MITSUBISHI ESTATE Annual Report 2014

source of future growth and profitability. To do so, our course of action will be to continue with our current strategies, such as the redevelopment of the Daimaruyu area and the expansion of our overseas property portfolios. In overseas operations, in particular, we will take steps to achieve our goal of increasing the contribu-tion to total operating income by the International Business to 20% by fiscal 2021. To that end, we will be accelerating business development and seeking out joint investment partners based on our collaborations with Group companies, such as Rockefeller Group, Inc., of the United States.Under the medium-term management strategies, we will be proceeding with large-scale investments, primarily in the redevel-opment of the Daimaruyu area and the International Business. Consequently, achieving a sound balance between investments and our financial position will be a key point in our operations. I believe it will be a period where our accumulated know-how, including portfolio management, will be strongly tested.To prepare for the implementation of the medium-term management strategies, we revised our organizational structure as of April 1, 2014, merging the previous Commercial Property Development and Investment Group into the Office Building Group. This reorganization unifies the know-how and informa-tion accumulated by our management property development and turnover property development businesses related to asset management, development, leasing, and property management (PM). In addition, we set up departments to manage individual areas of the International Business.Aim and Outline of New Medium-Term Management Plan (FY 2015–FY 2017)Business conditions in Japan have been favorable since the second half of the fiscal year ended March 31, 2014. Against a backdrop of improved corporate performances, office leasing fees and occupancy rates are on the rebound. In the condo-minium market, the reaction to the demand rush ahead of the hike in the consumption tax was limited, and sales have trended upward because of expectations that real estate values and interest rates will rise. The J-REIT market is also recording growth because of the continued influx of investment funds. Furthermore, positive signs have emerged in the external envi-ronment, such as the awarding of the 2020 Summer Olympic and Paralympic Games to Tokyo.Taking into consideration the business environment and the steady progress with the redevelopment of the Daimaruyu area, Mitsubishi Estate has formulated new medium-term manage-ment plan covering the three-year period starting in April 2014. The underlying theme of the plan is achieving an increase in corporate value over the term.Under the current medium-term management plan, we will not achieve significant increases in growth potential or profitability. We are expecting this result because of the higher initial costs related to the completion of several large-scale buildings, such as amortization expenses, and due to lower leasing income related to the closing of buildings prior to the start of new redevelopment projects. Therefore, the impact of the current medium-term management plan will not begin to emerge until fiscal 2018. Up until that point, we will aim to steadily build up the fundamental strengths that will be the EBITDA / Operating Income EBITDA Operating IncomeTo Our Stakeholders2001200220032004200520062007200820092010Millions of yen 16MITSUBISHI ESTATE CO., LTD. 0200,000100,00050,000250,000300,000150,000First Stage of the Marunouchi Redevelopment Project (CY 1998–2007)