income declined ¥285 million, or 11.5%, to ¥2,199 million chiefly due to a

fall in consulting revenue.

(3) Status of capital investments

Capital investment was ¥47,799 million for the fiscal year under review.

The main investments were ¥9,659 million (79 million US dollar) for Two Oliver Street, ¥5,064 million

for Otemachi 2-Chome Area 1st Class Urban Redevelopment Project Building A, ¥4,412 million for

Urbannet Nihonbashi 2-Chome Building, ¥3,730 million for Urbannet Ginza 1-Chome Building and

¥5,561 million for building renovations.

The Company also acquired investment securities of ¥6,764 million mainly associated with the acquisition

of overseas properties. The amount of investments including investment securities, etc. was ¥54,563

million.


20

(4) Status of financing

The Company raised funds of ¥56.3 billion by Long-term loans payable for the repayment of loans, and

capital investment.

(5) Issues Facing the Group

In response to changes in the economic environment in Japan and overseas, the Group will aim to enhance

its corporate value by providing customers with valuable real estate services by fully adopting a customer

and market-centered orientation, pursuing innovation based on the Medium-Term Vision 2018 – For

Further Growth and increasing the satisfaction of stakeholders. The Group will also strive to improve and

strengthen its management system in light of the corporate governance code.

(i) Strengthening the revenue base in the leasing business

In the office business, the Group will continue working to strengthen the leasing sales capability and

cost competitiveness, including the reinforcement of relationships with existing tenants in preparation

for the expected supply of large volume of offices in central Tokyo. The Group will also seek to

strengthen its revenue base by proposing corporate real estate (CRE) strategies to the NTT Group and

implementing a strategic renewal to respond to business continuity plans (BCP) in flagship buildings.

In addition, the Group will work actively on more diversified and sophisticated developments by

participating in regional redevelopment projects, collaborating with other companies and undertaking

the mixed-use property development of offices and commercial facilities.

(ii) Strengthening and reviewing the residential business

In the residential business, the Group will review the business strategies and processes of the past to

provide dependable condominiums of high quality that meet the needs of customers dealing with

issues such as an increase in vacancies associated with the aging population combined with the

declining birth rate, rising demand for high-quality condominiums as a result of the data manipulation

issue in piling works of condominiums, and higher sales prices linked to increasing construction costs.

In addition, the Group will continue working to expand its business domains by entering into business

for senior citizens, such as serviced senior housing as represented by the Tsunagu (Connecting) Town

Project in cooperation with the NTT Group and the used house renovation market.

(iii) Further expanding the commercial property business

In the commercial property business, the Group will address new areas in response to the increasing

consumption of the inbound tourism through collaboration with suitable partners for each project,

including the provision of hotels in urban areas such as Osaka and Kyoto in addition to central Tokyo

and small luxury hotels at resort spots such as Kashikojima and Atami. With respect to the operation

of commercial facilities in office buildings, the Group will aim to create attractive facilities that satisfy

customers by strengthening and expanding these facilities.

21

(iv) Promoting the global business

In the global business, the Group will continue to work on diversifying its portfolio and increasing

income by acquiring and enhancing the value of office buildings in New York, Boston and

Washington in the United States, in addition to London in the United Kingdom, while maintaining a

close watch on movements in the foreign exchange market and overseas markets. The Group will also

seek to create business opportunities in Southeast Asian countries where future growth looks

promising.

(v) Enforcing comprehensive financial control

The Group intends to carefully select investments for future growth, giving due consideration to

market trends. The Group will also implement asset replacement in accordance with the asset portfolio

strategy set forth in the Medium-Term Vision 2018, including the sale of assets to a private REIT

which the Group organized in February 2016 to secure funds for future development. The Group will

strengthen its financial base by keeping tight control on interest-bearing debt, while taking into

account the effects of negative interest rates adopted by the Bank of Japan, among others.

22

(6) Financial position and results of operations in recent years

Section 28th term

(FY2012)

29th term

(FY2013)

30th term

(FY2014)

31st term (term

under review)

(FY2015)

Operating revenue (million yen) 163,168 189,186 152,052 183,016

Ordinary income (million yen) 22,016 24,865 20,395 33,832

Profit attributable to owners of

parent (million yen) 12,073 11,343 16,235 16,557

Net income per share (yen) 36.68 34.46 49.33 50.31

Total assets (million yen) 941,050 985,507 1,033,220 1,033,557

Net assets (million yen) 213,835 228,591 245,641 251,905

Net assets per share (yen) 535.43 563.98 610.45 626.02

(Note 1) The Company implemented the 100-for-one stock split for its common shares with October 1, 2013. Net

income per share and Net assets per share are calculated as if the stock split had been implemented at the

beginning of the 28th term (FY2012).

(Note 2) Net income per share and net assets per share are calculated based on the average number of issued and

outstanding shares during the period excluding treasury shares and the number of issued and outstanding

shares at the end of the period excluding treasury shares.

(Note 3) Adopted the Accounting Standard for Business Combinations (Accounting Standards Board of Japan

(ASBJ) Statement No. 21 on September 13, 2015), etc., and changed “Net income” to “Profit attributable

to owners of parent” from the fiscal year under review.

23

(7) Status of material parent company and subsidiaries

(i) Relationship with the parent company

The Company’s parent company is Nippon Telegraph and Telephone Corporation (“NTT”), which

holds 221,481,500 shares in the Company (representing an ownership interest of 67.3%).

The Company has business relationships including building lease agreements with NTT.

(ii) Relationship with material subsidiaries

Company name Capital Ownership

percentage Principal business

UDX Tokutei

Mokuteki Kaisha 14,100 million yen 61.0% Owing Akihabara UDX

(iii) Other

The Company has 22 consolidated subsidiaries and 14 equity method affiliates.

In the fiscal year under review, the Company conducted an absorption-type merger which the

surviving company was NTT Urban Development Builservice Co., and the company that ceased to

exist was NTT Urban Development West BS Co..

The Company also made an investment in Seragaki Resort Tokutei Mokuteki Kaisha to develop

resort hotels in Okinawa and invested in properties in the United States to develop its Global

Business.

NTT Urban Development Asset Management Corporation, which was established in the previous

fiscal year, began asset management for NTT Urban Development Private Investment Corporation,

Inc., a private placement REIT, in the fiscal year under review.

24

(8) Principal businesses

The table below shows the principal businesses of the Group

Classification Principal businesses

The Company

(1) Acquisition, disposal and management of real estate

(2) Leasing, brokerage and appraisal of real estate

(3) Building design, construction and supervision of

construction, and contracted business

(4) Sale and leasing of office equipment, communication

equipment, and other furniture and fixtures, and

interior equipment for buildings and houses

(5) Construction and sale of residential properties

Subsidiaries

NTT Urban Development

Builservice Co.

(1) Building and building equipment design, construction

and supervision of construction

(2) Consulting relating to the management of buildings

and building equipment


Hokkaido Co.

(1) Building and building equipment design, construction

and supervision of construction

(2) Consulting relating to the management of buildings

and building equipment

Otemachi First Square Inc. Management of the Otemachi First Square building and its

site

DAY･NITE Co., Ltd. Operation of restaurants, halls and conferences, etc.

Knox Twenty-One Co., Ltd. Operation of the NTT Group’s convention facilities

Motomachi Parking Access

Co., Ltd.

Maintenance of underground passages in the Motomachi

area of Hiroshima-shi

Premier REIT Advisors Co.,

Ltd.

Investment management business under the Financial

Instruments and Exchange Act

Shinagawa Season Terrace

Building Management

Corporation

Management of Shinagawa Season Terrace and its land


Asset Management

Corporation

Investment management business under the Financial

Instruments and Exchange Act

UD EUROPE LIMITED Investment in and management of real estate in the UK

UD AUSTRALIA PTY

LIMITED Investment in and management of real estate in Australia

UD USA Inc. Investment in and management of real estate in the USA

(Note) On October 1, 2015, the Company conducted an absorption-type merger which the surviving company was

NTT Urban Development Builservice Co., and the company that ceased to exist was NTT Urban

Development West BS Co..

25

(9) Principal offices

The Company

Head Office Chiyoda-ku, Tokyo

Kansai Branch Osaka-shi, Osaka

Tokai Branch Nagoya-shi, Aichi

Kyoto Branch Kyoto-shi, Kyoto

Chugoku Branch Hiroshima-shi, Hiroshima

Kyushu Branch Fukuoka-shi, Fukuoka

Subsidiaries

NTT Urban Development Builservice Co. Chiyoda-ku, Tokyo

NTT Urban Development Hokkaido Co. Sapporo-shi, Hokkaido

Otemachi First Square Inc. Chiyoda-ku, Tokyo

DAY･NITE Co., Ltd. Chiyoda-ku, Tokyo

Knox Twenty-One Co., Ltd. Minato-ku, Tokyo

Motomachi Parking Access Co., Ltd. Hiroshima-shi, Hiroshima

Premier REIT Advisors Co., Ltd. Minato-ku, Tokyo

Shinagawa Season Terrace Building

Management Corporation Minato-ku, Tokyo

NTT Urban Development Asset Management

Corporation Chiyoda-ku, Tokyo

UD EUROPE LIMITED London, UK

UD AUSTRALIA PTY LIMITED Melbourne, Australia

UD USA Inc. New York City, USA

(10) Status of employees

(i) Group Employees

Number of employees

Change from end of

previous consolidated

fiscal year

800 (265) Up 15 (Down 3)

(Note) The number of employees is the number of people employed by the Group. The number of temporary

employees is shown in parentheses.

(ii) Company Employees

Number of employees Change from end of

previous fiscal year Average age

Average length of

service

402 (9) Down 5 (Down 4) 43.3 years old 17.3 years

(Note 1) The number of employees is the number of people employed by the Group. The number of temporary

employees is shown in parentheses.

(Note 2) Workers seconded from other companies to the Company (10 workers) are included in the number of

employees, while workers seconded from the Company (193 workers) are excluded.

(Note 3) Length of service at NTT or any other company in the NTT Group is added to the length of service of the

employees who worked for these companies when calculating the average length of service. Workers

seconded from other companies (10 workers) are excluded from the calculation.

26

(11) Principal lenders

Lenders Amount borrowed

NTT FINANCE CORPORATION 73,004 million yen

Syndicated loan 71,300 million yen

Sumitomo Mitsui Trust Bank, Limited 42,000 million yen

Mizuho Bank, Ltd. 32,917 million yen

NIPPON LIFE INSURANCE COMPANY 22,000 million yen

Meiji Yasuda Life Insurance Company 19,000 million yen

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 15,000 million yen

Mitsubishi UFJ Trust and Banking Corporation 15,000 million yen

THE NISHI-NIPPON CITY BANK, LTD. 15,000 million yen

The Dai-ichi Life Insurance Company, Limited 13,000 million yen

SUMITOMO LIFE INSURANCE COMPANY 12,000 million yen

(Note) The syndicated loan is a loan syndication led by Mizuho Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ,

Ltd. and Sumitomo Mitsui Banking Corporation.

27

2. Matters concerning shares of the Company

(1) Total number of shares authorized to be issued by the Company: 1,050,000,000

(2) Number of issued and outstanding shares: 329,120,000

(Including treasury shares 77)

(3) Number of shareholders: 12,470

(Of the above, less than one unit shareholders 73)

(4) Status of top ten shareholders

Shareholder Number of

shares held

Shareholding

ratio (%)

Nippon Telegraph and Telephone Corporation 221,481,500 67.30

Japan Trustee Services Bank, Ltd. (Trust Account) 7,291,100 2.22

GOLDMAN,SACHS& CO.REG 6,316,775 1.92

The Master Trust Bank of Japan, Ltd. (Trust Account) 5,224,800 1.59

NORTHERN TRUST CO.(AVFC) RE U.S. TAX EXEMPTED

PENSION FUNDS 3,746,700 1.14

STATE STREET BANK AND TRUST COMPANY 505223 2,075,369 0.63

MELLON BANK, N.A. AS AGENT FOR ITS CLIENT MELLON

OMNIBUS US PENSION 1,985,400 0.60

STATE STREET BANK AND TRUST COMPANY 505225 1,929,895 0.59

STATE STREET BANK - WEST PENSION FUND CLIENTS -

EXEMPT 505233 1,888,600 0.57

THE BANK OF NEW YORK 133522 1,883,473 0.57

(Note) The shareholding ratio is calculated by excluding treasury shares (77 shares).

(5) Other material matters concerning shares

Not applicable.

3. Matters concerning stock acquisition rights of the Company

Not applicable.

28

4. Matters concerning officers of the Company

(1) Directors and Corporate Auditors

Title Name Responsibility Major concurrent posts

President and Chief

Executive Officer Sadao Maki

Senior Executive

Vice President

Yoshiharu

Nishimura

Representative Director,

Otemachi Town Planning

Co., Ltd.

Executive Vice

President Satoshi Shinoda

Corporate Strategy and

Planning, IT Innovation

Executive Vice

President Kazuhiro Hasegawa Office Building Business

President and Chief Executive

Officer, NTT Urban

Development Builservice Co.

Executive Vice

President Masayuki Kusumoto

Commercial Business

Headquarters, Hotel and

Resort Business, Design

Management Office, Global

Business

Senior Vice

President Akiyoshi Kitamura


Headquarters

Senior Vice

President Kanya Shiokawa

Kansai Regional Business

(General Manager of Kansai

Branch)

President and Chief Executive

Officer, NTT Urban

Development West BS Co.

(retired on October 1,2015)

Senior Vice

President Shigehito Katsuki Accounting and Finance

Senior Vice

President Yoshihito Kichijo General Affairs Headquarters

Senior Vice

President Hideyuki Yamasawa Global Business

Senior Vice

President Hirotoshi Shinohara

Project Management, Aoyama

Development

Representative Director,

Harumi 4-chome City

Planning Design Co.

Senior Vice

President Akira Komatsu

Professor Emeritus,

Hitotsubashi University

Professor, Department of

Business Administration,

Faculty of Economics,

Musashino University

Professor, Graduate School of

Political Science and

Economics, Musashino

University

Senior Vice

President Toshio Koujitani

Principal Architect, Business

Development Department,

No.3 Business Division, JGC

CORPORATION

（resigned from office on

29

Title Name Responsibility Major concurrent posts

March 31, 2016）

Senior Vice

President Koichi Takami

Vice President of Business

Planning, Nippon Telegraph

and Telephone Corporation

Corporate Auditor

(full-time) Mitsuhiro Watanabe

Corporate Auditor

(full-time) Shunichi Okazaki

Corporate Auditor Hisako Kato

Representative , Kato

Accounting Office

Outside Corporate Auditor,

JSR Corporation

Corporate Auditor Harunobu Takeda

Senior Manager, Finance and

Accounting Department,

Nippon Telegraph and

Telephone Corporation

(Note 1) Mr. Hideyuki Yamasawa, Mr. Hirotoshi Shinohara, Mr. Toshio Koujitani and Mr. Koichi Takami were

newly elected as Directors at the Ordinary General Meeting of Shareholders for the 30th term held on June

23, 2015, and assumed office.

(Note 2) Mr. Shunichi Okazaki and Mr. Harunobu Takeda were newly elected as Corporate Auditors at the

Ordinary General Meeting of Shareholders for the 30th term held on June 23, 2015, and assumed office.

(Note 3) Of the Directors, Mr. Akira Komatsu, Mr. Toshio Koujitani and Mr. Koichi Takami are Outside Directors.

(Note 4) Of the Corporate Auditors, Mr. Mitsuhiro Watanabe, Mr. Shunichi Okazaki, Ms. Hisako Kato and Mr.

Harunobu Takeda are Outside Auditors.

(Note 5) Corporate Auditor (full-time) Mr. Mitsuhiro Watanabe worked for the accounting division of Nippon

Telegraph and Telephone Corporation, and has substantial knowledge about finance and accounting.

(Note 6) Corporate Auditor Ms. Hisako Kato has worked as a certified public accountant and a certified tax

accountant, and has considerable knowledge about finance and accounting.

(Note 7) Corporate Auditor Mr. Harunobu Takeda worked for the finance division of Nippon Telegraph and

Telephone Corporation, and has substantial knowledge about finance and accounting.

(Note 8) The Company notify Tokyo Stock Exchange, Inc. of Mr. Akira Komatsu and Mr. Toshio Koujitani, Senior

Vice President, Mr. Shunichi Okazaki and Ms. Hisako Kato, Outside Corporate Auditor, as Independent

Officers set out in the provision of Tokyo Stock Exchange, Inc. The Company does not have any personal,

capital, or business relationships, or other interests with the four persons that could cause any conflict of

interest with general stockholders.

30

(Note 9) The table below shows changes in titles and the roles of Directors during the fiscal year under review.

Name After change Before change Date of change

Yoshiharu

Nishimura Senior Executive Vice President

Senior Executive Vice President

Project Management

CSR

June 23, 2015

Masayuki

Kusumoto

Executive Vice President

Commercial Business

Global Business

Senior Vice President

Commercial Properties

Development

Global Business

June 23, 2015


Commercial Business

Headquarters, Hotel and Resort

Business Department, Design

Management Office, Global

Business


Commercial Business

Global Business

October 1, 2015

Akiyoshi

Kitamura



Headquarters


Residential Development October 1, 2015

Yoshihito

Kichijo


General Affairs

Real Estate Investment

Department


General Affairs


July 1, 2015


General Affairs


General Affairs


Department

November 1,

2015

Hirotoshi

Shinohara


Project Management

Aoyama Development


Project Management July 1, 2015

31

(Note 10) The table below shows Directors and a Corporate Auditor who retired during the fiscal year under review.

Title at the time of resignation Name Date of retirement

Senior Vice President Shiro Nakahara June 23, 2015 (resigned from office)

Senior Vice President Masaki Mitsumura June 23, 2015 (resigned from office)

Senior Vice President Kou Ikeda June 23, 2015 (resigned from office)

Corporate Auditor (full-time) Hiroshi Ikegawa June 23, 2015 (resigned from office)

Corporate Auditor Shinji Kume June 23, 2015 (term of office expired)

(2) Policies concerning remuneration of Directors and Corporate Auditors, and the amount

(i) Policies

The matters concerning remuneration for Directors are decided at the meeting of the Board of

Directors.

The remuneration for Directors (except Outside Directors) consists of monthly compensation and

bonuses. The monthly compensation is provided based on the extent of roles and the scope of

responsibilities for each position. The bonuses are provided by taking into account the Company’s

performance and other matters during the fiscal year under review. In addition, from the perspective

of reflecting the medium-to long-term performance of the Company, Directors purchase the

Company shares through the Directors’ stock accumulation plan by contributing over the certain

amount of the monthly compensation, and hold all of the purchased shares during the term of office.

For Outside Directors, from the perspective of ensuring a high independency, only the monthly

compensation is provided without gearing the amount to the Company’s performance.

The remuneration for Corporate Auditors is decided upon discussion by the Corporate Auditors, and

from the perspective of ensuring a high independency, only the monthly compensation is provided

without gearing the amount for the Company’s performance.

(ii) Remuneration of Directors and Corporate Auditors

Title Number of people receiving

remuneration Amount of remuneration

Director 15 297 million yen

Corporate Auditors 4 46 million yen

Total 19 343 million yen

(Note 1) The Ordinary General Meeting of Shareholders for the 22nd term held on June 21, 2007 resolved that

annual remuneration for Directors shall not exceed ¥480 million and annual remuneration for Corporate

Auditors shall not exceed ¥80 million.

(Note 2) The numbers for Directors and Corporate Auditors include two Directors and one Corporate Auditors who

retired as at the conclusion of the Ordinary General Meeting of Shareholders for the 30th term held on June

23, 2015.

(Note 3) The amount of Directors’ remuneration includes bonuses of ¥40 million for the fiscal year under review.

(Note 4) Other than the above, executive bonuses in the amount of ¥21 million were paid to Directors who also hold

executive management positions.

32

(3) Matters concerning outside officers

(i) Major partner companies for concurrent posts and their relationship with the Company

Title Name Partner company Concurrent post

Relationship with the

Company

Senior Vice

President

Akira Komatsu Hitotsubashi

University

Professor Emeritus There is no special

relationship with the

Company

Musashino University Professor,

Department of

Business

Administration,

Faculty of

Economics

Professor, Graduate

School of Political

Science and

Economics

There is no special


Company

Senior Vice

President

Toshio

Koujitani

JGC CORPORATION Principal Architect,

Business

Development

Department, No.3

Business Division

（resigned from

office on March 31,

2016）

There is no special


Company

Senior Vice

President

Koichi Takami Nippon Telegraph and


Vice President of

Business Planning

Parent company

Corporate

Auditor

Hisako Kato Kato Accounting

Office

Representative There is no special


Company

JSR Corporation Outside Corporate

Auditor

There is no special


Company

Corporate

Auditor

Harunobu

Takeda

Nippon Telegraph and


Senior Manager,

Finance and

Accounting

Department

Parent company

33

(ii) Main activities in the fiscal year under review

a. Attendance at meetings of the Board of Directors and Board of Corporate Auditors

Title Name

Board of Directors Board of

Corporate Auditors

Meetings

attended

Attendance

rate

Meetings

attended

Attendance

rate

Senior Vice President Akira Komatsu 13／13 100.0％－－

Senior Vice President Toshio Koujitani 10／10 100.0％－－

Senior Vice President Koichi Takami 9／10 90.0％－－

Corporate Auditor

(full-time) Mitsuhiro Watanabe 13／13 100.0％ 17／17 100.0％

Corporate Auditor

(full-time) Shunichi Okazaki 10／10 100.0％ 11／11 100.0％

Corporate Auditor Hisako Kato 13／13 100.0％ 17／17 100.0％

Corporate Auditor Harunobu Takeda 9／10 90.0％ 10／11 90.9％

(Note 1) Mr. Toshio Koujitani and Mr. Koichi Takami were appointed Director on June 23, 2015. The denominators

in the “Meetings attended” columns is the numbers of meetings of the Board of Directors that were held

after his appointment.

(Note 2) Mr. Shunichi Okazaki and Mr. Harunobu Takeda were appointed Corporate Auditor on June 23, 2015. The

denominators in the “Meetings attended” columns is the numbers of meetings of the Board of Directors and

Board of Corporate Auditors that were held after his appointment.

b. Statements at Board of Directors and Board of Corporate Auditors meetings

(a) Director, Mr. Akira Komatsu made suggestions and proposals to ensure the adequacy and

fairness of decisions made by the Board of Directors, and expressed opinions about agenda

items and the deliberations relating thereto, from the objective viewpoint of an Independent

Officer, which is independent of management, making the most of his extensive knowledge

and experience as a university professor of business administration.

(b) Director, Mr. Toshio Koujitani made suggestions and proposals to ensure the adequacy and

fairness of decisions made by the Board of Directors, and expressed opinions about agenda

items and the deliberations relating thereto, from the objective viewpoint of an Independent

Officer, which is independent of management, making his profound knowledge of software and

hardware in the field of architecture and extensive expertise and experience in planning and

designing in the field of architecture by participated in a number of projects both in Japan and

overseas mainly as principal architect at JGC CORPORATION.

(c) Corporate Auditor, Mr. Koichi Takami stated his opinions based on his considerable experience

at Nippon Telegraph and Telephone Corporation and made suggestions and proposals to ensure

the adequacy and fairness of decisions made by the Board of Directors, and expressed opinions

about agenda items and the deliberations relating thereto, from the objective viewpoint of an

Independent Officer.

34

(d) Corporate Auditor (full-time), Mr. Mitsuhiro Watanabe made statements from the perspective

of an experienced business manager, to ensure the adequacy and fairness of decisions made by

the Board of Directors and establishment of a high quality corporate governance system that

will enable the sound and sustainable growth of the Company.

(e) Corporate Auditor (full-time), Mr. Shunichi Okazaki made statements from the perspective of

an Independent Officer, making the most of the broad insight that he developed mainly through

his extensive experience in government administration, to ensure the adequacy and fairness of

decisions made by the Board of Directors and for the establishment of a high quality corporate

governance system that will enable the sound and sustainable growth of the Company.

(f) Corporate Auditor, Ms. Hisako Kato made statements necessary from the perspective of an

Independent Officer, with viewpoints of a certified public accountant and a certified tax

accountant, to ensure the adequacy and fairness of decisions made by the Board of Directors

and for the establishment of a high quality corporate governance system that will enable the

sound and sustainable growth of the Company.

(g) Corporate Auditor, Mr. Harunobu Takeda made statements necessary based on his

considerable experience at Nippon Telegraph and Telephone Corporation, to ensure the

adequacy and fairness of decisions made by the Board of Directors and for the establishment of

a high quality corporate governance system that will enable the sound and sustainable growth

of the Company.

35

(iii) Outline of agreements for the limitation of liability

The Company has concluded agreements with its Outside Directors and Outside Corporate Auditors

pursuant to Article 427, Paragraph 1 of the Companies Act for the limitation of liability as stipulated in

Article 423, Paragraph 1 of the Companies Act. For both Outside Directors and Outside Corporate

Auditors, liability for damages under the agreements is limited to the minimum liability amount stipulated

in Article 425, Paragraph 1 of the Companies Act.

(iv) Remuneration of outside officers

Number of people receiving

remuneration Amount of remuneration

Remuneration of outside officers 6 57 million yen

(Note) The amount of remuneration of outside officers is included in “Remuneration of Directors and Corporate

Auditors” on page 31.

36

5. Status of accounting auditors

(1) Name of the accounting auditor

KPMG AZSA LLC

(2) Remuneration payable to accounting auditor in the fiscal year under review

¥88 million

(Note1) The audit contract between the accounting auditor and the Company does not distinguish between

remuneration for audits under the Companies Act and remuneration for audits under the Financial

Instruments and Exchange Act, as it is not practically possible to distinguish between the two types of

remuneration. The amount above therefore is the sum of the amounts of the two types of remuneration.

(Note 2) In light of the Practical Guidelines for Cooperation with Accounting Auditors published by the Japan Audit

& Supervisory Board Members Association, the Board of Corporate Auditors of the Company examined the

adequacy of the audit time, the staffing plan and the amount of remuneration in the audit plan for the fiscal

year under review by comparing the audit results in the previous fiscal year and the audit plan for the fiscal

year under review. As a result, the Board of Corporate Auditors has determined that remuneration payable to

the accounting auditor, etc. is appropriate and agreed with it.

(3) Total amount of cash and other income payable by the Company and subsidiaries

¥126 million

(4) Content of non-audit services

The Company compensates the accounting auditor for the advisory service related to the International

Financial Reporting Standards (IFRS) in addition to the services stipulated in Article 2, Paragraph 1 of the

Certified Public Accountants Act.

(5) Policy concerning decisions to dismiss or change the accounting auditor

If it is determined that any of the conditions set out in items of Article 340, Paragraph 1 of the Companies

Act applies to the accounting auditor, the Board of Corporate Auditors shall dismiss the accounting

auditor upon unanimous consent of its members.

In other cases when it is deemed that the accounting auditor is no longer able to perform its duties in a fair

manner, the Board of Corporate Auditors shall determine a proposal to dismiss or change the accounting

auditor to be submitted to the general meeting of shareholders.

37

6. Systems and policies of the Company

(1) Mechanisms to ensure appropriate business operations

The following is an outline of the Company’s Internal Control Systems Basic Policy, which sets out

systems and procedures to ensure that the Directors’ performance of their duties will comply with laws

and regulations and the Articles of Incorporation, and other systems to ensure appropriate operations of

the Group:

(i) A system to ensure that Directors and employees adhere to laws and regulations and the

Company's Articles of Association in the execution of their duties. This system requires that:

a. Employees carry out their respective duties in a diligent and conscientious manner in

accordance with laws, regulations and instructions in an effort to ensure appropriate and

efficient business operations as stipulated in the Company's Rules of Employment and related

documents;

b. All Directors and employees of NTT Urban Development Group companies engage in

activities that promote the highest standards in corporate ethics and compliance in accordance

with the NTT Group's Code of Corporate Ethics;

c. The Corporate Ethics Promotion Committee is established and preventive measures initiated

with regard to illegalities and misconduct in accordance with compliance related regulations;

d. The Company establishes a corporate ethics and compliance helpline to provide the necessary

support infrastructure for all Directors and employees of the Group to report corporate ethics

and compliance matters, anonymously or by name, both inside and outside the Company using

attorneys. The Company will ensure that any person who makes reports to the corporate ethics

and compliance helpline is not treated unfairly;

e. NTT Urban Development establishes a framework to ensure information is concentrated in the

relevant department and an appropriate response is formulated in the event of potential and

actual non-compliance and unethical act;

f. Education and training with regard to corporate ethics and compliance is implemented on a

continuous basis for all Directors and employees of the Group;

g. The Internal Audit Office is inaugurated as a means to evaluate the efficacy and management

of the Internal Control Systems, and an audit review program is initiated for areas of

particularly high risk to facilitate necessary and appropriate improvement;

h. A legal structure and framework, coordinated by the Legal Department, is maintained to ensure

the appropriate checks and balances are in place. In addition, the Legal Department shall

centrally coordinate the Company's legal consultation with lawyers;

i. With respect to the financial instruments business operated by the NTT Urban Development

Group, NTT Urban Development ensures appropriate business management and human

resources structures, and develops structures to enforce the compliance with laws and

ordinances, and risk management structures, and manages appropriate customer protection and

38

customer information control;

j. NTT Urban Development appropriately develops and manages internal control associated with

financial reports to ensure the credibility of financial reports in accordance with the Financial

Instruments and Exchange Act; and

k. NTT Urban Development is committed to not being associated, by any means, with antisocial

forces or organizations that pose a threat to the order and safety of society, and to act decisively

against these antisocial activities in cooperation with the appropriate authorities, such as the

police.

(ii) A structure for storing and managing information pertaining to the execution of duties by

Directors. Under this structure:

a. Minutes of meetings, associated documents and other information relating to the execution of

duties by Directors are stored and managed by the relevant department in accordance with

internal rules and regulations; and

b. Directors and Corporate Auditors regularly review the aforementioned documentation and

information.

(iii) Provisions and other structures concerning administration of the danger of losses. In this context:

a. By establishing the Risk Management Committee and formulating regulations related to risk

management, the Company shall regularly identify and assess the Group’s risks as a whole and

shall prevent and handle risks appropriately;

b. Careful consideration of investment risks and other factors by the Management Council in

connection with investment projects is preceded by due diligence by the Investment

Deliberation Council;

c. NTT Urban Development conducts risk management education and training in order to raise

awareness among all Directors and employees of the Group; and

d. NTT Urban Development develops systems that enable it to take appropriate measures in the

event of disaster by taking the necessary measures, such as establishing the Disaster Risk

Management Promotion Committee and the Disaster Risk Management Promotion Office,

developing a basic policy and a manual to respond to the occurrence of a major earthquake,

and holding seminars and training in disaster management.

(iv) A framework to ensure the efficient execution of duties by Directors. Under this framework, the

Company:

a. Clarifies department responsibilities, authority and decision-making procedures, based on

internal rules and regulations that define the structure and scope of internal organizations as

well as the division of duties, responsibilities and authority;

b. Formulates rules and regulations for the Board of Directors. In principle, the Board of

Directors meets once a month to decide on important matters relating to the management of the

39

Company in accordance with related legal requirements, decision-making principles and

recommendations based on due diligence. In addition, the Board of Directors periodically

reports on the status of business execution. Moreover, the Company formulates rules and

regulations for the Management Council, an organization that in principle meets once a week

and reports to the Board of Directors; and

c. Strives to enhance efficiency in the execution of business. To this end, the Board of Directors

formulates medium-term management policies and business plans of the Group and closely

reviews performance on a monthly and quarterly basis.

(v) A statement concerning the establishment of a system to ensure that the corporate group conducts

activities appropriately. This system ensures that:

a. Associated with the affiliate management regulations of the NTT Urban Development Group,

etc., the Company requests that the Group companies deliberate with or report to the Company

regarding important matters, including corporate ethics, compliance and risk management;

b. The internal control departments periodically call on the Group companies with the aim of

monitoring and supervising the companies’ operations;

c. Periodic meetings are convened for the Group companies to report to the Company the status

of operations and their financial standing. This process enables the Company to maintain a

comprehensive understanding of the Group companies activities and statuses and to ensure that

the Group companies activities are conducted in an appropriate manner; and

d. Transactions between the parent company and the Group companies are conducted in an

appropriate manner by examining contracts on the same terms and conditions as those with

third parties.

(vi) Items concerning the independence from Directors of employees who are appointed to assist

Corporate Auditors in their duties and to secure the effectiveness of instructions to the employees.

These items provide for:

a. The establishment of the Corporate Auditors Office that reports directly to the Corporate

Auditors and the appointment of full-time, specialist employees to support Corporate Auditors

in the conduct of their duties.

b. Employees appointed to support Corporate Auditors do not engage in concurrent activities.

c. Assistants to Corporate Auditors conduct their duties based on the directions and orders of

Corporate Auditors.

d. The opinions of Corporate Auditors are respected in handling the personnel changes,

evaluations, and so on of employees who belong to the Corporate Auditors’ Office.

(vii) A system for Directors and employees to report to Corporate Auditors and for other reporting to

Corporate Auditors. Under this system:

a. A comprehensive reporting system is maintained in which Corporate Auditors attend not only

40

the Board of Directors meetings but also the Management Council and other important

meetings;

b. Directors and employees are required to report to Corporate Auditors on matters relating to the

execution of their duties including the following; and

- Matters that have led to significant damage or have the potential to lead to significant damage

to the Company

- Monthly business reports

- The status of internal audits

- Any risk of a breach of laws and regulations, the Company's Articles of Association and

related rules and regulations

- The status of reports made under the corporate ethics and compliance helpline

- Important items reported by the Group companies

- Important issues relating to corporate ethics and compliance other than those previously

identified

c. Directors are required to report to the Board of Directors on the status of the establishment and

management of the Internal Control Systems through the Internal Audit Office.

(viii) Other structures to ensure that audits are performed effectively by Corporate Auditors. Based on

this structure:

a. Corporate Auditors conduct meetings with representative directors and related personnel on a

quarterly basis to promote an exchange of opinions and ensure appropriate communication

channels are maintained; and

b. The Company will provide every support to Corporate Auditors in connection with any request

for the use of external advisors including attorneys and certified public accountants.

c. Corporate Auditors may charge expenses as necessary for the execution of their duties, and the

Company shall make payments based on their expense claims.

(Note) In accordance with a resolution at a meeting of the Board of Directors held on November 4, 2015, the Company

has revised descriptions on the strengthening of internal control as the NTT Urban Development Group and the

development of the affiliate management regulations of the NTT Urban Development Group with respect to the

financial instruments business. The Basic Policy above reflects the revisions.

(2) Outline of the management of the mechanisms to ensure appropriate business operations

An outline of the management of the mechanisms to ensure appropriate business operations in the fiscal

year under review is as follows.

(i) Initiatives for corporate ethics and compliance

The Company posts its Rules of Employment and the NTT Group’s Code of Corporate Ethics on its

website so that they can be reviewed regularly.

The NTT Urban Development Group provided training, etc. on corporate ethics and compliance to all

41

directors and employees of the Group.

The Company held the Corporate Ethics Promotion Committee meetings five times and deliberated

on matters reported to the corporate ethics and compliance helpline, among others.

The Internal Audit Office, which is an internal control department of the Company, audited the

execution of duties to determine whether they adhered to laws and regulations and the Company’s

Articles of Association and reported the audit results to representative Directors and Corporate

Auditors on a quarterly basis.

(ii) Initiatives for risk management

The Company held quarterly Risk Management Committee meetings to identify important risks that

should be managed by the Group as a whole and checked if new risks had emerged.

The Company established business continuity management (BCM) guidelines for large-scale

earthquakes, etc. and conducted anti-disaster training, etc. based on the BCM guidelines.

(iii) Initiatives for ensuring the efficient execution of duties

The Company has clarified departmental responsibilities, authority and decision-making procedures

based on internal rules and regulations that define the structure and scope of internal organizations as

well as the division of duties, responsibilities and authority.

The Company held the Board of Directors meetings on 13 occasions based on the rules and

regulations for the Board of Directors. It also held Management Council meetings on 43 occasions

based on the rules and regulations for the Management Council.

(iv) Initiatives for ensuring that the corporate group conducts activities appropriately

In accordance with the formulation of the affiliate management regulations of the NTT Urban

Development Group, etc., the Group companies reported important matters to the Company and

deliberated on them with the Company.

The Internal Audit Office implemented audits on the Group companies and reported the audit results

to the representative Directors and Corporate Auditors on a quarterly basis.

(v) Initiatives for ensuring the effectiveness of audits by Corporate Auditors

Corporate Auditors attended important meetings such as the Board of Directors meetings and the

Management Council meetings and received reports and explanations about the status of the

execution of duties, etc. from Directors, etc.

Corporate Auditors exchanged opinions with representative Directors on a quarterly basis and

received the necessary reports from the independent accounting auditor.

The Company established the Corporate Auditors Office that reports directly to Corporate Auditors

and appointed full-time, specialist employees who do not engage in concurrent activities. The said

employees conducted their duties based on the directions and instructions of the Corporate Auditors.

(3) Basic policy on the control of the Company

Reflecting the parent company’s ownership of more than 50% of the Company’s shareholder voting rights,

42

the Company has not established a detailed basic policy on control of the Company and, at present, does

not maintain takeover defense measures.

________________________________________________________________________________

Amounts of money and volumes of sales in the Business Report are rounded down to the nearest unit.

Ratios and other figures are rounded to the nearest unit.

43

Consolidated Balance Sheet (As of March 31, 2016)

(Unit: million yen)

Account item Amount Account item Amount

Assets Liabilities

Current assets Current liabilities

Cash and deposits 14,846 Notes and operating accounts payable–trade 9,182

Notes and operating accounts receivable 9,170 Lease obligations 40

Real estate for sale 41,736 Short-term loans payable 6,530

Real estate for sale in process 99,374 Current portion of long-term loans payable 36,775

Costs on uncompleted construction contracts 248 Current portion of bonds 19,999

Raw materials and supplies 58 Income taxes payable 1,064

Lease investment assets 2,224 Deferred tax liabilities 380

Deposits paid 1,360 Other 41,488

Deferred tax assets 425 Total current liabilities 115,462

Other 8,665 Non-current liabilities

Allowance for doubtful accounts (0) Bonds payable 110,975

Total current assets 178,110 Long-term loans payable 371,739

Non-current assets Lease obligations 87

Property, plant and equipment Lease and guarantee deposits received 69,424

Buildings and structures 279,458 Negative goodwill 22,951

Machinery, equipment and vehicles 1,557 Deferred tax liabilities 58,658

Land 494,722 Provision for directors' retirement benefits 27

Lease assets 92 Net defined benefit liability 8,215

Construction in progress 3,604 Asset retirement obligations 2,424

Other property, plant and equipment 2,459 Other 21,684

Total property, plant and equipment 781,895 Total non-current liabilities 666,189

Intangible assets 25,994 Total liabilities 781,651

Investments and other assets Net assets

Investment securities 24,311 Shareholders’ equity

Long-term prepaid expenses 15,072 Capital stock 48,760

Net defined benefit asset 147 Capital surplus 31,648

Deferred tax assets 556 Retained earnings 118,437

Other 7,468 Treasury shares (0)

Total investments and other assets 47,557 Total shareholders’ equity 198,846

Total non-current assets 855,447 Accumulated other comprehensive income

Valuation difference on available-for-sale

securities 3,003

Deferred gains or losses on hedges (9)

Foreign currency translation adjustment 5,261

Remeasurements of defined benefit plans (1,066)

Total accumulated other comprehensive

income 7,187

Non-controlling interests 45,871

Total net assets 251,905

Total assets 1,033,557 Total liabilities and net assets 1,033,557

(Note) All amounts have been rounded down to the nearest million yen.

44

Consolidated Statement of Income

(From April 1, 2015 to March 31, 2016)

(Unit: million yen)

Account item Amount

Operating revenue 183,016

Operating cost 127,078

Operating gross profit 55,938

Selling, general and administrative expenses 18,166

Operating income 37,771

Non-operating income

Interest income 11

Dividends income 93

Contributions 262

Gain on donation of non-current assets 22

Amortization of negative goodwill 1,926

Equity in earnings of affiliates 251

Other 68 2,635

Non-operating expenses

Interest expenses 5,936

Other 637 6,573

Ordinary income 33,832

Extraordinary income

Gain on sales of non-current assets 3,285

Other 13 3,298

Extraordinary losses

Loss on sales of non-current assets 8,020

Loss on retirement of non-current assets 1,073

Impairment loss 4,917 14,011

Income before income taxes and minority interests 23,120

Income taxes-current 3,861

Income taxes-deferred 265 4,127

Profit 18,993

Profit attributable to non-controlling interests 2,435

Profit attributable to owners of parent 16,557


45

Consolidated Statement of Changes in Net Assets


(Unit: million yen)

Shareholders’ equity

Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’

equity

Balance as of April 1,

2015 48,760 34,109 108,264 ― 191,134

Cumulative effects of

changes in accounting policies

(2,461) (1,118)

(3,579)

Restated balance 48,760 31,648 107,145 ― 187,554

Total changes of items

during the year

Dividends from surplus (2,632)

(2,632)

Interim dividends (2,632)

(2,632)

Profit attributable to

owners of parent 16,557

16,557

Purchase of treasury

shares (0) (0)

Net changes of items

other than

shareholders’ equity


during the year ― ― 11,292 (0) 11,291

Balance as of March 31,

2016 48,760 31,648 118,437 (0) 198,846

46

Accumulated other comprehensive income

Non-controllin

g interests

Total net

assets

Valuation

difference on available-for-

sale securities

Deferred

gains or

losses on hedges

Foreign

currency

translation adjustment

Remeasure

ments of

defined benefit plans

Total

accumulated

other

comprehensive income


2015 2,837 ― 6,429 509 9,776 44,730 245,641

Cumulative effects of

changes in accounting policies

(3,579)

Restated balance 2,837 ― 6,429 509 9,776 44,730 242,061


during the year

Dividends from surplus

(2,632)

Interim dividends

(2,632)

Profit attributable to

owners of paren

16,557

Purchase of treasury

shares

(0)


other than shareholders’ equity

165 (9) (1,168) (1,575) (2,588) 1,140 (1,447)


during the year 165 (9) (1,168) (1,575) (2,588) 1,140 9,844


2016 3,003 (9) 5,261 (1,066) 7,187 45,871 251,905


47

(Reference)

Consolidated Statements of Cash Flows


(Unit: million yen)

Account item Amount

Net cash provided by (used in) operating activities 17,430

Net cash provided by (used in) investing activities (14,570)

Net cash provided by (used in) financing activities (6,781)

Effect of exchange rate change on cash and cash equivalents (125)

Net increase (decrease) in cash and cash equivalents (4,046)

Cash and cash equivalents at beginning of period 20,153

Cash and cash equivalents at end of period 16,106


48

Balance Sheet (Non-Consolidated)

(As of March 31, 2016)

(Unit: million yen)

Account item Amount Account item Amount

Assets Liabilities

Current assets Current liabilities

Cash and deposits 53 Operating accounts payable 6,907

Operating accounts receivable 6,500 Short-term loans payable 2,459

Real estate for sale 29,359 Lease obligations 20

Real estate for sale in process 91,208 Current portion of long-term loans payable 32,000

Costs on uncompleted construction contracts 225 Current portion of bonds 19,999

Raw materials and supplies 22 Accounts payable-other 25,272

Prepaid expenses 954 Accrued expenses 1,163

Lease investment assets 2,159 Income taxes payable 572

Deferred tax assets 515 Advances received 5,477

Other 7,930 Deposits received 8,477

Allowance for doubtful accounts (0) Other 3,052

Total current assets 138,929 Total current liabilities 105,403

Non-current assets Non-current liabilities

Property, plant and equipment Bonds payable 109,975

Buildings 214,074 Long-term loans payable 291,300

Structures 3,586 Lease obligations 41

Machinery and equipment 1,542 Long-term accounts payable-other 21,345

Tools, furniture and fixtures 2,250 Lease and guarantee deposits received 68,245

Land 310,813 Deferred tax liabilities 14,582

Lease assets 40 Provision for retirement benefits 5,981

Construction in progress 3,602 Assets retirements obligations 2,408

Total property, plant and equipment 535,910 Other 62

Intangible assets Total non-current liabilities 513,942

Leasehold right 20,110 Total liabilities 619,346

Software 375 Net assets

Software in progress 2,002 Shareholders’ equity

Lease assets 0 Capital stock 48,760

Other 100 Capital surplus

Total intangible assets 22,588 Legal capital surplus 34,109

Investments and other assets Total capital surplus 34,109

Investment securities 16,630 Retained earnings

Stocks of subsidiaries and affiliates 22,774 Legal retained earnings 3,437

Investments in other securities of 30,222

Other retained earnings 84,833

subsidiaries and affiliates Voluntary retained earnings 45,815

Investments in capital 0 Retained earnings brought forward 39,018

Long-term prepaid expenses 14,787 Total retained earnings 88,270

Prepaid pension cost 288 Treasury shares (0)

Lease and guarantee deposits paid 9,414 Total shareholders’ equity 171,140

Other 1,942 Valuation and translation adjustments

Total investments and other assets 96,060 Valuation difference on available-for-sale 3,003

Total non-current assets 654,560 securities

Total valuation and translation 3,003

adjustments

Total net assets 174,143

Total assets 793,489 Total liabilities and net assets 793,489


49

Statements of Income (Non-Consolidated)


(Unit: million yen)

Account item Amount

Operating revenue

Operating revenues from leasing business 111,535

Operating revenues from residential property sales business 47,968

Operating revenues from other businesses 1,121 160,626

Operating cost

Operating cost for leasing business 71,650

Operating cost for residential property sales business 36,978

Operating cost for other businesses 590 109,219

Operating gross profit 51,406

Selling, general and administrative expenses 17,251

Operating income 34,155

Non-operating income

Interest income 2

Dividends income 424

Contributions 254

Gain on donation of non-current assets 22

Other 70 774

Non-operating expenses

Interest expenses 3,604

Interest on bonds 1,648

Other 633 5,886

Ordinary income 29,043

Extraordinary income

Gain on sales of non-current assets 3,285

Other 13 3,298

Extraordinary loss

Loss on sales of non-current assets 8,034

Loss on retirement of non-current assets 1,058

Impairment loss 4,917 14,010

Income before income taxes 18,330

Income taxes-current 3,045

Income taxes-deferred 2,913 5,958

Profit 12,372


50

Statement of Changes in Net Assets (Non-Consolidated)


(Unit: million yen)

Shareholders’ equity

Valuation and

translation adjustments

Total net

assets

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total sharehold

ers’

equity

Valuation difference on

available-for-s

ale securities

Legal capital

surplus

Legal retained

earnings

Other retained earnings

Voluntary retained

earnings

Retained earnings

brought forward


2015 48,760 34,109 3,437 35,606 42,121 － 164,034 2,837 166,871

Changes of items during

the year

Dividends from surplus (2,632) (2,632) (2,632)

Interim dividends (2,632) (2,632) (2,632)

Provision of reserve for

advanced depreciation of non-current assets

12,120 (12,120) －－

Reversal of reserve for

advanced depreciation of non-current assets

(2,138) 2,138 －－


special account for

advanced depreciation of non-curreut assets

1 (1) －－


special depreciation 341 (341) －－

Reversal of reserve for

special depreciation (116) 116 －－

Profit 12,372 12,372 12,372

Purchase of treasury shares

(0) (0) (0)


other than shareholders' equity

165 165


during the year ― ― ― 10,209 (3,103) (0) 7,106 165 7,272


2016 48,760 34,109 3,437 45,815 39,018 (0) 171,140 3,003 174,143


51

Independent Auditor’s Report

May 9, 2016

The Board of Directors


KPMG AZSA LLC

Masashi Oki (Seal)

Designated Limited Liability Partner

Engagement Partner

Certified Public Accountant

Koji Fukai (Seal)


Engagement Partner


Yutaka Terada (Seal)


Engagement Partner


We have audited the consolidated financial statements, comprising the consolidated balance sheet, the

consolidated statement of income, the consolidated statement of changes in net assets and the related notes

of NTT Urban Development Corporation as at March 31,2016 and for the year from April 1, 2015 to

March 31, 2016 in accordance with Article 444-4 of the Companies Act.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with accounting principles generally accepted in Japan, and for such internal

control as management determines is necessary to enable the preparation of consolidated financial

statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit as

independent auditor. We conducted our audit in accordance with auditing standards generally accepted

in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the consolidated financial statements. The procedures selected depend on our judgement, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s

preparation and fair presentation of the consolidated financial statements in order to design audit

procedures that are appropriate in the circumstances, while the objective of the financial statement audit is

not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit

52

also includes evaluating the appropriateness of accounting policies used and the reasonableness of

accounting estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position and the results of operations of NTT Urban Development Corporation and

its consolidated subsidiaries for the period, for which the consolidated financial statements were prepared,

in accordance with accounting principles generally accepted in Japan.

Other Matter

Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to

the provisions of the Certified Public Accountants Law of Japan.

Notes to the Reader of Independent Auditor’s Report:

The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as

required by the Companies Act.

53

Independent Auditor’s Report

May 9, 2016

The Board of Directors


KPMG AZSA LLC

Masashi Oki (Seal)


Engagement Partner


Koji Fukai (Seal)


Engagement Partner


Yutaka Terada (Seal)


Engagement Partner


We have audited the financial statements, comprising the balance sheet, the statement of income, the

statement of changes in net assets and the related notes, and the supplementary schedules of NTT Urban

Development Corporation as at March 31, 2016 and for the 31st business year from April 1, 2015 to

March 31, 2016 in accordance with Article 436-2-1 of the Companies Act.

Management’s Responsibility for the Financial Statements and Others

Management is responsible for the preparation and fair presentation of the financial statements and the

supplementary schedules in accordance with accounting principles generally accepted in Japan, and for

such internal control as management determines is necessary to enable the preparation of financial

statements and the supplementary schedules that are free from material misstatements, whether due to

fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial statements and the supplementary schedules

based on our audit as independent auditor. We conducted our audit in accordance with auditing

standards generally accepted in Japan. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements and the supplementary schedules are

free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the financial statements and the supplementary schedules. The procedures selected depend on our

judgement, including the assessment of the risks of material misstatement of the financial statements and

the supplementary schedules, whether due to fraud or error. In making those risk assessments, we

consider internal control relevant to the entity’s preparation and fair presentation of the financial

statements and the supplementary schedules in order to design audit procedures that are appropriate in the

54

circumstances, while the objective of the financial statement audit is not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the financial statements and the

supplementary schedules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the financial statements and the supplementary schedules referred to above present fairly,

in all material respects, the financial position and the results of operations of NTT Urban Development

Corporation for the period, for which the financial statements and the supplementary schedules were

prepared, in accordance with accounting principles generally accepted in Japan.

Other Matter

Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to

the provisions of the Certified Public Accountants Law of Japan.

Notes to the Reader of Independent Auditor’s Report:

The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as

required by the Companies Act.

55

BOARD OF CORPORATE AUDITORS’ REPORT

(English Translation)

Based on reports from each Corporate Auditor, and following discussion at meetings, the Board of

Corporate Auditors has prepared this report regarding the execution of the duties of the Board of Directors

in the 31st fiscal year from April 1, 2015, to March 31, 2016.

The Board of Corporate Auditors reports as follows:

1. Outline of Audit Methodology

(1) The Board of Corporate Auditors established auditing policies, assignment of duties, etc., and received

reports from each Corporate Auditor on the status of the implementation of audits and the results thereof,

as well as reports from the Board of Directors and the Independent Auditors regarding the execution status

of their duties, and requested explanations as necessary.

(2) On the basis of the Board of Corporate Auditors Rules, etc. established by the Board of Corporate

Auditors, and in accordance with its auditing policies, assignment of duties and other relevant matters, the

Corporate Auditors sought mutual understanding with the Directors, employees of the internal auditing

department and other departments, and other persons in their efforts to collect information and achieve an

environment conductive to audits, and carried out audits by the following methods.

i. Attended meetings of the Board of Directors and other important meetings, received reports from

Directors and employees regarding performance of their duties, requested explanations as necessary,

perused important statements regarding decisions and approvals made and investigated the status of

operations and assets at the head office and other principal business locations. Regarding the

subsidiaries, the Board of Corporate Auditors sought to achieve a mutual understanding and exchange

of information with directors and corporate auditors and other persons of the subsidiaries, and where

necessary received business reports from the subsidiaries.

ii. As for the particulars of Board of Directors resolutions relating to the establishment, as set forth in

Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act, of

structures stated in the business report as necessary to ensure that the Directors’ performance of their

duties is in conformity with laws and regulations and their company’s Articles of Incorporation and

to otherwise ensure the appropriateness of the business of a kabushiki kaisha and a corporate group

consisting of a kabushiki kaisha and its subsidiaries, as well as the structures established pursuant to

such resolutions (internal control system), the Board of Corporate Auditors regularly received reports

from Directors, employees and other persons, requested explanations from them as necessary and

expressed opinions.

iii. The Board of Corporate Auditors audited and verified whether the Independent Auditor maintained

its independence and carried out its audits appropriately, received reports from the Independent

Auditor regarding the execution of its duties and, where necessary, requested explanations. Also, the

Board of Corporate Auditors received notification from the Independent Auditors to the effect that a

“structure to ensure that duties are executed appropriately” (the matters listed in Article 131 of the

56

Accounting Principles for Enterprises) had been established in accordance with “Quality Control

Standards for Auditing” (Business Accounting Council, October 28, 2005), and where necessary

requested explanations.

Based on the above methodology, the Board of Corporate Auditors audited the non-consolidated financial

statements related to the fiscal year under review (the Balance Sheet, Income Statement, Statement of

Changes in Net Assets, and the individual notes thereto), related supplementary statements, as well as the

consolidated financial statements (Consolidated Balance Sheet, Consolidated Income Statement,

Consolidated Statement of Changes in Net Assets and the consolidated notes thereto).

2. Audit Results

(1) Results of the audit of the Business Report

i. We find that the Business Report and its supplementary statements accurately reflect the conditions

of the Company in accordance with law and the Articles of Incorporation.

ii. No inappropriate conduct concerning the execution of duties by Directors or material facts in

violation of law or the Articles of Incorporation were found.

iii. We find that the particulars of Board of Directors’ resolutions concerning the internal control

system are appropriate. Further, no matters worthy of note were found with respect to Directors’

execution of duties and status of this Business Report in regards to the internal control system.

(2) Results of the audit of the financial statements and supplementary statements

We find that the methodology and results of the audit by the Independent Auditor, KPMG AZSA

LLC are appropriate.

(3) Results of the audit of the consolidated financial statements

We find that the methodology and results of the audit by the Independent Auditor, KPMG AZSA

LLC are appropriate.

May 11, 2016


Board of Corporate Auditors

Corporate Auditor (full-time) Mitsuhiro Watanabe

Corporate Auditor (full-time) Shunichi Okazaki

Corporate Auditor Hisako Kato

Corporate Auditor Harunobu Takeda

Note: Corporate Auditors are Outside Corporate Auditors as prescribed in the Companies Act.

END

57

(Reference)

Topics

Completion of Urbannet Nihonbashi 2-Chome Building and Urbannet Ginza

1-Chome Building

Urbannet Nihonbashi 2-Chome Building and Urbannet Ginza 1-Chome Building, two buildings located in

Chuo-ku, Tokyo, were completed in January 2016 and February 2016, respectively.

Both buildings have introduced the latest environmental performance and business continuity plan (BCP)

measures.

◆ Urbannet Nihonbashi 2-Chome Building

Urbannet Nihonbashi 2-Chome Building is located one-minute walk from Nihombashi Station and was

developed with the tradition and stately atmosphere of Nihonbashi as the theme. This is seen, for instance,

in the comfortable entrance piloti space and an eave that gives an impression of the eave of a

long-established store.

◆ Urbannet Ginza 1-Chome Building

Urbannet Ginza 1-Chome Building is a three-minute walk from Takaracho Station and a five-minute walk

from Ginza-itchome Station. It was developed with a sense of openness in the city center, such as the

entrance piloti with a ceiling height of about six meters and the roof terrace.

Location; Chuo-ku, Tokyo

Site area; 1,687 m2

Total floor space; 14,795 m2

Building scale; 10 floors above ground and 1 below

Main use; Office

Location; Chuo-ku, Tokyo

Site area; 1,737 m2

Total floor space; 11,720 m2

Building scale; 8 floors above ground and 1 below

Main use; Office

Entrance Hall

Photographed by Forward Stroke Inc.

Upper: Roof terrace

Left: Exterior view

Photographed by SS Tokyo Co.,

Ltd.Inc.

58

Development of small luxury hotels in capital and business alliance with

Hiramatsu Inc.

Concluding a capital and business alliance agreement

with Hiramatsu Inc. in November 2015, we are

working on the hotel business jointly and developing

small residential-type luxury hotels (auberge) with

10 to 20 rooms. At present, we are developing the

business in Kashikojima, Mie, Atami, Shizuoka and

Hakone, Kanagawa. The Hiramatsu Hotels & Resorts

Kashikojima, the first hotel, is to open on July 15,

2016. We are also considering development in other

areas.

Sold out at Wellith Tsudanuma, the first condominium in the “Tsunagu

TOWN Project”

As the “Tsunagu TOWN Project”, we are developing a condominium while developing serviced housing

for seniors on an adjacent lot, with the creation of a permanent residence for multiple generations as the

theme.

We will propose a new form of permanent residences for multiple generations, leveraging the strong

expertise we have been cultivating and the comprehensive strength of the NTT Group.

At Wellith Tsudanuma, the first condominium in the “Tsunagu TOWN Project”, all condominium units

were sold out for the sales period of five months in May 2015, and Wellith Olive Tsudanuma, an adjacent

serviced housing for seniors, opened in March 2016.

Currently we are promoting the “Tsunagu TOWN Project” in Nerima-ku, Tokyo and Machida, Tokyo.

Image of the project in Atami

Wellith Olive Tsudanuma

Left: Exterior view Under: Tsunagu cafe

59

Development of global business

After acquiring our first property overseas in London, the United Kingdom in 2009, we have been actively

developing our overseas business in the United Kingdom and the United States, among other countries.

We will continue to work on diversifying our portfolio and increasing income by acquiring office

buildings and enhancing the value of office buildings through their renewal and other means. We will also

continue seeking to create business opportunities in Southeast Asian countries where future growth looks

promising.

In our 31st fiscal year, we acquired three properties in Boston, the United States, and a property in

Washington D.C., the U.S. capital.

Two Oliver Street

(Boston)

Acquired on July, 2015

575 Lexington Avenue

(New York)

Joined to business on August, 2015

1015 18th Street

(Washington D.C.)

Acquired on December, 2015

60

Major financial indicators (Consolidated)

Section 28th term

(FY2012)

29th term

(FY2013)

30th term

(FY2014)

31st term (term

under review)

(FY2015)

Return on assets (ROA) (%) 3.1 3.4 2.6 3.9

Return on equity (ROE) (%) 7.1 6.3 8.4 8.2

Full-year dividend per share(yen) 16.00 16.00 16.00 (Note 2)

17.00

Dividend payout ratio (%) 43.6 46.4 32.4 (Note 2)

33.8

Net interest-bearing debt /

EBITDA (X) 9.6 8.9 10.9 8.6

Net D/E ratio (X) 2.30 2.14 2.15 2.10

(Note1) On October 1, 2013, we conducted a 100-for-1 common stock split and have calculated the annual dividend per share as if the stock split

had been conducted at the beginning of the 28th term (FY2012).

(Note2) The full-year dividend per share and dividend payout ratio for the 31st term (term under review / FY2015) are stated on the assumption

that First Item (Distribution of Surplus as Dividends) of the ordinary general meeting of shareholder is approved. We have already

distributed a dividend per share of 8 yen of which the record date is September 30, 2015.

・Return on assets (ROA) ＝ (Operating income + Equity in earnings of affiliates + Amortization of negative goodwill) / { (Total assets at the

beginning of the fiscal year under review + Total assets at the end of the fiscal year under review) / 2 ｝ ×100

・Return on equity (ROE) ＝ Profit attributable to owners of parent / { (Shareholders' equity at the beginning of the fiscal year under review ＋

Shareholders' equity at the end of the fiscal year under review) / 2 } ×100

・Dividend payout ratio ＝ Full-year dividend per share / Net income per share

・Net interest-bearing debt = Interest-bearing debt - Cash and deposits - Short-term (less than 3 months) investments included in other current

assets

・EBITDA ＝ Operating income ＋ Depreciation and amortization

・Net D/E ratio ＝ Net interest-bearing debt / Net assets

61

Corporate Slogan

Corporate Philosophy（UD-Statement）

We will contribute to sustainable urban development through our real estate services. What we value most

is seeing the satisfaction of our customers and members of the wider public, and bringing smiles to their

faces.

For this, we will pay close attention to the changing needs of our customers and society, and thoroughly

understand our customers’ perspectives.

We make it a promise to continue our challenge of generating innovative services, where all of our

management and employees will act with integrity and without fearing failure.

This challenge is fueled by a corporate culture conducive to all of our management and employees freely

and proactively voicing opinions, where all of us may respect and value one another, and go about our

jobs with a smile.

The cover is photographed by Forward Stroke.


Akihabara UDX, 14-1, Sotokanda 4-chome, Chiyoda-ku, Tokyo 101-0021

http://www.nttud.co.jp/english/

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