Sumitomo Realty is a pioneer in the Japanese market in condominium development for sales. The Company established its condominium sales business earlier than almost all of its competitors. The Company is building attractive condominiums in good locations and working to raise its brand value.

Sumitomo Realty’s condominium operations are centered in Japan’s six largest urban areas-the Tokyo metropolitan area, Osaka/Kobe, Sapporo, Sendai, Nagoya and Fukuoka. Moreover, in recent years we have enhanced our presence in other major cities, such as Niigata and Hiroshima. The Company develops and sells about 5,000 units a year.

Over the past decade, we have been one of the leading suppliers of condominium units nationwide. This strong position is the result of our central urban strategy, which we implemented ahead of competitors, and our aggressive approach to large-scale and high-rise condominiums. Our landmark exterior designs, the rich array of common facilities that is made possible by the scale of the buildings and elegant entrances make our condominiums sought after by a wide range of consumers with diverse lifestyles. As a result, our high operating margin is at the top of the industry.

The risk of market fluctuations is a critical factor in the condominium business. Consequently, the Company’s policy is to offer a stable supply of condominiums and to enhance the Sumitomo Realty brand through the ongoing sale of high-quality units. In the years ahead, the Company will continue striving to maintain its strong position and further expand its business.

Conditions in the condominium market, which accounts for more than 90% of our sales in this segment, continued to be sluggish, and the number of new units supplied in the Tokyo metropolitan area fell to less than 50,000 during the year. In particular, the percentage of units sold substantially declined in the third quarter. However, from the fourth quarter signs of market recovery could be seen, as consumer purchasing motivation improved due to the decline in mortgage interest rates and an effective tax reduction brought about by revisions to the tax system. Consequently, the number of units sold began to increase, principally properties in favorable locations.

In this environment, the number of condominium units, detached houses and land lots delivered increased by 265 from the previous year, to 4,008. In addition, the number of condominium units sold was up by 638, to 3,269.

As a result, revenue from operations was down 1.2%, to ¥191.2 billion, and operating income fell 28.1%, to ¥30.7 billion. While the total number of condominium units, detached houses and land lots delivered increased, as a consequence of the recording of a large number of highly profitable large-scale condominiums in the previous fiscal year, the average price per unit and the operating margin both decreased, and we recorded declines in both revenue and profit.

In the March 2010 fiscal year, we plan to deliver a total of 4,300 condominium units, detached houses and land lots, an increase of 292 year on year. Also, of the 4,200 condominium units and detached houses that we expect to deliver in the March 2010 fiscal year, approximately 15% had already been sold at the end of March 2009 (30% in the previous fiscal year). Accordingly, we plan to continue working to bolster our sales system and to promote sales.

As a result, in the March 2010 fiscal year we are forecasting revenue from operations of ¥210.0 billion, up 9.8%, and operating income of ¥21.0 billion, down 31.7%. This decline in operating income is attributable to the establishment of conservative profit margins due to the lack of transparency in the future operating environment.