Overview of Operating Performance during the Fiscal … I-4. Investment and Interest-Bearing Debt (Billions of yen) Debt-to-equity ratio 2.1 times 231.7 2.3 times 2.3 times 268.9 293.0

Copyright © 2005 NTT Urban Development Co. All rights reserved.

W e c r e a t e h a r m o n y .

Overview of Operating Performance during the Fiscal Year Ended March 31, 2007

May 2007NTT Urban Development Corporation

1

I. Overview of the Fiscal Year Ended March 31, 2007

2

I-1. Financial Highlights of the Fiscal Year Ended March 31, 2007

Net sales

(Millions of yen)

Category

－

Year Ended March 31, 2007

Change from Previous Term

Amount Higher than Forecast

128,215 17,382 15.7% 1,215 1.0%

Operating income 25,091 3,374 15.5% 791 3.3%

Recurring income 22,938 4,591 25.0% 638 2.9%

Net income 1,594 14.0% 595 4.8%

Operating expenses

Other income

Other expenses

12,995

Extraordinary income

Extraordinary expenses

Corporate taxes, etc.

14,007 15.7%

－

－

－

－

－

1,263 215.5%

46 1.2%

(3,800) (92.5%)

(1,855) (56.4%)

1,051 13.5%

Note: Forecast figures for the year ended March 31, 2007, are as of the interim announcement on November 1, 2006.

103,124

1,850

4,003

306

1,432

8,816

Overview of Performance and Income◆ During the year, consolidated net sales, operating income, recurring income and net income were all higher, both as compared with the

preceding term and in comparison with our forecasts.◆ Net sales, operating income, recurring income and net income were all historic highs.

Year Ended March 31, 2006

110,833

21,716

18,346

11,401

89,116

586

3,956

4,107

3,287

7,765

Forecast for Year Ended March 31,

2007

127,000

24,300

22,300

12,400

－

－

－

－

－

－

3

I-2. Performance by Segment (Net Sales and Operating Income)

Note: Before the elimination of intra-segment transfers

2006/3Actual

2007/3Actual

＋7,823（10.1%）

＋9,136（38.8%）

△431(△3.1%）

＋17,382 (15.7%）

Others13,956

Residential property sales

23,543

Leasing77,488

110,833

128,215

Others13,524

Residential property sales 32,680

Leasing85,312

Others 1,001Residential

property sales 4,503

Leasing19,773

21,716

Others 951

Residential property sales 5,228

Leasing23,184

25,091

＋3,411（17.3%）

＋725（16.1%）△49(△5.0%)＋3,374 (15.5%）

2006/3Actual

2007/3Actual

25.5%

19.1%

7.2%

27.2%

16.0%

7.0%△0.1%

△3.1%

1.7%

19.6% 19.6%0.0%

◆ In the leasing business, net sales increased 10% and operating income grew 17.3%, owing to an increase in the number of new buildings and higher sales and income from pre-existing buildings.

◆ In the residential property sales business, net sales grew 38.8% and operating income rose 16.1%, as the number of condominium sales increased.

2006/3 Actual 2007/3 Actual

Residential property sales

Leasing(Millions of yen)

(Millions of yen)

Others

Total

Net Sales Operating IncomeMargin

Operating Income

4

115.7 125.1

316.3

360.5

96.1

111.6

I-3. Balance Sheet Highlights

(Billions of yen) Total Assets

543.7

Liabilities and Net Assets

543.7581.8

Current liabilities

Long-term liabilities

Net assets

◆ Total assets were up ¥38.0 billion, due to capital investment of ¥48.5 billion and a ¥42.2 billion increase in inventories (stock of land for residential property sales business).

◆ Liabilities were up ¥28.6 billion, owing mainly to a ¥24.1 billion increase in interest-bearing debt.

Note: “Net assets” indicated as of March 31, 2006, is the total of the “shareholders’ equity” and “minority interests” sections, prior to the application of the Accounting Standard for the Disclosure of Net Assets.

・投資有価証券 204・投資有価証券 297

13.2

74.4

194.4

116.55.0

249.6

105.25.2

115.10.5

0.0

124.70.2

0.0

60.7 50.5

436.4412.5

94.870.4

0

100

200

300

400

500

600

March 31, 2006 March 31, 2007

434.7312.2

3.4101.7

14.0

1.7

410.7326.9

3.876.3

0.3

1.8

581.8

Property and equipment, intangible assets

Current assets

March 31, 2006 March 31, 20070

100

200

300

400

500

600(Billions of yen)

・Interest-bearing debt (long-term)

・Deposits from tenants・Accrued employees'

retirement benefits

・Notes and accounts payable, trade

・Interest-bearing debt (short-term)

・Shareholders' equity・Valuation and translation

losses・Minority interest

・Acquisitions of fixed assets・Buildings and structures・Machinery and vehicles・Land・Construction in progress

・Intangible assets, net

・Acquisitions of fixed assets・Buildings and structures・Machinery and vehicles・Land・Construction in progress

・Intangible assets, net

Investment, etc.

・Interest-bearing debt (long-term)

・Deposits from tenants・Accrued employees'

retirement benefits

・Inventories 40.4 ・Inventories 82.7

・Investment securities 29.7 ・Investment securities 20.4

21.743.4

・Notes and accounts payable, trade

・Interest-bearing debt (short-term)

・Shareholders' equity・Valuation and translation

losses・Minority interest

5

I-4. Investment and Interest-Bearing Debt

(Billions of yen)

Debt-to-equity ratio

2.1 times

231.7

2.3 times 2.3 times

268.9293.0

Consolidated Interest-Bearing Debt

Note: The account items “current portion of long-term debt” and “corporate bonds (must return within one year)” are included, respectively, in “long-term debt”and “bonds.”

Short-term borrowings

社債

長期借入金

Investment

54.6

48.5

◆ Principal items included in the investment amount of ¥48.5 billion are ¥11.4 billion for Shijo Karasuma, ¥9.5 billion for the Otemachi Redevelopment Project and ¥4.1 billion for the UD Midosuji Building.

◆ Compared with one year earlier, consolidated interest-bearing debt was up ¥24.1 billion, to ¥293.0 billion. The debt-to-equity ratio was 2.3 times.

26.0

Investment amount

Depreciation and amortization

23.8 23.8 23.6

0

20

40

2005

189.9 207.6242.9

31.826.810.034.5

7.8

42.2

0

100

200

300

March 31, 2005 March 31, 2006 March 31, 2007

(Billions of yen)

2006 2007

Corporate bonds

Long-term debt

(Years ended March 31)

6

Category

Cash flows from operating activities

Year Ended March 31, 2007

Year-on-Year Change

Year Ended March 31, 2006

(5,076) 22,243 (27,320)

21,812

23,657

(42,281)

8,439

(9,992)

19,166

23,828

(25,108)

8,751

(2,875)

2,646

(170)

(17,172)

(311)

(7,117)

(43,117) 818

Cash flows from investing activities (32,995) (45,157) 12,162

Cash flows from financing activities 20,823 32,214 (11,390)

Free cash flow (38,072) (22,913) (15,158)

Cash and cash equivalents, end of year 2,255 19,503 (17,248)

(43,936)

24,119 (13,038)37,157(3,290) 1,641(4,931)

I-5. Cash Flows(Millions of yen)

(Restated) Income before income taxes and minority interests

(Restated) Depreciation and amortization expenses

(Restated) (Increase) in inventories

(Restated) (Decrease) in notes and accounts payable, trade

(Restated) Income taxes paid

(Restated) Purchases of property and equipment

(Restated) Net increase in borrowings(Restated) Dividend payments

7

2.7%3.4%

8.4%

0.9%

4.2%

11.1％

2.1%

4.3%

8.5%

01/02 04/02 07/02 10/02 01/03 04/03 07/03 10/03 01/04 04/04 04/07 10/04 01/05 04/05 07/05 10/05 01/06 03/06 06/06 09/06

I-6. Vacancy Rates

Note: Vacancy rates that historically were calculated on the first day of the following month are now calculated on the final day of the current month, as of March 2006.

0.0

2.0

4.0

6.0

8.0

10.0

12.0(%)

Five wards of central Tokyo(Miki Shoji data)Five wards of central Tokyo(NTT Urban Development)Nationwide(NTT Urban Development)

12/06 03/07

8

NOI (nonconsolidated)

Return on equity (ROE)

Dividends over net assets (DOE)

Payout ratio

Net worth ratio

Debt-to-equity ratio

¥50,387 million

10.8%

2.7%

25.3%

21.5%

2.3 times

¥47,237 million

10.1%

2.9%

29.1%

21.3%

2.3 times

I-7. Major Management Indicators

Indicator Year Ended March 31, 2007

Notes: 1. All of the above-stated management indicators, except NOI, are on a consolidated basis.2. NOI = Net property rental income for the leasing business + Depreciation and amortization; ROE = Net income ÷Average shareholders’ equity during the year;

DOE = Dividends paid ÷Average net assets during the year; Payout ratio = Dividends paid ÷Net income; Net worth ratio = Shareholders’ equity at year-end ÷Total assets at year-end; Debt-to-equity ratio = Interest-bearing debt at year-end ÷ Shareholders’ equity

Year Ended March 31, 2006

9

II. Forecast for the Year Ending March 31, 2008, and the Status of Business Initiatives

10

II-1. Consolidated Results Forecast for the Year Ending March 31, 2008

Net sales

Items Year Ended in March 2007 Change

１３８.０ ＋９.７

Operating income ２８.０ ＋２.９

Recurring income ２４.５ ＋１.５

Net income ＋１.０１４.０

＋７.６％

＋１１.６％

＋６.８％

＋７.７％

Forecast for the Year Ending in March 2008

１２８.２

２５.０

２２.９

１２.９

Change (%)

◆ Accounting the robust real estate market, aggressively advance our operations in the year ending March 31, 2008.

As in the year ended March 31, 2007, aim to set new records for net sales and income.

(Billions of yen)

11

II-2. Consolidated Results Forecast, by Segment, for the Year Ending March 31, 2008

leasing business ＋４.２ ＋５.０％

residential property s a l e s b u s i n e s s ＋６.４ ＋１９.６％

△０.５ △３.９％

＋２.４ ＋１０.４％

＋ ０.６ ＋１２.９％

８５.３

３２.６

１３.５

２３.１

５.２

０.９ △０.０ △５.４％

８９.６

３９.１

１３.０

２５.６

５.９

０.９

◆ Secure revenue and income increases in the leasing business and the residential property sales business.

Items Year Ended in March 2007 ChangeForecast for the Year

Ending in March 2008 Change (%)

(Billions of yen)

Net sales １３８.０ ＋９.７ ＋７.６％１２８.２

Others

leasing business

residential property s a l e s b u s i n e s s

Others

Operating income ２８.０ ＋２.９ ＋１１.６％２５.０

12

II-3. Development Business

◆ Shijo Karasuma in Kyoto◆ Chain redevelopment project in Otemachi

(First-phase redevelopment)◆ Acquisition of real estate from NTT West◆ Acquired a part of UD Midosuji Building and

adjoining space◆ Telwel Yokohama Building◆ Participation in bidding on A, B and C blocks

at north exit of Osaka Station (North Yard),and others

◆ Such factors as participating the Osaka Station North Yard project will raise our investment level to around ¥55.0 billion in the year ending March 31, 2008.

Fiscal 2006(Billions of yen)

Fiscal 2007◆ A, B and C blocks at north exit of Osaka Station

(North Yard)◆ Chain redevelopment project in Otemachi (First-

phase redevelopment), and others

Debt-to-equity ratio:2.3 times 2.3 times 2.56 times

Owing to such factors as a higher investment amount,the debt-to-equity ratio will rise temporarily.

Investment

48.5

55.054.6

30

35

40

45

50

55

60

FY2005 FY2006 FY2007(Forecast)

13

50

55

60

65

70

75

80

85

90

95

100

2005年度 2006年度 2007年度計画

0

5

10

15

20

25

30

II-4. Leasing Business

While improving utilization rates, revise rents in line with market

changes to expand leasing revenues. Our new SPC should also contribute to

higher leasing revenues.

Raise performance at both pre-existing and new properties

19.7

23.125.6

77.4

85.389.6

+7.8+4.2

（+2.0）

◆ Revise rents in line with trends in the market for existing buildings, eliminate vacancies, and boost leasing revenues through an on-balance-sheet special-purpose company etc.

Leasing profit

Leasing revenue

(Billions of yen)Leasing profitLeasing revenue

Existingproperties

New properties, etc.

FY2005 FY2006 FY2007 (Forecast)

14

II-5. Residential Property Sales Business

0

10

20

30

40

50

60

2005年度 2006年度 2007年度計画

0

2

4

6

30.0%67Chiyoda-ku, TokyoParkhouse Sanbancho

60.0%40Saitama, Saitama Prefecture

Wellith Garden Urawa Kishimachi

65.0%163Suita, Osaka Prefecture

Wellith Geo Senri-Satakedai

60.0%267OsakaWellith Uehonmachi Laurel Tower

100.0%37Minato-ku, TokyoWellith Azabu Mamiana

Percentage of Total

Units Completed

LocationProject

566 670 Approx. 750Condominiums soldWellith Azabu MamianaWellith Uehonmachi Laurel Tower

◆ Plan to continue increasing our sales volume, with the aim of further entrenching the Wellith brand.

+6.4

Major Projects Completed in FY2007

Overview of Projects in FY2007

○ Progressed steadily on site acquisition and development projects○ In addition to standard condominiums, sold subdivided land and sold

entire blocks (whole buildings) according to usage and site characteristics, securing additional sales

+9.1

5.2

23.5

32.6

39.14.5

5.9

(Billions of yen)Residential Property

RevenuesResidential Property

Income

Leasing profit

Leasing revenue

FY2005 FY2006 FY2007(Forecast)

15

◆ Revise rents in line with market trends, and actively promote development and condominium projects

◆ Strengthen our real estate solutions for the NTT Group・Promote consulting sales that make the most effective use of NTT Group real estate・Strengthen internal structures to propose optimal solutions, such as employing fund schemes・Aggressively develop rental condominiums・Expand property management activities through newly established NTT Urban Development

West BS Co. and other property management subsidiaries

◆ Enhance our management infrastructure・Form an internal control (J-SOX) system (newly establish an internal control documentation

department)⇒ By documenting business processes, expand BPR, with a view to enhancing corporate value

・Create training programs in line with commencement of new graduate recruitment

II-6. Initiatives to Boost Future Results