The global economy remains in recovery mode, having bottomed out after the slump induced by the 2008 global financial crisis. In emerging markets such as China and India, which continue to record higher growth rates than industrialized countries, there is strong demand for funds as these nations invest in infrastructure and industry. Along with this, there is a growing number of investment opportunities and business chances for this division.

Adopting an industrial finance perspective, the Asset Finance & Business Development Division focuses on three main fields: (1) asset management business, (2) leasing business, and (3) buyout investment business. The division provides risk capital to industry, and varied investment opportunities to investors. In this way, the division functions as a financial intermediary.

In the asset management business, MC subsidiary Alternative Investment Capital Ltd. and Development Bank of Japan Inc. established a new fund to invest in Asian private equity funds. Looking ahead, we will work to reinforce and develop our asset management business through this fund, along with structuring and selling other funds matching investor needs.

In the leasing business, results are improving at MC affiliates Mitsubishi UFJ Lease & Finance Company Ltd. and Mitsubishi Auto Leasing Holdings Corporation. Furthermore, in the aircraft leasing business, wholly owned subsidiary MC Aviation Partners Inc. is working to build up prime assets to capitalize on the tailwind created by recovering passenger demand.

Real estate transactions in Japan plunged in the wake of the global financial crisis and have been slow to recover amid an anemic economy. In the year ended March 2011, we finally saw signs that the market had bottomed out. That said, the impact of the Great East Japan Earthquake on the real estate market is complex and careful observation will be required over some time in many respects.

This division leverages MC's access to a broad range of industries and an extensive global network to provide customers with sophisticated solutions in the construction and real estate fields, as well as develop value-added real estate in Japan and overseas.

In July 2010, we sold an office building in the City of London known as "Bow Bells House" to a European investor. Developed by MC and its partners, this office building is a prime example of a successful real estate development that won recognition as an institutional-grade investment even amid the market uncertainty caused by the global financial crisis.

In Japan, subsidiary Mitsubishi Corporation Urban Development, which focuses on developing and managing urban commercial real estate, leased a retail building from Musashino-shi Public Corporation, after a major department store exited, and reopened it as "coppice KICHIJOJI" in October 2010 following a major renovation.

The seaborne container trade in and out of Japan began to recover in the year ended March 2011 to levels seen before the financial crisis. This market dropped temporarily following the impact of the 2008 collapse of Lehman Brothers, after having risen through the year ended March 2008.

The Logistics Division leverages the MC Group's integrated global network of operating bases to provide comprehensive and integrated logistics services. It has produced consistent results in three main fields: (1) logistics business, (2) dry bulk business, and (3) insurance business.

As a member of the Industrial Finance, Logistics & Development Group, the division can integrate financial elements to create logistics finance business models unique to a trading company like MC.

In the logistics business, MC subsidiary Mitsubishi Corporation LT, Inc. is engaged in ship ownership and operation of car carriers as well as warehousing and transportation in Japan and overseas, and integrated international logistics services. With these services, it meets various client needs.

There is an emerging sense that the Japanese real estate market has bottomed out from a slump following the global financial crisis. Investors are once again seeking listed REITs and private real estate funds that generate stable earnings. The Japanese real estate market is valued at ¥2,200 trillion, yet the securitized sector of this market still represents a mere 1% or so. Such a low figure has aroused expectations that it can grow to account for 5% of the overall market in Japan, as it does in the U.S.

The Real Estate Investment & Management Unit was established on October 1, 2010 to promote the real estate business as a finance business since it straddles all of the Industrial Finance, Logistics & Development Group's divisions. The new unit integrates the real estate-related businesses and funds of the three existing business group divisions, Asset Finance & Business Development Division, Development & Construction Project Division, and Logistics Division as well as related personnel. Reporting directly to the Group CEO, the unit will manage the real estate finance business with greater flexibility as a new organizational body. The new unit will develop and manage a portfolio through acquisitions and medium- to long-term holding of revenue-generating real estate using internally generated funds. It will also create and manage REITs and private funds utilizing third-party financing through a portfolio management subsidiary. Going forward, the unit will expand and enhance its business base in Japan, while at the same time building a business overseas to connect investors in Japan and elsewhere with real estate mainly in China and the U.S.