In the construction business, Sumitomo Realty's business consists of the construction of custom homes and house remodeling. Our construction operations are order based and do not require substantial amounts of capital.

REMODELING

In 1996, Sumitomo Realty launched the Shinchiku Sokkurisan Full Remodeling Package. This product addresses the concern that remodeling can sometimes be more expensive than rebuilding in Japan due to the risk of cost overruns. With Shinchiku Sokkurisan, a house can be fully remodeled at half the cost and in half the time required to rebuild it. And because Shinchiku Sokkurisan uses less materials, it is also environmentally friendly. We were the first major real estate company to offer this type of product, and Shinchiku Sokkurisan has been well received in the marketplace. Cumulative sales have surpassed 50,000 units, and we anticipate continued growth in Shinchiku Sokkurisan sales in the years ahead.

CUSTOM HOMES

In 1995, Sumitomo Realty launched the American Comfort line of high-quality, low-cost Western-style homes in Japan using the know-how that the Company acquired in building and selling homes constructed with the two-by-four method in California.

In April 2003, we launched the J-Urban home design, which combines the excellent security features of condominiums with the superior ventilation and lighting of detached houses. J-Urban has been highly evaluated in the marketplace and has received a Good Design Award from the Japan Industrial Design Promotion Organization. In March 2009, we commenced sales of J-URBAN TRAD, which is the latest product in the J-Urban series and offers environmentally friendly functions, such as solar electric power systems, and the aesthetic sense and functionality of traditional Japanese houses.

In Shinchiku Sokkurisan remodeling operations, accompanying the rapid deterioration in business sentiment, orders fell by 273, to 7,051, but deliveries increased by 134, to 7,090.

In custom home operations, in a challenging operating environment, orders increased by 7 year on year, to 1,687 units, while deliveries increased by 117, to 1,747 units.

Due to an increase in unit prices for both custom homes and Shinchiku Sokkurisan, total sales of these two businesses rose 6.5%, to ¥137.8 billion.

On a consolidated basis, including the results of such companies as Sumitomo Fudosan Syscon Co., Ltd. and Sumitomo Fudosan Reform Co., Ltd., revenue from operations rose 2.3%, to ¥160.1 billion, and operating income was up 27.7%, to ¥13.0 billion, meaning we recorded higher revenue and profit for the eighth consecutive year. Breaking down revenue from operations, Shinchiku Sokkurisan contributed ¥88.0 billion, custom homes ¥49.8 billion and other businesses ¥22.3 billion. All shares held in Universal Home, Inc. were sold and from the third quarter it is no longer within the scope of consolidation.

In the March 2010 fiscal year, we are targeting 8,800 orders—7,100 for Shinchiku Sokkurisan and 1,700 for custom homes. We will continue to expand our operations, focusing on Shinchiku Sokkurisan, while simultaneously working to enhance operating measures.

Consequently, we are targeting revenue from operations of ¥162.0 billion, up 1.2%, and operating income of ¥14.0 billion, up 7.9%, for the ninth consecutive period of increased revenue and profit.