In fiscal year 2007, the Japanese economy maintained a moderate recovery. Due to favourable corporate earnings, company investments continued to expand, and the levels of employment and personal consumption showed a tendency towards recovery.

In the real estate business, the building market benefited from robust demand for offices which led to continuing high occupancy rates, and to rises in rents in urban areas. In the residential housing market, due to drastic reductions in the number of houses supplied and the rise in sales prices due to escalating construction costs, customers made their choices based on location and product planning more than ever. The Financial Instruments and Exchange Law helped improve the investment environment in the real estate securitisation market, while prolonged construction procedures due to the amendment in building codes greatly affected the real-estate industry.

In this business environment, the Company has focused on building a secure financial base for the future by enforcing earnings power from leasing of office buildings and from sales of residential properties and by participating in urban-development projects.
As a result, total revenue from operations for the term decreased from ¥234,340 million for the preceding fiscal year to ¥213,218 million, a fall of 9.0%. Operating income rose from ¥34,461 million to ¥45,423 million, up 31.8%, and recurring profits increased from ¥31,289 million to ¥39,487 million, up 26.2%, while net income rose from ¥17,406 million to ¥21,744, an increase of 24.9%.

Overview of segment-based businesses is as follows.

In “Leasing”, the Company focuses on services towards tenants “providing a safe and comfortable space” and has been trying to improve occupancy rates and profitability.
In “Buildings,” whole-year occupancy in “Ebisu Building” (Shibuya-ku, Tokyo) and in “Watanabe Recruit Building” (Osaka), newly launched “Kasumigaseki Common Gate” (Chiyoda-ku, Tokyo), and the continued rise in rents in urban areas, and newly launched urban rented apartments such as “Apartment Tower Roppongi” (Minato-ku, Tokyo) have helped to increase revenue by 9.6% from the preceding year.
Dividends income from SPCs was derived from the sales of “Hamarikyu Park Side Place” (Chuo-ku, Tokyo).
As a result, this term’s total revenue from operations in “Leasing” rose from ¥43,550 million to ¥53,513 million, up 23.0%, and operating income rose from ¥19,193 million to ¥27,772 million, an increase of 44.7%.

In real estate sales, the Company has been strengthening its acquisition of selected land plots and its customer-oriented product planning and has also focused on quality control, after-sale services, and administration to establish the Brillia’s brand identity as providing “sophisticated residences” and “safety and security.”
Sales of condominiums including “Brillia Tama Centre” (Tama, Tokyo), “Brillia Grande Minato Mirai OCEAN & PARK” (Yokohama), “Brillia Tower Modern Art Museum” (Sapporo), and sales of detached houses including “Brillia Terrace Tanashi Mukodai” (Nishi-Tokyo, Tokyo) were recorded.
The total revenue from operations in Sales decreased from ¥155,494 million for the preceding fiscal year to ¥105,556 million, a decrease of 32.1%, while operating income decreased from ¥18,351 million to ¥9,562 million, down 47.9%. Partial disposal of the major complex “olinas” (Sumida-ku, Tokyo) during the preceding year affected the decrease in sales and income.

The Company, using its abundant know-how, has developed the following businesses: brokerage, resort/leisure/hotel, renovation, restaurants, retail of packaged media, and spas.
In “Resort/leisure/hotel,” the major complex resort facilities “Hatoriko Highland ReginaForest” (Tenei-mura, Fukushima) reopened, and the Company acquired “Kawaguchiko Country Club” (Fuji-Kawaguchi, Yamanashi) and started its operation. “Other” include income from asset sales of a commercial facilities-related SPC (asset management fee and dividend income).
As a result, total revenue from operations increased from ¥35,341 million from the preceding period to ¥54,148 million, an increase of 53.2%, while operating income increased from ¥3,945 million to ¥16,673 million, up 322.6%).

In fiscal year 2008, the Japanese economy should continue to be on track of recovery, however, the downturn of the U.S. economy due to the subprime loan problems and the trend of oil prices warn against reaching premature conclusions.
For buildings in the real estate market, building occupancy rates should remain at high levels in urban areas, and rents will remain high. In the residential housing market, while the number of houses to be supplied is to decrease, customers will be even more selective on the location and in the product planning of their residences.
Given this situation, the Company group will evolve businesses utilising securitisation of real estate to help enforce the expansion of operations and earnings power. Employing “Innovation” “Creation” and “Pursuit” within the midterm business plan, the Group will take on new challenges to further growth by providing high-quality products and services appraised as the best by customers. The Company will bridge today and tomorrow with “trust”, which is what the Company has cultivated over the past 110 years.

Outlook for the next term:

For the leasing segment in the following term, whole-year occupancy of “Kasumigaseki Common Gate” and an increase in the occupancy of urban leased condominiums are estimated. In the sales segment, sales of “Brillia Tower KAWASAKI” (Kawasaki) and “Brillia Rokko Island Branz Livio” (Kobe) are expected. “Resort/leisure/hotel” and “Media complexes” in other business segment are expected to shift favourably as well.
The Group is moving steadily towards success of its midterm plans for 2009.

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