Financial Results for the First Six Months of the Fiscal Year 2018
Tosei
Corporation
トーセイ株式会社
東京証券取引所第一部
証券コード：8923
Tokyo
Stock Exchange, First
Section Code : 8923
シンガポール証券取引所
証券コード：S2D
Singapore
Exchange, Mainboard
Code : S2D

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

I. Overview of Results for the First Six Months Ended May 31, 2018

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

2

FY2018 First Six Months / Full Year Forecasts - Highlights◆ Revenue ¥32.5 billion (up 23.4% yr/yr), Profit for the Period ¥4.4 billion (up 13.2% yr/yr).
◆ Large size property sales in Revitalization business drove the Company’s sales performance.

Achieved more than 66% of the Profit forecast.
(¥million)（百万円）

70,00060,00050,000

4Q
3Q
2Q
1Q

【 Revenue 】(¥million)（百万円）

67,830 (forecast)
10,00057,754

49,81815,776【Operating Profit】10,946 (forecast)
9,279
456

(35,310)8,484

15,6186,000

32,5203,548

20,000(¥million)（百万円）

13,527

14,677FY2016'16/11期

FY2017'17/11期

57,754
49,81830,0000FY2018'18/11期

341(Other)

0
4,637 (Other)
2,802
6,237

2,475
2,914
40,268166 (Other)
1,346 (Fund)

8,613

17,585

6,000

4,341

FY2017'17/11期

FY2018'18/11期

2,000

6,511
2,361

0

141
951

9,833

3,658

4,150

FY2016'16/11期

FY2017'17/11期

FY2018'18/11期(¥million)（百万円）【Profit for the Period】

8,000

14.1%

ROE
14.4%

278
1,273
2,581

2,000

5,547
168
636

6,887
204
707
1,246

-2,0007,84553(Other)
4,000

399
1,823

13.7% (forecast)

6,699(forecast)12%(2,248)
2,248

4,452
8%

2,132

1,604
1,431
4%

2,000

4,227

4,001

16%

6,155
6,000

3,674

4,000

0
'18/11期
2Q(累計)FY2018
2Q

3,914

1,408

-1,131(internal transaction) -1,388(internal transaction) -580 (internal transaction)'17/11期
FY2017

3,828

8,000

25,809'16/11期
FY2016

9,279

2,389

0

-10,000

3,326
2,198

＜ Segment Operating Profit＞

5,197

13,138FY2016'16/11期

Other
その他
Property
Management
不動産管理事業(¥million)
（百万円）
Fund
and Consulting
ﾌｧﾝﾄﾞ・ｺﾝｻﾙﾃｨﾝｸﾞ事業
12,000
不動産賃貸事業
Rental
不動産開発事業
Development
不動産流動化事業
Revitalization
10,00032,52020,00010,0004,127

18,310＜ Segment Revenue＞

60,00040,000

6,000

2,545

(3,527)

4,000

2,000

4,005
2,329
5,324

527
2,664

4,000

14,21070,00050,000

6,887

247
963

9,049

11,682

10,000
0

8,000

2,413

30,00017,1288,450(4,060)10,67940,00010,000753
2,839【Profit Before Tax】
10,038 (forecast)

9,833

1,148

8,000

(¥million)
（百万円）

2,611

2,500

2,847

0
-17 -408 (Development) (Other)(Other)-74
FY2016FY2017FY2018-1,860 (internal transaction)-1,661(internal transaction) -960 (internal transaction)'16/11期'17/11期'18/11期'16/11期'17/11期'18/11期
2Q(累計)
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.
FY2016FY2017FY2018
2Q

ｃ

0%

3

Overview of Consolidated Financial Results(¥million,%)yr/yr change

FY2018 2Q

FY2017 2Q%%%

26,360100.0

32,520

100.0

6,160

23.4

16,85864.0

21,749

66.9

4,890

29.0

9,501

36.0

10,771

33.1

1,270

13.4

3,402

12.9

3,922

12.1

520

15.3

787

3.0

1,028

3.2

241

30.6

2,614

9.9

2,893

8.9

279

10.7

Other Income

160

0.6

123

0.4

-36

-22.9

Other Expenses

17

0.1

85

0.3

67

384.2

6,241

23.7

6,887

21.2

645

10.3

Revenue
Cost of Revenue
Gross Profit
Selling, General and Administrative Expenses
Expences Related to Property Marketing Activities
Selling, General and Administrative Expenses(Net of Expences Related to Property Marketing Activites)

Operating Profit
Finance Income/Cost (Net)
Profit Before Tax
Income Tax Expense

-384

22.2

5,857
1,925

-375

-

20.0

6,511
2,059

-

9

-

11.2

654
134

-

-

-

Profit For the Period

3,931

14.9

4,452

13.7

520

13.2

Comprehensive Income for the Period

3,938

14.9

4,486

13.8

548

13.9

EPS(¥)

81.43

10.54

12.9

91.97

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

4

Revitalization Business - First Six Months of FY2018◆ A property acquired with completely vacant rooms was sold in a state of full occupancy by leasing, resulting in ahigh profit margin. Also a property acquired in the past from a real estate M&A was sold at a high profit margin.
◆ The number of sales contract of properties to be sold after the third quarter grew steadily.

Revenue / Gross Profit Margin(¥million)（百万円）

Restyling
Restyling
Whole building to general customers
1棟販売(トーセイリート向け)
Whole building to REIT
1棟販売(一般向け)
Gross
Profit Margin
売上総利益率FY2017(whole fiscal year)
35.3%
Gross Profit Margin22.8%

14,00012,00010,00010,939
437

4,000

24.3%

7,009

8,000
6,000

11,338440

10,981259

1Q

FY2018 2Q(first six months)
Gross Profit Margin28.8%

14,425

30%
30.1%

23.2%

25%
20%

9,827

14,31010,897

0

894

2Q

0%

(forecast)

17,948
5,566
4,800
22
37

1Q

5%

2,726

FY2017 1Q
FY2017 2Q
FY2017 3Q
FY2017 4Q4Q '18/11期
FY2018 1Q
FY2018 2Q'17/11期
1Q '17/11期
2Q '17/11期
3Q '17/11期
1Q '18/11期
2Q(\ million)
FY2017FY2018Full Year
Six Months Full Year Six Months

Revenue
Gross Profit
Operating Profit
No. of Sales (Restyling)
No. of Sales (Whole buildings, Others)

Ichikawa-shi
Income-generating Apartment

10%

432
7.3%

Itabashi-ku
Income-generating Building

15%

3,159

6,618

2,000

2Q

35%

114

24.9%

390
10,501

Major Properties Sold

40,268
9,186
7,845
45
58

17,585
5,071
4,227
15
24

39,375
9,023
7,067
26
59

*The gross profit is net of Cost of Revenues including the following write-down amounts under
LCM: FY2017: -5 millions

Musashino-shi

Funabashi-shi

Income-generating Building

Income-generating Apartment

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

5

Development Business - First Six Months of FY2018◆ The Development business’ performance was driven by The Palms Yutenji Master Place which is a first condominium projectin four years.
◆ Sold 45 detached houses in projects such as THE Palms Court Kashiwa-Hatsuishi and THE Palms Court Kamakura-Shiromeguri.

Major Properties Sold

Revenue / Gross Profit Margin
FY2018 2Q(first six months)
Gross Profit Margin
26.0%

Condominium
分譲ﾏﾝｼｮﾝ
Detached Houses / Land Lots / Housing Construction
戸建・宅地・請負
Gross Profit Margin
売上総利益率(¥million)
（百万円）

8,000
FY2017(whole fiscal year)
Gross Profit Margin
18.8%

7,000
6,000

7,847
(note)
Condominium’s
Gross Profit Margin
28.7%

35%
30%

26.8%

5,000

4,000

25%
18.1%

19.1%

20.0%

969

1,175

1,354

1,175

1,354

1,000
969

THE Palms Yutenji Master Place(Total units 89)

THE Palms Court Kashiwa-Hatsuishi(Total units 95 / sold out)

THE Palms Court Kamakura Shiromeguri(Total units 86)

THE Palms Court Koshigaya Lake Town
(Total units 68)

6,559

17.9%

20%

17.3%
(note)
Detached houseand others
Gross Profit Margin
17.5%

3,000
2,000

40%

1,698

15%
10%

766
1,698

766

0

5%

1,287

0%

FY2017 1Q
FY2017 2Q
FY2017 3Q
FY2017 4Q
FY2018 1Q
1Q '18/11期
FY2018 2Q
2Q'17/11期
1Q '17/11期
2Q '17/11期
3Q '17/11期
4Q '18/11期(\ million)

FY2017Six Months

Revenue
Gross Profit
Operating Profit
No.of Sales (Sales in lots)
No.of Sales (Whole buildings)
No.of Sales （Condominiums）

2,144
400
-219
50
-

FY2018Full Year
Full Year Six Months(forecast)

5,197
976
-408
121
-

8,613
2,238
1,408
45
85
-

14,880
3,328
1,657
138
89
2

*The gross profit is net of Cost of Revenues including the following write-down amounts under
LCM: FY2017: -28 millions

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

6

Acquisitions in Revitalization and Development Businesses -Acquisition Amount and Inventories◆ Total acquisition amount (expected disposition values) was about ¥35.0 billion as a result of the acquisition of awide variety of products, such as offices, condominiums, hotels, logistics and detached houses.
◆ Total acquisition amount progressed to about ¥53.5 billion on a contract basis.

Trends in Annual Acquisition Amounts

Breakdown of Inventories(delivery basis and expected revenues)(¥million)（百万円）
70,00066,842
6,956

60,000

6,631

2,808
1,765

50,00045,1682,033
40,000¥80 billion

2,496
880
7,544

Kawasaki-shi
Income-generating Building

Contract Basis
Progress

49,809HIno-shi
Income-generating Apt Building¥53.5 billion(18,499)

4,970
2,202

30,000

戸建・土地（開発）
Detached
Houses, Land (Development)
賃貸マンション（開発）RentalApartment (D)分譲マンション（開発）
Condos(D)
Acquisition Target
物流施設（開発）
Logistics(D)
for FY2018
Hotel
(D)
ホテル（開発）Office,Commercial Facilities (D)オフィス・商業施設（開発）Land,
etc., (Revitalization)
土地等（流動化）
Apt
Building (R)マンション（流動化）
Hotel
(R)
ホテル（流動化）
53,573
Offices(R)
オフィス（流動化）

21,321

5,114
865
1,433

9,576
1,552

16,47220,00035,073
2,076

Acquisition Progress

4,816(delivery basis)

2,541¥35.0 billion

8,160
26,387

Ota-kuEmpty Building

3,769
1,124

Taito-ku
Empty Building

Narashino-shi
Income-generating Building

Breakdown of Acquisition (for first the six months of FY2018)
Office BL

Apartment

Hotel

Logistics

CondosDetached
House,
Land lots

Total

Revitalization

16

16

-

-

-

7

39

Development

-

-

1

1

1

5

8

25,80810,00015,005FY2015'15/11期

FY2016'16/11期

FY2017'17/11期

12,588FY2018 2Q'18/11期(2Q累計)(cumulative)*For more details for inventory expected disposition value please look P13~P14
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

7

Rental Business - First Six Months of FY2018◆ The number of properties owned by Tosei increased to 95 (an increase of 6 properties from the end of the previous year).
◆ Although there were replacements of properties due to acquisition and sales, the profit margin level remained the sameas that of the previous fiscal year.
◆ Rental revenue from non-current assets shares 50% of the total rental revenue.

Breakdown of Properties* Held by Tosei

Revenue / Gross Profit Margin
FY2017（百万円）(¥million)

1,600

FY2018 2Q(first six months)
Gross Profit Margin45.9%(whole fiscal year)
Revenue (Current Assets)
流動資産
Gross Profit Margin
Revenue (Restyling)
Restyling
45.9%
Revenue (Non-current Assets)
固定資産
Gross Profit Margin
売上総利益率

1,482

1,527

1,622

1,605

1,434

1,480

1,400

49.0%

1,000

813

46.1%

400

985

892

46.8%

44.9%

947

659

746

40%

21

21

30%

30

29

22

22

638

605

614

635

753

100

83
60

60

51

52

25

26

0%

57

65

6

5

33

20

12

10

8

7

15

16

18

21

26

25

'13/11'14/11'15/11'16/11'17/11'18/5

10%FY2017 1Q
FY2017 2Q
FY2017 3Q
FY2018 1Q
1Q '18/11期
FY2018 2Q
2Q'17/11期
1Q '17/11期
2Q '17/11期
3Q FY2017'17/11期4Q
4Q '18/11期

55

40

20%

712

95

89

80

50%

200
0

70%

45.9%

42.9%

800
600

Current Assets
流動資産
Restyling
Restyling
Non-current Assets
固定資産

60%

1,200

Office, Commercial Buildings : 39
Apartment : 53
Other : 30

*Only includes income-generating properties(\ million)

FY2017Six Months

Revenue
Gross Profit
Operating Profit

3,010
1,430
1,303

FY2018Full Year Six Months
6,237
2,864
2,581

2,914
1,336
1,246

Full Year(forecast)

6,709
3,304
3,009

Increase and Decrease from the End of the Previous Fiscal Year
New Acquisition
Decrease by Sale
Other

+24
-17
-1

*The revenue includes internal transactions.
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

8

Fund and Consulting Business - First Six Months of FY2018◆ On Dec. 2017, a fund structured by our company acquired large-scale residential property “Kawada-cho Comfo-

Garden” (¥41.5 B) from Urban Renaissance Agency, our company has newly started AM contracts with this property.
◆ The balance of AUM increased to ¥635.2 billion. ( up ¥83.0 yr/yr) Income from AM fees are increasing steadily.

Revenue / Gross Profit Margin

1,200

1,176

800

600

782

FY2017(whole fiscal year)
Gross Profit Margin
90.6%

498

485
180
41
25

400

200

93.4%

（百万円）
(¥million)

600,000
100%

86.9%
90.6%

1,000

95.3%

94.5%

91.3%

Increase and Decrease from the End of the Previous Fiscal Year
Private Funds AM +¥83.0 B (Increase ¥91.5B Decrease ¥8.5B)

FY2018 2Q(first six months)
Gross Profit Margin
94.4%

Brokerage
Fee / Other
仲介手数料･その他
DispositionFee
ディスポジションフィー
AcquisitionFee
アクイジションフィー
AM
Fee
AMフィー
Gross
Profit Margin
売上総利益率(¥million)（百万円)

Balance of Assets Under Management

5
126

687

139
34
54

192

659

60%

104

153

213

238

262

270

295

FY2017 1Q
1Q'17/11期

FY2017 2Q
2Q'17/11期

FY2017 3Q'17/11期

FY2017'17/11期4Q
4Q

217

37 17

365

391

FY2018 1Q
1Q'18/11期

FY2018 2Q
2Q'18/11期

40%

20%

0%

0

(\ million)

FY2017Six Months

Revenue
Gross Profit
Operating Profit*The revenue includes internal transactions.

1,661
1,508
915

552,208

500,000

421,79280%642

CRE*1 ※1
CRE
Private Funds AM
私募ファンドAM
REIT AMAM
REIT

FY2018Full Year
Full Year Six Months(forecast)

2,802
2,538
1,273

1,346
1,270
707

2,715
2,589
1,187

400,000

300,000

200,000

100,000

91,789448,186

635,278
114,097

114,097

124,084※2

300,607

248,028

475,184

98,679170,114

149,349

113,057'13/11

17,434'14/11

0392,114*2

300,643

287,924

29,35836,17745,99745,997'15/11'16/11'17/11'18/5*1 The light blue portion indicates the assets under consulting agreements of CRE. CRE is
methods of investing in and managing corporate real estate efficiently to maximize long-term
enterprise value. By undertaking CRE, Tosei conducts comprehensive consulting services fromthe views of real estate professional.
*2 ¥45 billion was transferred from private funds AM to CRE at the end of November, 2016
after reviewing the management details. For comparison, revenue for the previous fiscal year
(FY2016) are recalculated.
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

9

Property Management Business - First Six Months of FY2017◆ The total number of properties under management increase to 667 (up two properties(スポーツクラブ運営事業等)
yr/yr)◆ Earnings from PM and BM fee, etc. which will ensure stable profits, increased steadily.

Revenue / Gross Profit Margin
FY2017
Repair Works, Commission and Fees (whole fiscal year)
スポット工事・手数料など
Gross Profit Margin
PM / BM Fees
PM・BM報酬など
29.3%
Gross Profit Margin
売上総利益率

1,275

（百万円）
(¥million)

1,200
1,000

1,115
357

1,096
320

FY2018 2Q(first six months)
Gross Profit Margin
30.9%

1,230

1,149
305

The Number of Properties Under Management

1,244

（棟数）

700
60%

416

373

600

328

28.9%

30.1%

30.0%

757

776

844

FY2017 2Q'17/11期
2Q

547

544

500
30.8%

28.2%

400

31.0%
30%

858

857

915

20%

200

FY2017 1Q
1Q'17/11期

546

FY2017 3Q'17/11期
3Q FY2017'17/11期4Q
4Q

FY2018 1Q
1Q'18/11期

667

219

270

276

203

193

196

343

351

351

375

395

391

'13/11'14/11'15/11'16/11'17/11

'18/5

300
200

10%

100

0%

0

FY2018 2Q'18/11期
2Q

665
594

50%
40%

600

0

OfficeBuilding, Others
ビル等(Buildings)

800

400

Condo/
Apt
マンション

Example of Properties Under Management(\ million)

FY2017Six Months

Revenue
Gross Profit
Operating Profit

2,212
652
134

FY2018Full Year
Full Year Six Months(forecast)

4,637
1,356
278

2,475
764
204

5,201
1,483
283

Condominium

Commercial Facility

Hotel*The revenue includes internal transactions.
OfficeCopyright © 2018 TOSEI CORPORATION, All Rights Reserved.
SchoolNursery School10Summary of Balance Sheet (Consolidated) –Assets(¥million)'17/11
Total Assets
Cash and cash
equivalents
Inventories(properties)
Investment properties/ PPE
Other assets

Decrease

Increase'18/2

Decrease

Increase'18/5

122,550+2,125

124,675+10,260

134,935

23,750+1,14824,898+928

25,827TOTAL
Decrease

Increase+12,385A+2,07659,718-10,699+11,140

60,159-8,165+17,448

69,442-18,864+28,588

33,665-139+134

33,659-140+88

33,607

-280

+222

5,416

+540

5,957

+101

6,058

+641

A：Change in inventory
Inventories increased ¥9.7 billion from the end of the previous fiscal year. The increase was attributable to newproperties purchased and construction, etc., which exceeded decreases due to properties sold.
（\ million）

Increase Acquisitions
Factor Construction / Value-added etc.
Decrease Dispositions
TOTAL

1Q

2Q
+12,667+4,780TOTAL+8,843+21,511+2,297+7,077-10,699-8,165-18,864-10,699 +11,140 -8,165 +17,448 -18,864 +28,588

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

11Summary of Balance Sheet (Consolidated) -Liabilities/Equity'17/11

Decrease Increase'18/2

Decrease Increase

Increase

122,550+2,125

124,675+10,260

134,935

Total Liabilities

76,391+303

76,695+8,60485,299Borrowings

67,123-12,814+12,173

66,482-8,715+15,069

72,836-21,529+27,242

Current borrowings

6,449-1,484+3,1408,105-3,686+1,8206,239-5,171+4,961

Non-current
borrowings

60,674-11,329+9,03258,377-5,029+13,248

66,596-16,358+22,280

Other Liabilities

9,268

+944

10,212+2,25012,463Equity46,158+1,821

47,980+1,65549,635Equity Ratio (%)

37.7

+0.8

38.5

-1.7

36.8

Net D/E Ratio

0.94

-0.07

0.87

+0.08

0.95

New Borrowings
Non‐Current → Current Portion
Repayments upon Disposition
Others repayments （refin / maturity, etc.)

New Borrowings
Others（refinace,etc.)
Repayments upon Disposition+12,385

A+8,908+3,195BC+3,476-0.9+0.01

B： Change in Equity(\ million）

Increase
FactorCurrenｔ
Decrease
FactorIncrease
Factor•••Decrease

Total Liabilities /Equity

A： Change in borrowings

Non‐
Current'18/5(¥million)

TOTAL

Decrease
Others repayments （refin / maturity, etc.)
FactorNon‐Current→Current Portion
TOTAL

１Q

２Q
+143
+2,997-474-1,009TOTAL+713+1,107-3,174-512+856+4,105•-3,649-1,522+8,012+1,020+10,898+2,350+18,910+3,370-7,816-515-2,997-12,814 +12,173-1,910-2,010-1,107-8,715 +15,069-9,726-2,526-4,105-21,529 +27,242¥19.7 billion of new borrowings incurred to acquisition of 47 properties (book value ¥21.5 billion).
The repayment of borrowings by sales was ¥13.3 billion.
They resulted in increased of debt balance by ¥5.7 billion from the end of the previous fiscal year.

Total equity increased ¥3.4 billion from the end of theprevious year, reflecting an increase of ¥4.4 billion in
profits as well as the payment of ¥1.2 billion for dividends.

C: Financial Soundness••

Equity ratio is 36.8% (down 0.9 points from the end of theprevious year).
Net D/E ratio is 0.95 times (up 0.01 points from the endof the previous year).
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

12

Inventories -BreakdownBalance of Inventories
As of May 31, 2018

¥69,442million (122properties)

Total Expected
Disposition Value¥110,622million

Breakdown of Inventories
Inventories

Property
type

•
•
•

(¥ million)

Revitalization（ No. ofproperties）

Expected disposition values

Development（ No. ofproperties）

Total
Revitalization

Development

Total expected
disposition value

Office, Commercial
buildings
Condo/
Apt buildings

20,881

(28)

2,690

(4)

23,571

26,7603,779

30,53921,276

(56)

7,706

(5)

28,982

26,79820,53747,335

Hotel

2,786

(1)

4,150

(2)

6,937

4,539

9,352

13,892

Logistics

-

706

(1)

706

-

2,540

2,540

Detached
houses

-

6,711

(18)

6,711

-

11,149

11,149

2,533

5,165

-

5,165

69,442

63,26347,358110,622

Other

2,533

(7)

-

合計
Total

47,478(92)

21,964(30)

The expected disposition values above are based on Tosei’s estimate of revenue corresponding to the properties currently in the inventories. Actual amounts may be vary significantly from the estimates,
due to various factors.
The inventories above represent carrying amount and may increase due to such factors as value-up investments and construction costs.
The condominium buildings and detached houses are counted as each project being one property.

Expected disposition values
Detached Other
5%
Office,Logisticshouses
Commercial
10%2%
buildings
28%
Hotel
Property
12%

Type

Condo/
Apt buildings
43%

Saitama
Chiba 7%
10%

Kanagawa
29%

The 23 wardsof Tokyo
37%

Area

Tokyo (except
the Tokyo's 23
wards)
17%

More than ¥2billion33%

Less than ¥100
million30%

Property
Size
Between ¥1 andBetween ¥100
¥2 billionand ¥500 million
8% Between ¥0.5 and12%¥1 billion
17%CORPORATION, All Rights Reserved.
Copyright © 2018 TOSEI

Note: Detached houses and condominiums are classified by one unit’s price.

13

Inventories -Expected Disposition Values◆ Inventories (expected disposition values) totaled ¥110.6 billion as of May 31, 2018
◆ By property type, Condo / Apt Buildings shares 50%.
(¥million)'08/11'09/11'10/11'11/11'12/11'13/11'14/11'15/11'16/11'17/11'18/5

Office, Commercial
Buildings

60,48731,264

22,251

15,206

18,595

18,497

27,18534,99837,82029,74030,539Condo / Apt
Buildings

14,327

12,84430,58926,62723,47622,70913,881

23,497

39,57344,74947,335

Hotel

―

―

―

―

―

―

―

2,336

4,151

10,123

13,892

Logistics

―

―

―

―

―

―

―

―

―

―

2,540

Detached Houses

―

―

558

3,727

7,701

13,225

15,247

11,184

13,673

11,138

11,149

Other

1,672

479

220

1,021

354

393

4,243

2,348

4,208

4,324

5,165

Total

76,48744,58853,62046,581

50,12754,82560,55774,36599,428100,076

110,622

Balance between inventories and sales volume –There are enough inventories for this fiscal year-(¥million)(beginning-of-period) Inventories *1(A)

Revenue *2(B)

32,592

38,94845,46554,255(B)÷(A)

54%

52%

46%

54%

Revenue *2 ÷(beginning-of-period) Inventories**1 Expected disposition values*2 Sales from the trading business (Revitalization and Development business)'16/11
74,365'18/11(forecast)'17/11
18/1(forecast)
99,428100,076'15/1160,557

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

14

Investment properties and PPE -Breakdown◆ Unrealized profits (after tax) from investment properties and property, plant and equipment stood at ¥14.3 billion.
(¥ million)

Balance of Book Valueas of end of May 2018
Property Type
Office, Commercial Buildings* 1
Condominium*

2

Hotel
Logisticｓ
Land lots, etc.

Investment Properties and PPE

33,498
Balance ofBook Value (A)25,725
4,294
1,761
1,001
716
33,498*1 Includes one property which is partially is a hotel*2 From FY2018 2Q “Logistics” is added to the property type
*3 Calculated by corporation tax rate 33%* Fair values in above is based on the real estate appraisal by Tosei* PPE book value doesn’t include book value of structures attached to the buildings.

Unrealized Gains

21,409No. ofUnrealized
Fair Values (B)Property
Gains (B)-(A)20
39,04913,324
6
6,802
2,508
1
4,224
2,463
2
1,512
510
1
3,319
2,602
30
54,908
Total
21,409 A
Income Tax Expence*3-7065 B
Unrealized Gains (After Tax)
14,344 C (A+B)

Total Capital including unrealized gains (after tax) in above

Changes in Investment Properties and PPE (Book Value)*( ) are the number of properties which have rental income
properties
35物件
（百万円）
(¥million)

As of May 31, 2018

Equity 【A】¥49,635M

Unrealized Gains (after tax)【B】¥14,344M

Total (【A】+【B】)

63,979M

50,00019物件

Per Share

40,000(16)¥1,022.89

30,000¥295.60¥1,318.49

20,00017,097

22物件

25物件

30物件

30物件

(26)

(25)

33,55533,498

30物件

(21)

(18)

22,00441,30541,00020物件
10物件

25,172

物件-10物件

10,000

-20物件
-30物件

0
'14/11'15/11

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.
'16/11'17/11'18/5(Forecast)'18/11（予想）15Borrowings from Financial Institutions◆ There was another large-scale refinance of non-current assets, and the average loan term increased to 17.9 years.
◆ Average annual interest rates on borrowings decrease to 1.12%

Changes in Borrowing Rate / Period(year)（年）

Average
Interest Rate*
平均借入金利
※1 1
Average
Debt Term (Non-current※2
Assets)*2
平均借入期間（固定資産）
Average
Debt
Term(Current
Assets,
平均借入期間（流動資産等） ※2 etc.) *2

Changes in Borrowing Balance
Current Borrowings*3※3
短期借入金(1年内長期借入金を含む）
3
Non-current Borrowings*
※3
長期借入金

72,828(¥million)
（百万円）

20

70,124
67,113

years
17.9年
9,378

16.4年

6,235

9%

66,592

91%

6,445

60,000
15

14.3年
13.6年

48,655

13.1年

40,04240,00010

34,407

10.5年

9,487

5,230

7,315

60,74560,668

years
5.9年
5.3年
5

4.4年

20,000

4.5年

4.4年

39,167
34,812

3.8年
1.95%

27,092

1.73%

1.52%

1.30%

1.16%

1.12%

0
0
'13/11'14/11'15/11'16/11'17/11'18/5'13/11'14/11'15/11'16/11'17/11'18/5*1 The weighted-average rate of borrowing balance of end of each finical year
*3 lease debts are not included
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.
*2 Borrowing period are calculated using the weighted average of period from the date of borrowing until due date of borrowing depending on the borrowing balance.
016Overview of Segment Results (Consolidated) -Revenue and Cost of Revenue(¥ million)

Revenue
Total
Revitalization
Development
RentalFund and Consulting
Property Management
Other
Internal Trancsaction

Cost of revenue
Total
Revitalization
Development
RentalFund and Consulting
Property Management
Other
Internal Trancsaction

FY2017 2Q

FY2018 ２Q

yr/yr Change

%

%

%

26,36017,948
2,144
3,010
1,661
2,212
0
-616

100.0%
68.1%
8.1%
11.4%
6.3%
8.4%
-

32,52017,585
8,613
2,914
1,346
2,475
166
-580

100.0%
54.1%
26.5%
9.0%
4.1%
7.6%
0.5%
-

6,160
-363
6,469
-95
-315
262
166
36

FY20172Q

FY2018２Q

yr/yr Change

%

%

%

16,85812,382
1,744
1,579
152
1,559
0
-558

64.0%
69.0%
81.3%
52.5%
9.2%
70.5%
-

21,74912,513
6,374
1,578
75
1,710
3
-506

66.9%
71.2%
74.0%
54.1%
5.6%
69.1%
2.2%
-

4,890
130
4,630
-1
-77
150
4
52

23.4%
-2.0%
301.7%-3.2%-19.0%
11.9%
-

29.0%
1.1%
265.5%-0.1%-50.5%
9.7%-9.4%

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

17

Overview of Segment Results (Consolidated) -Gross Profit and Operating Profit(¥ million)

Gross Profit
Total
Revitalization
Development
RentalFund and Consulting
Property Management
Other
Internal Trancsaction

Operating Profit
Total
Revitalization
Development
RentalFund and Consulting
Property Management
Other
Internal Trancsaction

FY20172Q

FY2018

%

9,501
5,566
400
1,430
1,508
652
0
-58

FY2017

36.0%
31.0%
18.7%
47.5%
90.8%
29.5%
-

2Q

10,771
5,071
2,238
1,336
1,270
764
162
-74

FY2018

%

6,241
4,800
-219
1,303
915
134
1
-692

23.7%
26.7%
-10.2%
43.3%
55.1%
6.1%
-

6,887
4,227
1,408
1,246
707
204
53
-960

2Q
２Q

yr/yr Change

%

%

33.1%
28.8%
26.0%
45.9%
94.4%
30.9%
97.8%
-

1,270
-494
1,838
-94
-238
112
162
-16

13.4%
-8.9%
459.2%-6.6%-15.8%
17.2%
27.6%

２2Q
Q

yr/yr Change

%

%

21.2%
24.0%
16.3%
42.8%
52.6%
8.3%
32.0%
-

645
-572
1,627
-56
-207
69
52
-267

10.3%
-11.9%-742.2%-4.4%-22.7%
51.9%
38.6%

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

18

Summary of Cash Flow Statements (Consolidated)(¥ million)

FY20172Q (A)Cash flows from / used in operating activities
Profit before tax
Depreciation expense
Increase / Decrease in inventories
Income taxes paid
Other, net
Cash flows from/used in investing activities
Increase / Decrease in PPE
Increase / Decrease in investment properties
Other, net
Cash flows from/used in financing activities
Increase / Decrease in borrowings
Cash dividends paid
Interest expenses paid
Other, net
Increase / Decrease in cash and cash equivalents
Cash and cash equivalent at beginning of period
Effectrateratechangeon cashcash
equivalent
Effectofofexchange
exchangechange
onand
cash
and
cash
Cash and cash equivalent at end of period

2,497
5,857
190
-1,182-2,155
-211
535
-6
-193
734
-1,739-234-1,060
-442
-1
1,293
21,640022,934FY20182Q (B)

-400
6,511
292
-7,344-1,037
1,177-1,723-29-205-1,4874,201
5,714-1,205
-498
190
2,077
23,750-025,827yr/yrChange(B)-(A)-2,898654
102-6,161
1,118
1,388-2,258-23-12-2,222
5,941
5,949
-144
-56
192
784
2,109
-0
2,892

Cash Flows fromOperating Activities¥0.4 billion Decreased
Mainly due to ;・¥6.5 billion of profit before tax
・¥7.3 billion increase in inventories
・¥1.0 billion decrease due to income taxes paid.

Cash Flows used in
Investing Activities¥1.7 billion Decrease
Mainly due to;・¥1.4 billion payment due to acquisition ofsubsidiaries’ stock through M&A

Cash Flows used in
Financing Activities¥4.2 billion Increase
Primarily due to;・¥5.7 billion net increase in borrowings
・¥1.2 billion decrease of cash dividends paid.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

19II. Business Development in FY2018

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

20

Forecast for FY2018 - Revenue/Profit Summary Revenue

Operating Profit(¥ million)(百万円)

80,00070,000(¥(百万円)million)57,754
4,637

4,005

43,006
3,574

6,237

2,329
694

5,324

8,000

5,201

6,000

6,000
6,709

6,040

2Q

4,000

2Q

4,000

6,887

6,511
2,000

2,000

14,880

5,197

0

0

32,52013,138

2,475
1,346
2,914

6,605

8,613
40,26839,375166

25,809(¥(百万円)million)

ROE

6,000

4,000
17,585-1,131-1,388FY2015'15/11期

FY2016
16/11期

FY2017
17/11期-1,396-10,000

Advancing Together 2017

Seamless Growth 2020

(予想)
20%
6,699 (Forecast)
18%

160

6,155

14.4%

16%
14%

14.1%

12.0%

13.7%

2Q

8%

4,452

6%
4%

配当金
Dividend
(円)
(¥)
40

EPS
Dividend
配当金¥127.48

80

30

¥30

¥85.6640¥138.75*¥114.89

120

12%

10%

-580

FY2018FY2018
18/11期
18/11期(firstsix months)(forecast)（予想）（2Q累計）

Dividends
EPS
(円)
(¥)

5,547

2,000
-559

FY2015 16/11期
FY2016 17/11期
FY2017FY2018'15/11期
18/11期(forecast)（予想）

FY2017FY2018
17/11期
18/11期(forecast)（予想）

Profit for the year

4,135

10,000

0

9,049

8,000

6,891

2,715
0

4,262

25,986

10,0008,450

FY2015 16/11期
FY2016'15/11期

20,000(Forecast)

10,038345

2,444

30,000

9,279

9,833

341

50,000Growth Rate 10.9%

12,000(予想)
10,946 (Forecast)

10,00067,8302,802

49,818(¥million)(百万円)

12,000その他
Other
不動産管理事業
Property
Management
Fundand Consulting
不動産ﾌｧﾝﾄﾞ・ｺﾝｻﾙﾃｨﾝｸﾞ事業
Rental
不動産賃貸事業
Development
不動産開発事業
Revitalization
不動産流動化事業
Internal
内部取引Transactions

60,00040,000

Profit before Tax

¥25
¥22

¥16

20

10

2%

0

FY2015'15/11期

FY2016
16/11期

FY2017
17/11期

00
0%
FY2015FY2016FY2017FY2018'15/11期
16/11期
17/11期
18/11期
FY2018
18/11期(forecast)（予想） 21(forecast)（予想） Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.
* FY2018 EPS is calculated by using the number of stocks as of end of FY2017

Earnings Forecasts for FY2018 - Segment Overview FY2016(¥ million,%)

FY2017 [A]

Revenue
Revitalization
Development
RentalFund and Consulting
Property Management
OthersInternal Transactions

Gross profit
Revitalization
Development
RentalFund and Consulting
Property Management
OthersInternal Transactions
Selling, general and administrative expenses,etc
Expenses related to property marketing activities
Selling, general and administrative expenses(net of expenses related to property marketing

Other income
Other expenses

Operating profit
Revitalization
Development
RentalFund and Consulting
Property Management
OthersCorporate expenses, etc.
Finace income/costs(net)Profit before tax
Income tax expenses

Profit for the year

FY2018 [B]yr/yr change [B]－ [A]49,81825,80913,138
5,324
2,329
4,005
341
-1,131
16,349
5,214
5,302
2,670
2,193
1,090
14
-136
7,021
1,806

100.0
51.8
26.4
10.7
4.7
8.0
0.7
32.8
20.2
40.4
50.2
94.2
27.2
4.3
14.1
3.6

57,75440,268
5,197
6,237
2,802
4,637
0
-1,38816,816
9,186
976
2,864
2,538
1,356
0
-106
7,153
1,457

100.0
69.7
9.0
10.8
4.9
8.0
0.0
29.1
22.8
18.8
45.9
90.6
29.3
12.4
2.5

(Forecast)
67,83039,375
14,880
6,709
2,715
5,201
345
-1,396
19,811
9,023
3,328
3,304
2,589
1,483
333
-250
8,881
2,207

5,214

10.5

5,696

9.9

6,674

9.8

977

17.2

222
270
9,279
4,001
3,674
2,389
951
141
-17
-1,860
-829
8,450
2,902

0.4
0.5
18.6
15.5
28.0
44.9
40.8
3.5
-5.2
17.0
-

215
44
9,833
7,845
-408
2,581
1,273
278
-74
-1,661
-784
9,049
2,894

0.4
0.1
17.0
19.5
-7.9
41.4
45.4
6.0
15.7
-

20
4
10,946
7,067
1,657
3,009
1,187
283
-82
-2,177-907
10,038
3,339

0.0
0.0
16.1
18.0
11.1
44.9
43.7
5.4
14.8
-

-194
-40
1,112
-777
2,066
427
-85
4
-7
-516
-123
989
445

-90.3
-91.0
11.3
-9.9
-505.6
16.6
-6.7
1.7
9.6
10.9
-

5,547

11.1

6,155

10.7

6,699

9.9

543

8.8

%

*The orange portion shows gross profit margin and operating profit margin

%

%

%

100.0
58.0
21.9
9.9
4.0
7.7
0.5
29.2
22.9
22.4
49.2
95.4
28.5
96.6
13.1
3.3

10,076
-893
9,683
471
-87
563
345
-7
2,994
-163
2,352
440
51
126
333
-144
1,727
750

17.4
-2.2
186.3
7.6
-3.1
12.2
17.8
-1.8
241.0
15.4
2.0
9.3
24.2
51.5

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

22

Recognition of the Current Business Environment◆◆

Despite concerns regarding the overheating and peaking of the investment market, overall real estate pricecontinues to increased at a modest pace.
Neither a significant increase in real estate prices or a significant decline in cap rates are likely to occur. However,demand from investors and brisk trade is expected to continue, backed by the Bank of Japan's monetary easing policy.
Policy, Industry Conditions, Demand and Supply Trends etc.

Common Factors

Offices•••

The GDP will continue to increase moderately, measures for monetary easing will continue to be implemented.
Construction costs will remain high.
The population of the 23 wards of Tokyo will rise until 2030 due to population inflow.

•

Demand from companies for offices is strong and the office vacancy rate is getting close to the pre-financial crisis level. Rents continue to riseslowly.
In 2018, supply of 441 thousand tusbo (27 buildings) is expected. Both Contract rate of new and existing buildings is high due tostrong demand for office expansion. Vacancy rate is expected to remain at the past level.

••

Housing••

New condos: The contracts rate fell due to a steep rise in price. Supply in the 23 wards of Tokyo increased.
The total supply increased for the first time in four years to 35,000 units (up 0.4% yr/yr) .
The number of units sold is expected to increase 5.9% from the previous year to 38,000 according to the 2018 forecast of a
private research institution.
Used condos: The number of sales is at a record high of 37 thousand units (up 0.4% yr/yr),due to consumers’ price consciousness.
Detached houses: Firm demand continues.

•••

The numbers of hotel rooms and inns in Tokyo are 154 thousand hotel rooms and 1,939 inns (as of Mar 2017).
Based on current plans, 24,000 hotel rooms and 176 inns are expected to be added between 2017 and 2020.
Although the new law for private residents temporarily taking lodgers was enforced in June 2018, the standards are strict and the number ofapplications to the government authority remains low.

•

The retail sales upturned for recovery in 2017, to ¥143 trillion, a 1.9% increase from previous year.

•

The logistics stock in the Greater Tokyo Area is 4,560 thousand tsubo (as of Apr. 2018). Currently there are 470 thousand tsubo of large-scale
logistics and 550 thousand tsubo is expected to be supplied in 2019, which will likely to be absorbed by new demand.

Common Factors••

The yield gap remains high.
Against a backdrop of good financing environment investors desire to acquire property remains strong.

Private Placement•

The market for private placement funds grew to ¥16.0 trillion. (Private Placement Fund ： ¥13.6trillion, Private Placement REITs : ¥2.4 trillion)

J-REIT••

Thank to increase in capital inflow from foreign investors, the Tokyo Stock Exchange REIT Index recovered to mid 1700 point range.
The J-REIT market expanded to ¥17.3 trillion as of end of May 2018.

•

Bank loans for the real estate industry exceeded ¥96 trillion to hit a record high, whichCopyrightis 15.6%©of2018
the TOSEI
total CORPORATION,
amount of bankloans.Reserved.
All Rights

HotelsCommerce
Logistics

Funds

Loan Environment

23
23

Earnings Forecasts for second half of FY2018 - Segment Overview ◆ The real estate investment market remains active.
Focus on acquisition, refurbishment and sales of investment properties for fund and enterprise where there is astrong demand.
◆ Aiming for next fiscal year, Tosei will promote sales and development of condominiums for end-users.
FY2018(¥ million,%)First Half％

Revenue
Revitalization
Development
RentalFund and Consulting
Property Management
OthersInternal Transactions

Gross profit
Revitalization
Development
RentalFund and Consulting
Property Management
OthersInternal Transactions

Operating profit
Revitalization
Development
RentalFund and Consulting
Property Management
OthersCorporate expenses, etc.

Profit before tax
Profit for the year％

Second Half

100.0
58.0
21.9
9.9
4.0
7.7
0.5
29.2
22.9
22.4
49.2
95.4
28.5
96.6
16.1

32,52017,585
8,613
2,914
1,346
2,475
166
-580
10,771
5,071
2,238
1,336
1,270
764
162
-74
6,887

100.0
54.1
26.5
9.0
4.1
7.6
0.5
33.1
28.8
26.0
45.9
94.4
30.9
97.8
21.2

47.9
44.7
57.9
43.4
49.6
47.6
41.5
54.4
56.2
67.2
40.4
49.1
51.5
48.6
29.6
62.9

7,067
1,657
3,009
1,187
283
-82
-2,177
10,038

18.0
11.1
44.9
43.7
5.4
14.8

4,227
1,408
1,246
707
204
53
-960
6,511

24.0
16.3
42.8
52.6
8.3
20.0

6,699

9.9

4,452

13.7

*The orange portion shows gross profit margin and operating profit margin％

Progress

67,83039,375
14,880
6,709
2,715
5,201
345
-1,396
19,811
9,023
3,328
3,304
2,589
1,483
333
-250
10,94635,31021,790
6,267
3,794
1,369
2,726
179
-815
9,039
3,951
1,089
1,967
1,318
718
170
-176
4,059

100.0
61.7
17.7
10.7
3.9
7.7
0.5
25.6
18.1
17.4
51.8
96.3
26.4
11.5

59.8
85.0
41.4
59.6
72.1
-64.6
44.1
64.9

2,840
249
1,763
480
78
-135
-1,216
3,526

13.0
4.0
46.5
35.1
2.9
10.0

66.5

2,247

6.4

A
B

A
B

A. Revitalization BusinessFirst Half
➢ Proceed as planned, results were positive.
Second Half
➢ REIT
The property supply for Tosei Reit based on
the sponsorship agreement is included.
➢ General Customers
Focus on sales of small size properties lessthan ¥1 billion.
➢ Preparation for the Next Fiscal Year
Achieve early commercialization of acquired
properties by focusing on revitalization andleasing activities.
B. Development BusinessFirst Half
➢ Sales of condominium was favorable.
Sales of detached houses were below theplanned level, sold 45 houses out of 138.(landlots and contract jobs are included)
Second Half
➢ Focus on sales of condominium in Chofu andcommercial facilities
Fund, Rental and Property Management
Second Half
➢ Continue to focus on increasing numbers ofproperties under management and AUM, andutilization of rental units

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

24

Business Strategies for Second Half of FY2018 – Revitalization Business Revitalization
Business

Overseas sales of large and mid-size properties are forecast to be steady in the second half of FY2018.
Focus on sales of properties less than ¥1 billion.

Second Half Sales Plan :29 Small Size Building , 6 mid to large-size (First Half Sold : 22 Small Size, 2 mid to large-size )Fundamental
PolicySales Plan and Measures



22.9%
22.8%

1棟10億円未満
Restyling
Restyling
1棟10億円以上
Building
over ¥2
1棟20億円以上
25.0%
25.0%
1棟20億円以上
22.9% Building
1棟10億円以上
over ¥1 B
Restyling
1棟10億円未満
Building
under ¥1 B
売上総利益率
売上総利益率GrossProfitMargin 20.0%
20.0%

40,26839,37539,375
Plan

売上高
Revenue(¥ million)(百万円)

60,00060,00050,00020.2%
50,00040,00040,000

22.8%

20.2%
40,26830,00030,00025,80920,00020,0008,804 3

10,0006,159 410,0000Over ¥2 B
15.0%
15.0%
8,526 3 8,526
11,711
11,711 (Large-scale)
2 BLs @5,855M
25,809(GrossProfit Margin)(売上総利率)7,661
15,882 10 15,882
8,804

6,159

19,326
14,330 45 14,330
9,120 25 9,120(number of buildings)
0
2016
2017
2016
2017
2018

(Forecast)(￥ million)

Revenue
Gross profit
Operating profit
No. of sales（Restyling)
No. of sales（whole buildings）

FY2016
Full Year
25,8095,214
4,001
57 units
32 projects

Over ¥1 B(Mid-scale)
7,661
17,5856 BLs @1,277M
Under ¥1 B
(Small-scale)
51 19,326
BLs @379M

28.8%
10.0%

FY2017Full Year
40,2689,186
7,845
45 units
58 projects

Facilitate the creation of added value through the revitalization of usedproperties, which is one of Tosei’s strengths.
(Correction for compliance with laws, change of purpose of use, improvement of design andenvironmental performance, security enhancement, and increase in occupancy rate)

Diversify sales routes and sales methods.
・Directly approach wealthy customers (Tosei Masters Club).
・Create IT-based opportunities for individual investors to make investments
in real estate.

Examples of Properties on Sale in FY2018
Large
Small

Small

10.0%

17,5855.0%

1 building
5.0%
1 building
22 buildings

20182018.2Q

Aim for quantitative and qualitative expansions witha focus on improvements in efficiency.

0.0%
2018.2Q

0.0%(Result)

FY2018
forecast
39,3759,023
7,067
26 units
59 projects

FY20182Q
17,585
5,071
4,227
15 units
24 projects

Hachiouji-shi
Income-generating Apt

Yokohama-shi Income-generating BL Yokohama-shi Totsuka
Income-generating BL

Small

MediumHino-shi Income-generating Apt

Sumida-ku
Copyright © 2018 TOSEI CORPORATION,
All Rights Reserved.
Income-generating BL

25

Business Strategies for Second Half of FY2018 - Development Business Development
Business

Focus on sales of detached houses and development/sale activities of whole buildings for next fiscal
year. Promote preselling of THE Palms Chofu Manor Garden (scheduled for delivery from Dec. 2018) .
Examples of properties on sale in FY2018

Sales Plan and Measures
Sales Plan for FY2018 : 1 Condominium
2 Commercial Facilities
138 Detached Houses

Condominium
分譲マンション
分譲マンション

売上高
Revenue(¥million)(百万円)

20,00015,00010,000Whole
building
１棟物件
１棟物件

40.4%
20,00015,00013,13810,000
7,488

5,000

Detached House
戸建・宅地・請負
戸建・宅地・請負

40.4%
18.8%

14,88013,1387,488

26.0% 売上総利益率
26.0%
40.0%売上総利益率
40.0%
22.4%
Gross Profit Margin

22.4%
18.8%

1,127
6,946

Plan

Commercial
14,880
Facilities(2 buildings)

1,127

2016

0

5,197

5,197

5,649
5,197

houses6,806 Detached
6,806
and others
5,197

(\mi
(\mil llilon)
i on)

Revenue
Revenue
Gross
Grossprofit
profitOperatingOperatingprofit
profitNo.
No.ofofsales
sales（（
detached
detachedhouses)
houses)No.
No.ofofs as laesl es（condos（condos) )No.
No.ofofsales
sales
（（
whole
wholebuildings
buildings
））

2017
2016

2018
2017

(Forecast)

FY2016FY2016FY2017FY2017Full
FullYearYear
Full
FullYearYear13,13813,138
5,197
5,197
5,302
5,302
976
976
3,674
3,674
-408
-408
119
119unitsunits
121
121unitsunits--22projects
projects
--

0.0%

0.0%

THE Palms Yutenji Master Place(4/89 units left)

T’S BRIGHTIA Chiba-Chuoo

26.0%

Comodo Casa Shiromeguri-40.0%
8,613-60.0%-40.0%(85-80.0%
units)-80.0%-100.0%-100.0%-120.0%-120.0% THE Palms Court Kamakura Shiromeguri

Condominium
6,946(89 8,613
units)(138 houses)

0

20.0%

-20.0%
Gross Profit
Margin -20.0%

5,000

5,649

20.0%

2018.2Q
2018(45 houses)-140.0%2018.2Q-60.0%-140.0%
Delivery scheduled next FY(Result)

FY2018FY2018
forecast
forecast
14,88014,880
3,328
3,328
1,657
1,657
138
138units
units
89
89units
units
22projects
projects

FY2018FY2018
2Q
2Q
8,613
8,613
2,238
2,238
1,408
1,408
4545units
units
8585units
units THE Palms Chofu Manor Garden (162unitsm on sale)-Copyright© change.
2018 TOSEI CORPORATION, All Rights Reserved.
*Photos are conceptual images and may
subject to26

Business Strategies in Second Half of FY2018 ‐Development BusinessDevelopment Project Schedule
2017
Hotel

Tosei Hotel Cocone Kanda (holding)Commercial Facility T‘S BRIGHTIA Minami Aoyama II (holding)

2018

T‘S BRIGHTIA Minami-Aoyama II

Condominium

THE Palms Setagaya Yutenji Master Place (89 units, on sale)Commercial Facility T’S BRIGHTIA Chiba-Cyuo (holding)Commercial Facility T’S BRIGHTIA Fujimidai (holding)Commercial Facility Nishikasai Commercial Facility (under construction)
Condominium

THE Palms Chofu Manor Garden (162 units on sale)2019
THE Palms Chofu Manor Garden

Rental Apartment Yokohama-shi Hiranumabashi Condominium Project
Hotel

Asakusa Hotel Project

2020 and after
Condominium

Sagamihara Condominium Project (243 units)

Hotel

Ueno 3-chome Hotel Project

Logistics

Sagamihara Logistics Project

Logistics

Hasuda Logistics Project

Condominium

Toda Condominium Project

THE Palms Sagamihara Park BRIGHTIA

Yokohama-shi Hiranumabashi
Condominium Project

Copyright
2018
CORPORATION,*Photos are conceptual
images ©
andmayTOSEI
subject
to change. All Rights Reserved.

27

Business Strategies in Second Half of FY2018 -AcquisitionRecognition of Issues

•
•
•
•

Property price in the central business districts is soaring, yield is decreasing (property price remains at highlevels) .
Shortage of large size properties on the market.
In some suburb area sales slump can be seen.
Banks’ lending stance toward apartment loans became selective due to higher vacancy rates in apartments.
Example of Building Planed to be Acquiredin the Second Half of FY2018

Acquisition Target (delivery basis)(expected disposition values)¥80.0 B
¥66.8 B
Exceeded to¥49.8 B

¥53.5 billion
on contract base
First
Half
¥35.0B

2016

2017

2018

Bunkyo-ku Yushima
Empty BLAcquisition Plan & Policy➢

Continue selective investment by mainly targeting mid-to-small size properties in the Greater Tokyo Area➢

Discovery of economical properties with potential by taking advantage of Tosei's strength in planning revitalization➢

For properties in the suburbs, investment will be made in only those with high liquidity and profitability expectations.

➢

By adding logistics to the product lines, acquisition will be considered for a wide variety of uses and various exit strategies➢

Implement efficient acquisitions using a range of methods such as M&As.

➢

Strengthen teams and organizations (Introduction of a new department to promote M&As, “M&A Group Strategy Department”)
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

28

Topics - Promoting Property Acquisition through M&A
Acquired about 30 properties worth more than ¥17.0 billion* through the M&A of five real estate companies after 2016.
*Expected disposition value

Mar. 2016 Company K
Acquired seven properties, including five income-generating
properties on the west side of Ikebukuro Station.

Properties acquired through M&A have higher profitability thanthose acquired by normal acquisition.
Sold
YearinProperties (Revitalization Business)

July 2016 Company F
Acquired six properties on the south side of Nakano Station.

Acquired four properties near Kawasaki station

10

39.7%

40

26.7%

7

50.4%

24

27.4%

Properties acquired by normal acquisition

Properties acquired through M&As
FY2018*Mar. 2018 Company S

Ratio(except properties for REITs)

Acquired seven properties located mainly in Tokyo

Acquired nine properties in the Tokyo Metropolitan area.

Gross Profit

Properties acquired through M&As
FY2017Mar. 2017 Company K

Dec. 2017 Company M

No.
Properties

Properties acquired by normal acquisition(except properties for REITs)*Sales contract bases (As of Jun. 2018, including properties which contract has been
completed but ownership has not yet been transferred )Real estate M&A
Real Estate Owner
Company• Headquarters
building• Leased assets• Idle assets

M&A
Tosei Group
M&A Group Strategy Dpt.
・Legal DD• “Value up”
・Financial DD(renovation, leasing)・Tax DD• Redevelopment
・Stock transfer procedure
Sales Dpt.
・Considering
revitalization plans
・Consideringdevelopment plans

Selling assets
individually

Corporate Planning Dpt.
・Raising capital for
acquisitions
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

29

Topics - Logistics Business
Launched the first logistics project, “Sagamihara Logistics Development Project”
Opportunity: Strong demand for logistics facilities is expected to continue due to increase in needs by the
e-commerce market (including the online mail-order business) and 3PL service providers where
growth continues to be strong.
Business Development

Tosei Group has a wealth of management experience oflogistics business (management and consulting)◼ Expansion of product lineup in Development and Revitalization Businesses(Sell newly built and revitalized logistics to investors)◼ Use of know-how and channels developed and accumulated through real estatebusiness. The Group cooperated in the establishment of all business cycles fromland acquisition/development to operation, management and exit strategy(private placement funds and REIT are assumed) and earned profits.

(Managed six logistics, more than 120 thousand tsubo, including large
size multi-tenant type logistics)◼ Aiming to develop logistics business as the sixth Tosei’s main business in mid-tolong -term.
Supply Plan
A: Sagamihara Logistics Development PJ

Tohoku
東北道
Expressway(land acquired)

Kan‐Etsu
関越道Expressway

Site : 5,885m2 (1,780 tsubo)

Chuo
中央道
Expressway

Site : 17,404 m2 (5,264 tsubo)
Total Floor Area : 25,058 m2 (7,580 tsubo)
Scheduled to be completed Mar. 2020

国道16号

Toukyougaikan
外環道
Expressway

Scheduled to be completed Mar. 2020

(land scheduled to acquire in 2018)

B Japan National
Route 16

Total Floor Area :11,868m2 (3,590 tsubo)

B: Hasuda-shi Logistics Development PJ

Kan‐Etsu
圏央道Expressway

Tokyo- Nagoya
東名高速
Expressway

A

Joban
常磐道
Expressway

Area• Targeting logistics concentrated area in themetropolitan area
• Select attractive location on the basis ofconvenience and stable employment
Equipment• Focus on middle size logistic facility• Flexibly provide a facility which suit the location andtenants needs (e.g. multi-tenant type, BTS type)
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

30

Topics - “Tosei Hotel COCONE Ueno” Scheduled to Open in Dec. 2018
In the Company's second brand hotel project, the existing office building is being renovated into a hotel. Scheduled
to open in Dec. 2018.
Overview of Hotel Business Expansion
Operation

Purchase/ Development
Purchase hotels primarily in the Tokyo area
• Develop new hotels• Purchase existing hotels and office andenhance their value and convert existing
office buildings to hotels

Sale

Direct management or lease by the Company
Sales to business operators or• Manage the Company's own hotels
investors in hotels(ownership and direct management)• Consider managing hotels held by other companies
Continue Ownership(undertaking of management)
Continue direct operation and rental• Enjoy rent revenue from lease of hotels not managed by the Company

Own Hotel Brand Lineup

Conversion: Tosei Hotel Cocone Ueno (Second own brand hotel, in-house operation(scheduled))
BeforeHotel dedicated to accommodations withmodern Japanese concepts under the theme of“Stay in Comfort”.
Development

Tosei Hotel Cocone Kanda (open)

Conversion

Tosei Hotel Cocone Ueno (scheduled to open in Dec. 2018)

Development

Tosei Hotel Cocone Ueno-Okachimachi (scheduled to open in 2020)

Development

Tosei Hotel Cocone Asakusa (scheduled to open in 2020)

Development
Tosei Hotel Cocone Kanda (First own brand hotel, in-house operation)

A high occupancy rate is maintained. For the second andfuture Tosei brand hotel, we aim to expand sales channel toreach out to businesspersons and tourists.

1st Floor Entrance
2nd Floor Front Desk
Location: 3min walk from Ueno St.
Units: 126 units
Structure: SRC 11 above & 2 underConstruction: 2005 (13 years old)
Acquisition: Sep. 2016

After

1st Floor Entrance

Merit of Conversion• One of the methods to acquire a hotel in an area where it is difficult to acquire land fordevelopment.
• Shorter construction period, smaller initial capital costs and eco friendly, compared to new
construction.
• Higher profitability (NOI) than offices is expected if an appropriate location is found.
⇒ In acquisition, properties that meet various conditions, such as a good location, shapeand structure of the property and regulations under laws, making the most of theCompany‘s own know-how on the revitalization of real estate and the functions of an
31© 2018 TOSEI CORPORATION, All Rights Reserved.
architects’ office have been found.Copyright
Such plans
will continue to be actively considered.

Trends in Dividends
We will increase earnings per share for the period through sustained growth in profit.
By doing so, we seek to pay dividends consistently and increase dividends.

Trends in Dividends
FY2013

FY2014FY2015FY2016FY2018(Forecast)

FY2017

Annual Dividends Per
Share(¥)

8.00

12.00

16.00

22.00

25.00

30.00

Payout Ratio(%)

18.6

20.2

18.7

19.1

19.6

21.6

Current Share PriceMarket Capitalization

Net Book Value

Unrealized Gain (After Tax)*1

Net Asset Value*(As of Jun 29th 2018)(As of end of May 2018)(As of end of May 2018)(As of end of May 2018)¥56.9 billion¥49.6 billion¥14.3 billion¥63.9 billion

Stock Price (A)Book Value per Share (B)Unrealized Gain per Share*1

Net Asset Value per Share *(C)¥1,022.89¥295.60¥1,318.49(same as above)¥1,174.00
PER

P/NAV* (A) ÷(C)

8.46

0.89

* Net Asset Value = Net Asset Value + Unrealized gains (after tax)
* Fair value of fixed assets are has been calculated by the Company based “Real Estate Appraisal Standards”. For details, please see page 15.
* Corporate tax is calculated at 33%

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

32

Ⅲ. Reference Materials for the first time visitors to Tosei

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

33

Group Overview As of May 31, 2018
Company Name
Address◼ Board of Directors

TOSEI CORPORATION
4-2-3 Toranomon, Minato-ku, Tokyo

Date EstablishedFebruary 2, 1950

Paid-in Capital¥6,544,061 thousand
Seiichiro Yamaguchi, President and CEO

Fiscal year-end

November 30

Employees

177 (Non-consolidated) 407 (Consolidated)

Stock Listing

Tokyo Stock Exchange, First Section (8923)
Singapore Exchange, Mainboard (S2D)(As of May 31, 2018)◼Total outstanding shares
48,525,000 shares◼Number of shareholders
4,494◼Shareholder composition
•
•
•
•
•
•

35.40%
Individuals/Other
Foreign companies 38.52%
12.41%
Other companies
Financial institutions 12.13%
Securities companies 1.54%
0.00%
Treasury Stock◼ Audit & Supervisory Board
Corporate
Governance
SystemRepresentative

Share Statusconstituted by 7 directors(including 2 Independent directors)(17,179,922)(18,690,362)(6,021,500)(5,884,600)(748,570)(46)

constituted by 4 members(2 full time, 2 part time auditors.
All from outside the Company andindependent audit & supervisory )◼ Organizational form
Company with Audit & Supervisory Board
Members◼ Nominating and Compensation Advisory
Committee

Main AffiliatedCompanies

Investment TrustManagement
Company

Tosei Community Co., Ltd.
Tosei Asset Advisors, Inc.
Tosei Revival Investment Co., Ltd.
Tosei Singapore Pte. Ltd.
Urban Home Corporation
Tosei Hotel Management Co., Ltd.

Tosei Reit Investment Corporation (3451)**The investment corporation, whose assets are managed
by Tosei Asset Advisors, Inc. ,a wholly-owned subsidiary of Tosei Corporation

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

34

History of Tosei Corporation
1950: Established as Yukari Kogyo Co., Ltd,the predecessor of Tosei Corporation
1983: Tosei Building Co., Ltd.
1994: Mr. Seiichiro Yamaguchi assumed
the role of President and CEO

Registered for
Financial Instruments Business
Registration; Type II Investment
Management Business; Investment
Advisor and Agency Business

EstablishingTosei HotelManagement*5

Introduced commercial building
Brand T’s BRIGHTIA

Revenues(¥ 100 million)
(億円)

700

Notes:
1. TRI: Tosei Revival Investment Co., Ltd.
2. TC: Tosei Community Co., Ltd.
3. TAA: Tosei Asset Advisors, Inc.
(Name changed from Tosei REIT Advisors, Inc. in April 2008)
4. Tosei Singapore: Tosei Singapore Pte. Ltd.
5.Tosei Hotel Management Co., Ltd.
6. Urban Home Corporation

Acquired 100%
ownership ofUrban Home.*6

Changed its name to current“Tosei Corporation”

Tosei Reit Investment
Corporation Listing

Relocated its head office
to Toranomon

Listed on Singapore
Exchange

Listed on Tokyo Stock
Exchange Second Section

600

Established TRI*1
Acquired 100% ownership of TC*2
Established TAA*3500

Began developing office andcommercial buildings
Set up private
placement fund

400
300
200
100

Launched
Revitalization businessConducted
real estate M&A
through LBO

Changed its name toRegistered for Real Estate
Investment Consulting“Tosei Fudosan”
Begandeveloping
condominiums

EstablishedTosei Singapore*4
Listed on
Tokyo Stock
Exchange,
First Section
Launched
Restyling business

Listed on
JASDAQ

Began developing
detached houses

0'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10Copyright'11 ©'12'13 '14 '15 '16 '17 '18
2018 TOSEI CORPORATION, All Rights Reserved.

(Forecast)

35

The Tosei Group's Mission
The Tosei Group's Mission
Create new value andinspiration*4 in all aspects of real estate*3
as a global-minded*1 group of
seasoned professionals*2.

*1 Global-minded•••*2 Professional

•
•
•

•

*3 All aspects of real estate•••*4 New value and inspiration••

Dually listed on the Singapore Stock Exchange. Efforts are being to attract inbound investments for Japan and promote outbound investments.
Adopted the International Financial Reporting Standards (IFRS). Disclosure documents are disclosed in both Japanese and English.
Have comprehensive knowledge of transactions conducted in the greater Tokyo area with our business focused on the area. Have a good grasp ofarea characteristics, rental needs, investor needs, investors’ trading trends, and expected yields, among other matters.
Offer optimal plans for revitalization and development for clients by leveraging skills and expertise that we have cultivated over years.
Have an internal organization that functions as a first-class architect office.
Investment Management Business, Investment Advising and Agency, consultant function based on Type II Financial Instruments Business (DirectorGeneral of Kanto Local Finance Bureau (Financial Instruments) Registration No. 363)
Broad product range (office buildings, commercial facilities, hotels, condominiums, detached houses, logistics)
Broad customer base (real estate funds, REITs, general business corporations, wealthy individuals, end users))
Diverse means of acquisitions (trust beneficiary rights, real estate M&A, real-estate collateralized loans)
Improve profitability through the revitalization of aged properties from both tangible and intangible perspectives. Create added-value in existing realestate.
Provide residential and office environments that are eco-friendly, secure, safe, and sophisticated.
Contribute to the creation of a sustainable society through business (reginal vitalization, community development, measures to deal with an aging
and diversifying society)
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

36

Business Strategy I. Flexible Portfolio Management through 5 Businesses
Tosei operates its business mainly in grater Tokyo area as a comprehensive real estate company.
The mutually complemented relations through the five businesses enable flexible portfolio management to copewith changes in the market.

5Businesses

Real estate transaction business● Revitalization BusinessIn our Revitalization Business, Tosei acquires existing office buildings
and condominiums, and resells them as revitalized real estate after
improving their equipment and designs, installing eco-friendly facilities
and undertaking other renovation work.
Project period: a half year to a year and a half
● Development BusinessIn our Development Business, Tosei acquires land for development, anddevelops and sells new office buildings, condominiums, residential
houses, commercial buildings, hotels and other buildings, taking into
account the needs and characteristics of the area.
Tosei also has an in-house, first-class architect office eager for quality
planning and design skills and fully making most of these in"manufacturing.“
Project period: one to two years

Stable business● Rental BusinessIn our Rental Business, Tosei generates steady income by leasing officebuildings, condominiums, and other properties owned by the Group, mainly inTokyo. As of May 31, 2018, Tosei holds 95 income-generating properties.
● Fund and Consulting BusinessIn our Fund Business, Tosei is engaged in the asset management of properties
owned by real estate funds and Tosei Reit, as well as acquiring and selling
properties to meet the needs of a wide variety of investors, and offering
advisory services to companies.
As of May 31, 2018, the balance of assets under management totaled
around ¥635 billion● Property Management BusinessIn our Property Management Business, Tosei undertakes general property
management operations, such as management, cleaning and renovation work
including fire protection inspection on condominiums and office buildings
through Tosei Community Co., Ltd. As of May 31, 2018, the number ofproperties managed by the Company was 667. (Office ,Hotel, School andOthers: 391, Residential ：276.)
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

37

Business Strategy II. Wide Range of BusinessOffer a broad range of services in all aspects of real estate.
Aim for business expansion and increase in business areas by maximizing synergy of the related business.
Fund Management(AM)
Revitalization

Real Estate Management(PM/BM)

Development

Consulting

M&A/ Acquisition of realestate collateralized loans

Brokerage

RentalHotel Management

One-stop solutions for investors from purchase to sale of real estate.
Acquisition• Consulting• Brokerage

Maximizing Profit / Management• Development

•
•
•
•

DisposalValue Up (value-added) • Asset Management
Lease Up
• Property Management
Improve Profitability• Building Maintenance
Cost Control
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

38

Business Strategy III. Tosei’s Real Estate Revitalization BusinessOur real estate solutions create added value not seen in repair or resale alone.
Advantages of revitalizing used properties
Regenerating value,
using Tosei’s expertise Revitalized building

Aging building

Construction costs (especially SRC cost) continuing to rise, revitalized
used-properties have become more affordable and attractive-profitability throughleasing activities

Investment OfficeCompetitiveness is lost, andthe occupancy rate andrents have fallen.

••

Comparison between the use of existingused properties and new properties

Improving-functions of facilities-safety performance-energy saving performance

Profitability has improved.
The value of the real estate
has increased.

Create value using the items in our original VALUE UP 32 survey
Constantly place emphasis on the balance between costeffectiveness and design (excessive investment is not necessary
for revitalization).

Newly Built Building ¥4.0 billion
4,000

For revitalized used properties, the investment
amount can3,500
be limited to a low level.
Therefore, a high yield will be realized.

4,000
60
400

Acquisition Cost
Tosei’s Profit

110

Acquisition / Sales
計 Cost+買主取得コスト

3,000

Over 25 years Buildings¥2.32,300
billion
2,500

Acquisition Cost

Tosei’s Profit

220
160

building Priceand renovation
1,500 cost

460

Acquisition2,000/ Sales Cost

2,000

30

・10 story office buildingnear Kinshi-cho station・basic floor建物代・改修費
About 500m2
・Floor space About 4,700m2
・Lending area
About3,900m2
土地代（土地原価）

1,000
Land Price

1,430

当社利益
Construction Cost
当社取得・再生・販売コ[Example] スト

1,430Land Price

500
0

Rent
NOI

CAP

¥11,400 1/ tsubo

2 / tsubo¥13,650(1.2 times of used building)¥0.14 billion / year ¥0.17 billion / year
6.2%
4.2%
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

39

Business Strategy III. Tosei’s Real Estate Revitalization Business
Improve existing building’s functionality and profitability by using two value-added approach
Revitalization(hardware)
X
Revitalization(utilization)

Design, Energy saving performance, Security and Functions of facilities, etc.
Increase the appeal of buildings through the repairmen and restoration of exteriors,
facilities and etc. to heighten property characteristics.

Change purpose of uses, Attract good tenants, Reduce costs
Propose the new ways of using property and provide solutions to improving profitability
through measures such as reducing expenses and recovering the occupancy rate .

Our “In-house Value Up Lab” fornew design research and product planning

Revitalization (hardware)

Revitalization (utilization)

To create the best value for our customers, Tosei provides safety &security, sophistication & comfort, and sustainability & eco-friendliness.

Renovation of floors in accordance with needs of tenants(change of the purpose of uses and floor plans)

Safety and security
Value improvement for security, disaster prevention, community revitalization,and conservation

Examples<Renovation of commercial facilities/offices>- Office=> Hotel- Cram school=> Office- Store=> SOHO specifications

Refinement and comfort<Renovation of apartments for rent>- Company house=>Lifestyle-oriented condominiums=>Apartment with soundproof equipment
capable of supporting musicians=> Convert into a shared house

Value improvement for scenic views, nice exterior appearance, amenities,
and enhanced convenience

Sustainability and environmental friendliness
Value improvement for sustainable energy conservation, cost cuts,and resource saving

Grovesnor Square
Commercial Property Built in 1990

Toyo-cho Tosei Building(Build in 1993 as a office)Introduction of wall greening
system, LED light and EV
disaster prevention cabinet
and wooden deckconstruction, etc..

The open space in the center has a wood deck, wherevisitors can make themselves at home.

Toranomon Tosei Building(Build in 2006 as a office)Tosei has obtained the A rank certificationof the Comprehensive Assessment System
for Built Environment Efficiency (CASBEE)
for existing buildings.

T-Rhythmic Soka Apartment

ARDEN Fujigaoka Apartment

A company dormitory renovated into a lifestyle-oriented
condominium tailored to the taste of a music loving resident in whichmusical instruments can be played freely thanks to soundproofing.

Converted a company dormitory intoa shared house.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

40

Mid-term Management Plan "Seamless Growth 2020” -Target PerformanceSeamless
Growth 2020

To continue growth as a whole Group to build a firm position as a uniquecomprehensive real estate company.

Performance Indicator Guidance【Profit Growth (consolidated)】• Revenue for the final fiscal year:• Profit before tax for the final fiscal year:• Average profit growth rate of the three years:• Average ROE of the three years:¥100 billion¥12 billion
10% or more
12% or more【Financial Soundness】• Expansion of the ratio of stable businesses(Gross Profit Margin : achieve 50/50 weight balance between Trading Business and Stable Business*)•

Aim to keep an equity ratio of around 35% in consideration of financial soundness.

*Of the five existing business segments, the Revitalization Business and the Development Business are defined as the “trading business” and the Rental Business, theFund and Consulting Business and the Property Management Business are defined as the “stable business.” Under this plan, gross profit of the trading businessexcludes sales expenses pertaining to property trading.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

41

Mid-term Management Plan "Seamless Growth 2020“ -P/L Simulation [Basic policy] ••Expand businesses in all segments.
Increase the ratio of stable businesses in the revenue and profit structure(fifty-fifty for trading businesses to stable businesses)
FY2017 (A)Revenue(¥ million)

FY2018 Forecast (B)Gross profit profit margin

Revenue

Gross Profit Margin

FY2020 Forecast (C)Gross profit profit margin

RevenueAchieve 50/50 weight balance
between Trading businessand Stable business

Gros s profi t profi t ma rgi n

57,754

16,81629.1%

67,83019,81129.2%

100,000

23,73723.7%

40,2685,197
45,465
6,237
2,802
4,637
0
13,677-1,3889,186
976
10,162
2,864
2,538
1,356
0
6,759
-106

22.8%
18.8%
22.4%
45.9%
90.6%
29.3%
49.4%
7.6%

39,375
14,88054,255
6,709
2,715
5,201
345
14,971-1,396

9,023
3,328
12,351
3,304
2,589
1,483
333
7,710
-250

22.9%
22.4%
22.8%
49.2%
95.4%
28.5%
96.6%
51.5%
18.0%

60,882
21,43282,314
9,461
2,999
6,295
962
19,717-2,031

9,516
4,025
13,541
5,375
2,861
1,709
914
10,859-663

15.6% 1
18.8% 2
16.5%
56.8% 3
95.4% 4
27.1% 5
95.0% 6
55.1%
32.6%

Selling, general and Expenses related to property
marketing activities
administrative
expenses,etc
Other expenses

1,457

2.5%

2,207

3.3%

3,109

3.1%

5,525

9.6%

6,657

9.8%

7,235

7.2%

Operating profit

9,833

17.0%

10,94616.1%

13,39313.4%

136.2%

Profit before tax

9,049

15.7%

10,03814.8%

12,23112.2%

135.2%

50 : 50

Profit for the year

6,155

10.7%

6,699

9.9%

8,194

8.2%

133.1%

Profit per share (\)

127*Excluding the property sales
expenses of ¥3.1 billion that areincluded in the gross profit margin.

Revenue, Gross profit
Real estate Revitalizationtransaction Development
business

RentalStablebusiness

Fund and Consulting
Property Management
Other

Internal Transactions

139

170

160

120

¥10.8B¥10.4B¥10.8B

Trading1
Business2
StableBusiness

80
60

Growthrate(C÷A)

133.1%

40

20
0Acquisition Plan

Approach
3. Rental Business•Increase property, plant and equipment (30 buildings with the book value of ¥33.5•Make the handling rate of large and midsize properties and small properties billion) to a little more than 50 buildings with the book value of ¥70.0 billion.
50-50.
•Increase profitability by improving the occupancy rate of inventories.
•Increase acquisition amounts through M&A of real estate.
4. Fund & Consulting Business•Strengthen the value-creating business model including conversion.
•Estimate profitability conservatively based on the assumption of property•Increase the balance of AUM from ¥552.2 billion to a little greater than ¥780.0 billion.
prices remaining high.
(Private fund and CRE: ¥506.1 billion ⇒ ¥680.0 billion)(Tosei Reit: ¥45.9 billion ⇒ ¥100.0 billion)
2. Development Business•Cover the temporary brokerage fee of ¥500 million for FY2017 by the AM fee.
•Supply one or two office buildings or commercial properties every year.
•Supply a little more than 200 units of condominiums every year.
5. Property Management Business(Assume profitability conservatively)•Supply 150 detached houses mainly priced at approximately 50 million yen •665 buildings of properties under management ⇒ 947 buildings (1.4 times)
every year
(Strengthen sales in Chiba and Saitama in addition to Tokyo and Kanagawa)

¥3.1B

100

*Calculated based on the number of shares as of November 30, 2017 for FY2018 and thereafter.

1.Revitalization Business¥13.5B140

6. Other•Increase the number hotels operated by Tosei (from 0 to 4 buildings)(¥ billion)

TargetTarget80.0

66.8

Target

100.0

90.0

49.8
2016

2017

2018

2019

2020

•Small and midsize properties → Increase sales personnel•Large properties→ Collaborate with core investors, funds and major brokeragecompanies, conversion into hotels, and investment in warehouses•Acquisition-oriented areas→ Expand into areas deeply around Tokyo such as Yokohama.
•Strengthenacquisition means throughthe M&Aof real estate.
Copyright © 2018TOSEI CORPORATION,
All Rights
Reserved.

42250.0Mid-term
Management Plan "Seamless Growth 2020“ -B/S Simulation -Seamless
Growth 2020

Aim to keep an equity ratio of 35% in consideration of financial soundness
As of end of FY2020

Revenue ¥100 million

200.0*In this simulation, calculations have been made based on the assumptionthat the corporate tax is 33% and capital is not increased.
The simulation is based on the information available Financial hurdles.
The actual amount may vary significantly due to various factors.

¥190.2 billion

23.9

As of end of FY2018¥157.0 billion

11.0 11.0
As of end of FY2017(result) 28.5 28.5

150.0

¥122.5 billion

10.7 10.7
10.7
Cash and cash
23.9
23.9
equivalents

28.5

Other Liabilities

11.0

Inventories
87.9 115.0
87.9
115.0
(properties) 87.9 115.0 Borrowings
9.2

9.2
10.1 10.1
9.210.1
23.7
23.7
23.7
21.6
21.6
94.4 94.4
100.0
81.6 81.6
67.1
67.1
67.1
70.1 70.1
70.1
59.7 59.7
billion 59.7
67.2 ¥117.0
67.2(disposition value)

94.4¥138.8billion(disposition value)
81.6*Expected based on the averagefor the most recent three years(1.58 times book value)¥100.0 billion

50.0(disposition value)

72.8

41.3 51.7
41.3
51.7
46.1
33.6
46.1
46.1
41.0
33.6
33.6
41.0
25.3
25.3 41.0
5.6
5.6
5.4
5.65.45.47.0
7.0
0.0
37.7%
0.94

32.9%
1.28

Investment

72.8
properties/PPE 72.8
64.6 64.6
64.6
41.3 51.7
5.65.6

Other assets

Equity5.6

34.0%
Copyright
2018 TOSEI CORPORATION,
Net
D/E© Ratio
1.41All Rights Reserved.

Capital Equity Ratio

43

ESG Activities - Environmental Initiatives The Tosei Eco Declaration has been established and Eco-Missions consisting of three action policies govern the business activities. The
Group has been striving to reduce the burden on the global environment by promoting human and eco-friendly corporate activities.

Tosei Group Eco Declaration
In order to achieve our slogan "Heart into the City", the Tosei Group declares its intention to promote corporate activities that arefriendly to people and the environment and to work to reduce burdens on the environment, while keeping true to our philosophy "Tocreate new value and inspiration in all aspects of real estate."

Eco-Mission(Action Policy)

Mission 1

Mission 2

Mission 3

Promote environmental practice throughbusiness activities

Comply with environmental laws, regulations
and raising of environmental awarenessInform our activities to stakeholder

We strive to minimize environmental burdens byintroducing measures to contribute to energy
conservation and resource saving in the real-estate
revitalization.

complying with environmental laws and regulations.
We will also conduct various measures aiming toincrease Tosei group employees environmental
conservation awareness.

Starting with the announcement of “EcoDeclaration” and “Eco Mission”, we will promote
open communication with the society whileproviding information on our progress and results.

Reduction of the burden on the environment through business◼ Eco-friendly revitalization of real estate
Rooftop and Wall Greening
Greened a cumulative total of 76 buildings
with an area of approx. 3,673m2 have been
as of Nov. 30, 2017.

◼ Introduction of eco-friendly products
In the revitalization and development of office buildings and residential houses, ecofriendly products are introduced according to the characteristics of each property,
considering energy saving, conservation of resources and other factors from the list ofsuch products, which includes more than 40 items.

Eco-friendly condominium
THE Palms Tukishima
Introducing solar power generating system
and rooftop gardening
Development of Net-Zero Energy House “ZEH”

Utilization of unused company house
Converted unused employee dormitories
to concept condos• Musician-friendly condo withsoundproof single-room units.
• Condos with common areas◼ Environmental Certification
Three office buildings developed by Tosei have obtained the A rank
certification of the Comprehensive Assessment System for Built
Environment Efficiency (CASBEE).
・ Heiwajima Tosei Building・ Kamata Tosei Building
・ Toranomon Tosei Building
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

44

ESG Activities - Social Initiatives Changes in the social environment have created issues such as a declining birthrate and aging population, diversifying lifestyles,
and natural disasters. The Tosei Group addresses those issues through a wide range of activities including creation of comfortable
residences, creation of comfortable working environments, and support for disaster-stricken areas.

Costumers

Employees

Creation of Safe, Secure and Comfortable Residences and Environment◼ Product Planning by Women - "Irodorie“ Project -To develop a global-minded group of seasoned
professionals as set forth in the Tosei Group's corporate
philosophy, the Tosei Group has
provided human resource
training and adopted a personal
development support system.

The Group proposes homes that are comfortable for all family members
by focusing on the ideas of women, who support family life throughhousehold tasks, childcare and other activities. In product development,
employees from many generations are asked to provide opinions aboutproblems with housework and childcare, the ideal floor plan and storage
spaces. Those opinions are reflected in the products.

Support Work Life Balance◼ Barrier-free House
The Tosei Group provides barrier-free houses, “Withstyle”, by applying a unique design code
consisting of 10 items, which is based on the concept of a permanent residence. Partition walls thatcan be flexibly changed according to the lifestyle and kitchens for wheelchair users, among othersimilar products, are introduced. Tosei creates house designs suitable for any situation in a long life.
子育てファミリー 子供独立後世代

車椅子生活◼ Creation of a Community Space
Tosei carries out construction work to
improve the value of existing real estate andcreates spaces for exchange in offices andhouses. It seeks to create a working/housing
environment where people can work/live
comfortably with spiritual wealth.

The Group takes steps to maintain the sound physicaland mental health of its employees by providing a stableoffice environment and mental health care, among
other actions.

Communities
Support for Disaster-Stricken Areas
Continuing voluntary activities
to support areas affected by
the Great East Japan
Earthquake since 2011.

Lounge◼ Quality Control - For Our Customer's Safety and Security •••Cultivation of Employees

Implementation of pile and structure audit by a third party
Quality control in accordance with ISO9001 rules
Provide questionnaires to our customers

Kids Room

Painting rusted playgroundequipment at nursery center

Environmental Awareness-raising Activities
Promote in-house ecology
activities and conduct
volunteer activities out side
the company.
Participation in cleaning activities
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

45

ESG Activities - Governance Initiatives We will maintain sound business activities to achieve sound growth by responding promptly and accurately tochanges in the operating environment.

Corporate Governance
The Tosei Group aspires to become a group of companies that make a meaningful contribution totheir shareholders, employees, business partners, and other stakeholders by promptly and accurately
responding to changes in the management environment and continually carrying out businessactivities that enable the Group to achieve sound growth.
The Group is determined to make efforts in a unified manner, from the top management down toeach employee of the Group companies, led by the Board of Directors, to set up a system which iscredible to all stakeholders.

Three Important Items in Corporate GovernanceCompliance
We place compliance at the top of our agenda andraise awareness of it from top management to all
employees of the Group companies■ Compliance Education

Risk Management

Information Disclosure

Assuming every possible risk, we prepare andpractice responses for daily risk and emergency
conditions.

We practice disclosure appropriately and on atimely basis to all stakeholders including
shareholders.

■Information Disclosure■ Risk Management Cycle
1 Company

wide risk
evaluation

2 Risk Analysis

Preventive Measures
Problem Clarification

3 Draw Up Individual••••

Preventive Measures
Follow the ManualTraining for insider trading prevention, Training
on action against anti-social forces
Mental health Seminar
Compliance slogans posters
Mail magazine to enhancing awareness ofcompliance•••

Establish and operate “Risk Compliance
Committee”
Monitor risk management on an ongoing basis
Set up a Business Continuity Plan (BCP)••

Hold financial results briefings
Timely financial and corporate status reportingin Japanese and English• Expand the IR information available on our
website (evaluated by external assessment ) 46
Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

Summary of Properties Sold – Property Size / Revenue (¥million)（百万円）

Over ¥3 billion
30億円以上50,000Between ¥1 and ¥3 billion
10億円以上30億円未満

45,308Between ¥100 and ¥1,000 million
1億円以上10億円未満
45,00043,064

Less than ¥100 million
1億円未満

3,637

40,85440,00038,5093,373

33,09135,00032,591
24,61430,00027,44526,517

10,102

11,016
20,771

4,088

16,862

26,15825,00019,49320,00015,00010,00010,998
8,525

14,867

3,530

2,119

0

6,218

6,251

6,294

1,076

1,718

4,693

5,422

12,237

12,166

11,805

7,264
9,456

8,213

8,906
1,577

3,160

12,086

10,85012,66914,065

2,418

8,407
5,000

17,297 16,965

4,388

8,513

7,351

8,401

19,831

8,877

9,510

7,388

7,131

6,457

13,274
7,949

9,217

6,832

2,818
2,571
1,895
1,594
1,221
FY2005 '06/11期
FY2006 '07/11期
FY2007 '08/11期
FY2008 '09/11期
FY2009 '10/11期
FY2010 '11/11期
FY2011 '12/11期
FY2012 '13/11期
FY2013 '14/11期
FY2014 '15/11期
FY2015 '16/11期
FY2016 '17/11期
FY2017 '18/11期
FY2018'05/11期
2Q
2Q累計

No. of projects
FY2005

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

Over tha n ￥3 bi l l i on
Between ￥1 and ￥3 billion

0
5

0
6

1
6

2
4

2
2

1
4

Between ￥100 and ￥1,000 million

16

22

16

28

23

15

9

Less than ￥100 million

2

3

3

6

4

7

18

Tota l
23
31
26
40
31
27
* The condomi ni ums , deta ched hous es a nd Res tyl i ng a re counted a s ea ch project bei ng one property* The condomi ni ums a nd deta ched hous es a re cl a s s i fi ed by one uni t’s pri ce.

31

30

0
4

0
1

FY2014FY2015FY2016FY2017FY2018
2Q

2
1

1
10

1
7

2
6

1
12

1
1

6

9

23

19

24

39

19

23

31

26

25

42

48

23

43

60

52

74

100

44

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

47

Summary of Properties Sold – Property Type/Sales Base –(Properties)
(件数)

100
90

その他
Other
戸建
Detached
House
マンション
Condominium
オフィス・商業・ホテル
Office/Commercial

100
9

80

74
35

70
19

60
60

50

43

40
40

4

31
30

20
10
0

23
1

2
4

8

3

26
3

11

8

31
6

27

31
1

3

30
3

1
7

10

15

19
18
8

16%

14
Residential

19

57%

20

6

Others

7

11
14

4

34

28
13

18

9

44

21
14

7
21

9

52

7

14

22
14

15

7

17

22
15

12

Office27%

FY2005 '06/11期
FY2006 '07/11期
FY2007 '08/11期
FY2008 '09/11期
FY2009 FY2010
FY2011 '12/11期
FY2012 '13/11期
FY2013 '14/11期
FY2014 FY2015'05/11期'10/11期 '11/11期'15/11期 FY2016'16/11期 FY2017'17/11期 FY2018
18/11期
2Q
2Q
2Q累計* The condominiums, detached houses and Restyling are counted as each project being one property.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

48

Inventory Breakdown –Properties in Inventories as of May 31, 2018(Properties)
(件数)

120

千葉・埼玉ほか
Chiba,
Saitama, Others
神奈川
Kanagawa
東京都下Tokyo(except the 23 wards of Tokyo)
東京23区
The 23 wards of Tokyo

122

102

102

22

24

25

100

91
8

3
2

72

65

61
60

32

5

80

6
1
3

55
3
1 2

40

54
41

78

56

8

5
2 1

43
2
4
4

55

49

38

2
5
2

6
4

33

33

'09/11'10/11

68

5

7

9

12

6

17
23

19

24
19

9

Tokyo

2
5
2

53%

54
45

20

68

48
40

44
36

29

41

0
'05/11'06/11'07/11'08/11'11/11'12/11'13/11'14/11'15/11'16/11'17/11'18/5* The condominiums, detached houses and Restyling are counted as each project being one property.

Copyright © 2018 TOSEI CORPORATION, All Rights Reserved.

49

Please visit our website.

For Contact
Accounting Department
Tel：+81 3-3435-2865

Fax：+81 3-3435-2866
URL :https://www.toseicorp.co.jp/english/

DISCLAIMER
Except for historical facts, all plans, forecasts, strategies and other information contained herein are forward-looking statements. Forward-looking statements
include but are not limited to descriptions of future events and performance containing words such as or similar to “believe,” “expect,” “plan,” “strategy,”“anticipate,” “forecast,” and “estimate,” and are based on judgments derived from the information available to the Company at the time of publication. Various
factors could cause results to differ materially from any projections presented herein. The Company reserves the right to maintain or change its projections
regardless of any new information, conditions or changes in performance. These materials are for informational purposes only, and should not be construed as arecommendation to invest in the Company.

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