Japan and the world experienced turbulent times in 2011, facing challenges including the Great East Japan Earthquake, the Fukushima Dai-ichi nuclear accident, and the sovereign debt crisis in Europe. Japan has reached a turning point requiring comprehensive reform of postwar systems, yet inability to make radical changes is driving up the budget deficit, and the cost of earthquake recovery will only exacerbate this trend. Confidence in the yen remains solid thanks to the high level of Japanese government bonds held by domestic investors and a current account surplus, but if reforms are not made Japan will enter a danger zone in a few years, and its government-bond yields may inevitably rise.
Meanwhile the earthquake has triggered public debate on future visions for our cities, focusing attention on disaster-resistant, environmentally responsible urban development capable of attracting people, goods, and finance. The key to the next phase of development lies in harnessing public-private partnerships and bold, sweeping reforms to formulate and implement new national and urban growth strategies.
In 2006, well before the 2008 global financial crisis, Mori Trust Group embarked on the third stage of its corporate history by reorganizing itself into three divisions dealing with real estate, hotels & resorts, and investment. Many years of experience in corporate management helped us envisage changes in the business environment and restructure the Group to strengthen its asset and business portfolios. Allow me to recap the three stages of our corporate history.
The first stage was from 1970 to 1993, when MORI BUILDING DEVELOPMENT CO., LTD. (which changed its name to MORI TRUST CO., LTD. in 1999) was a core member of the Mori Building Group dealing with short- and medium-term projects, while long-term developments were handled by MORI BUILDING CO., LTD. At that time, Mori Building Group was managed by three people: Founder Taikichiro Mori was CEO; former Mori Building Chairman Minoru Mori was in charge of development and marketing; and I was responsible for finance and administration.
The second stage ran from 1993 to 2005, when I became CEO of MORI BUILDING DEVELOPMENT and MORI TRUST HOTELS & RESORTS CO., LTD., and Mori Trust Group took its current form. During this stage, which followed the bursting of Japan's bubble economy, we strengthened our financial position by liquidating or turning around nonperforming assets. We also acquired sites in Tokyo's Marunouchi and Shiodome districts and began major urban development projects, constructing a competitive real estate portfolio even as Japan struggled with recession.
The third stage has seen the establishment and enhancement of business structures as our key Real Estate and Hotels & Resorts Divisions have grown to join the top players in the industry. This stage has also been a period for linking and utilizing a wealth of management resources and expertise built up over many years to create and develop new business opportunities suited to the times. Placing the Real Estate and Hotels & Resorts Divisions at the core of our operations, we aim to develop our business in directions that contribute positively to society in many ways.
Mori Trust Group balances growth, profitability, and stability in the management of its operations. Amid increasing economic turmoil over the last three years, we have focused particularly on stability. Having strengthened our financial position through measures such as raising our shareholders' equity ratio, we are now in a position to invest aggressively at any time.
The Real Estate Division will use the first-hand experience it gained with business continuity plans (BCP) and district continuity plans (DCP) through its Sendai operations at the time of the Great East Japan Earthquake to help achieve a new vision for urban development, especially by applying this expertise to two projects in Tokyo's Kyobashi district.
The Hotels and Resorts Division will utilize Group hotel resources, which embrace facilities of diverse sizes, target markets, and modes of operation, in multifaceted ways to create and implement new business models for upcoming hotel projects in Kyobashi and elsewhere, and for existing hotel operations.
The Investment Division, meanwhile, will monitor economic fundamentals around the globe to examine domestic and overseas investments from a mid- to long-term perspective, especially business opportunities that leverage a strong yen and low interest rates.
The key to success in the current economic environment is providing appropriate and well-timed products via up-to-date business models. With an eye to the changing times, Mori Trust Group will place its three divisions at the core of its operations, but without limiting the scope of its business activities, as it continues to contribute positively to society across a broad range of fields.
Our management philosophy is based on Trust, Continuity, Shared Rewards, and Social Responsibility. The word "Trust" is in our corporate name because it reflects our commitment to contributing to society over the long term, thus proving ourselves worthy of the trust placed in us by society. As we grow hand-in-hand with our customers and partners by creating mutually beneficial business models in a variety of spheres, we also aim to build businesses and systems that benefit our society as a whole.
Building trust has become a key issue throughout Japan since last year's earthquake and nuclear accident, and we believe that the mission of Mori Trust Group is to create an outstanding business that meets society's expectations, and to operate in ways that gain people's trust. We will continue striving to earn the trust of our customers and business partners as well as local communities and society as a whole.