MITSUBISHI ESTATE - INVESTOR RELATIONS - MANAGEMENT POLICY

Mitsubishi Estate Group's
New Three-Year Medium-Term Management Plan “Action 2010”

Mitsubishi Estate Group's New Three-Year Medium-Term Management Plan “Action 2010” Presentation Sheet (PDF 465KB)

Mitsubishi Estate Co., Ltd. (hereafter “Mitsubishi Estate” or “the Company”) today announced details of the Group's new three-year Medium-Term Management Plan commencing fiscal 2008, the fiscal year ending March 31, 2009.

1. Review of the current Medium-Term Management Plan

The current Medium-Term Management Plan, which commenced from the fiscal year ended March 31, 2006, had as its basic objectives the cultivation of capabilities for real estate value creation with “development” at the heart of business operations, and securing a leading position (building a foundation for the future) in the industry as a real estate company for the new era. Mitsubishi Estate has taken steps to build a foundation for future medium- to long-term growth by reinforcing, in particular, its development, real estate services and proposal-based marketing capabilities.

As a result, Mitsubishi Estate expects to achieve the following targets.

Outlook for the fiscal year ending March 31, 2008:

EBITDA (earnings before interest, taxes, depreciation and amortization): ¹	¥234.8 billion (target: ¥200.0 billion)
Net interest-bearing debt ² / EBITDA multiple:	5.0 (4.2) times³ (target: under 5.0 times)

1	EBITDA = operating income + interest and dividend income + equity in earnings (losses) of unconsolidated subsidiaries and affiliates + depreciation and amortization
2	Net interest-bearing debt = interest-bearing debt — cash and cash equivalents
3	TOWA REAL ESTATE DEVELOPMENT CO., LTD. and Sunshine City, the latter subject to successful completion of a current public tender offer by Mitsubishi Estate, shall be included in the Company's scope of consolidation for balance sheet purposes as of March 31, 2008. For income statement purposes, however, consolidation shall take place from the fiscal year ending March 31, 2009 and not reflected in EBITDA for the fiscal year ending March 31, 2008. Accordingly, calculations shall exclude the interest-bearing debt of both companies for that fiscal year.

2. New Medium-Term Management Plan

(1) Changes in the Business Environment Surrounding the Mitsubishi Estate Group

1.	Globalization: Globalization of real estate investors (funds), users and competition
2.	Securitization of real estate: Growth in asset management needs such as pensions, government funds, etc., and diversification of real estate players
3.	Acceleration in the pace of informatization: Due to IT innovations, accelerating speed and greater degree of change in markets, etc.
4.	Harmonious environmental co-existence: Increasing global awareness of the need to tackle environmental problems

(2) Future Mitsubishi Estate Visions and the New Medium-Term Management Plan “Action 2010”

In light of its stance toward the Mitsubishi Estate corporate brand, the business environment and FF (Foundation for the Future) 2007 results, in “Action 2010,” Mitsubishi Estate has identified attaining the status of “a global real estate solutions provider — development as a core driver”as a future vision.

A “solutions provider” is defined as a real estate company that provides the high added value that only Mitsubishi Estate can provide to real estate end users, owners and investors, and achieves customer value.

“Action 2010,” the New Medium-Term Management Plan, is a three-year action plan commencing the fiscal year ending March 31, 2008 for achieving this vision for Mitsubishi Estate into the future.

(3) The Four Business Domains

Action 2010 divides the Mitsubishi Estate Group's core businesses into the following four domains based on the business traits and business environments of each.

1st Domain	Real Estate Holding segment: This segment obtains rental revenues (income gain) from real estate
2nd Domain	Real Estate Development and Investment segment: This segment obtains capital gains from real estate
3rd Domain	Real Estate Investment Management segment: This segment provides management services to investors and obtains a fee income.
4th Domain	Real Estate Services segment: This segment provides fee-based services to customers involved in real estate

Until now, the business presence and management resources of the Mitsubishi Estate Group have been focused on the Real Estate Holding segment (1st Domain) and the Real Estate Development and Investment segment (2nd Domain). However, in light of recent customer and market structural changes surrounding the Mitsubishi Estate Group, it has sought to increase the ratio of the Real Estate Investment Management segment (3rd Domain) and the Real Estate Services segment (4th Domain) involvement in future Mitsubishi Estate visions, with a medium- to long-term view.

(4) Keywords for Helping to Realize Mitsubishi Estate's Future Visions

Following are key words for helping to realize future Mitsubishi Estate visions.

“Innovative” — for an innovative and creative Mitsubishi Estate Group

“Eco-Conscious” — symbolizing harmonious environmental co-existence in which the Mitsubishi Estate Group is proactively involved

“Global” — meaning the global Mitsubishi Estate Group

“As One Team” — for the Mitsubishi Estate Group united as one in pursuit of future visions

(5) Practical Action Items

I. Action Items for Each Business Domain

1st Domain: Real Estate Holding Segment

Maximization of Asset Value Held in Marunouchi and Other Locations

Reinforce asset management (AM) capabilities and improve cash flow gained from assets, promote high investment efficiency redevelopment and maximize the value of assets held, especially those in Marunouchi
As a part of that, organizationally differentiate property management (PM) and leasing capabilities from asset management (AM) capabilities and further reinforce them

2nd Domain: Real Estate Development and Investment Segment

Further Reinforce Development Capabilities and Risk Management Capabilities

Hold an advantage in diversity of development offerings, including type, means and duration, and invest broadly in the development segment
While reinforcing development capabilities, accurately assess the development investment fund portfolio and develop risk management capabilities
Promote collaboration with TOWA REAL ESTATE DEVELOPMENT CO., LTD. and improve development capabilities as a group

3rd Domain: Real Estate Investment Management Segment

Build Global Platform

Play a leading role in promoting the flow of funds to the real estate sector and securing a position for the real estate category within the fund management sector
In identifying opportunities for the allocation of funds to the real estate sector, build a variety of networks that can be deployed in major cities overseas, and build a global real estate investment management platform

4th Domain: Real Estate Services Segment

Aiming to be a Leading Service Provider that Contributes to Advancing Development Capabilities

Leveraging a diverse range of real estate offerings, including brokerage and advisory services, secure a position as the “best partner” and “best player” in the field of providing services to corporations through a stronger capacity to provide diverse solutions for corporate real estate (CRE)
As a source of competitive strength, improve the ability to provide real estate services, including PM, leasing, design and administration, in each of the real estate holding, development and investment and investment management segments

II. Action Items for Strengthening Segment / Cross-Sectional Competitiveness

1. Globalize Each Segment

While seeking to continually increase the value of assets held, position development and investment, investment management and real estate services as growth fields, and over the medium to long term, try to gain 20% profit growth overseas while promoting globalization in phases

2. Strengthen each Segment, Leveraging Development Capabilities

Affirm development capabilities as the source of competitive strength for all segments and seek further reinforcement. At the same time, have the development and investment segment, which has gained strength as the core of development capabilities, help other segments to grow, and promote the creation of a mechanism for producing synergies in investment management, real estate services, and so forth.

3. Further Develop Proposal-Based Marketing

Focus on medium- to long-term “Customer Value,” and reaffirm the significance of proposal-based marketing, which seeks commercialization by continually promoting solutions to customers, and, as an advantage unique to Mitsubishi Estate, further strengthen this marketing capability.

III. Management Infrastructure Action Items

1. Reinforcing Management, People and Organization Infrastructure

Mitsubishi Estate is taking steps to disseminate management policy throughout the Company, foster a corporate culture that promotes a spirit of taking on challenges, positioning “globalization of management and personnel” as its basic policy for infrastructure development and promoting greater management “visibility.” Moreover, in each expanding, diversifying and increasingly advancing Group segment, Mitsubishi Estate is working to reinforce and raise awareness of the corporate governance system, including risk management, compliance and internal controls.

2. Active Measures Toward Harmonious Environmental Co-Existence

Mitsubishi Estate is formulating a “Long-Term Environmental Vision” to proactively work toward harmonious environmental co-existence and is further clarifying its stance of actively contributing to society with the view of reducing its environmental impact.

Targets

The fiscal year ending March 31, 2011

EBITDA (earnings before interest, taxes, depreciation and amortization ¹):	¥ 300.0 billion
EBITDA/total asset:	over 6.5%
Net interest-bearing debt ² /EBITDA multiple:	under 6 times

Note:

1	EBITDA = operating income + interest and dividend income + equity in earnings (losses) of unconsolidated subsidiaries and affiliates + depreciation and amortization
2	Net interest-bearing debt = interest-bearing debt ñ cash and cash equivalents

Note: Assumptions

Revenue from operations	¥ 1,220.0 billion (Actual for the fiscal year ending March 31, 2008: ¥ 789.0 billion (estimate))
Operating income	¥ 235.0 billion (Actual for the fiscal year ending March 31, 2008: ¥ 169.5 billion (estimate))
Income before taxes and special items	¥ 200.0 billion (Actual for the fiscal year ending March 31, 2008: ¥ 156.5 billion (estimate))

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