Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Results for the
Fiscal Year Ended March 31, 2016
Our Goal is to Become the Real Estate Company Best Loved
and Most Chosen by Customers Worldwide

Financial Results for the Fiscal Year Ended March 31, 2016

3-16

Forecast for the Fiscal Year Ended March 31, 2017

17-20

Future activities
1) Business environment

21-232) Managerial policy and business model

24-363) Growth strategies

37-46

Sun Frontier Fudousan Co., Ltd.

Company Overview
Name
Head Office
Representative
Established
Stock Listing
Capital
Employees
Main Group
Companies: Sun Frontier Fudousan Co., Ltd.
: Toho Hibiya Building (Hibiya Chanter) 14F
2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006: President, Tomoaki Horiguchi: April 8, 1999
: First Section of the Tokyo Stock Exchange
on February 26, 2007 (Stock code 8934): ¥8,387 million (as of April 30, 2016): 307 Consolidated (as of April 30, 2016): SF Building Support Inc.
: Sun Frontier Real Estate Investment Advisors Inc.
: K.K.Yubi: Sun Frontier Taiwan: Sun Frontier Hotel Management

Businesses
1. Real Estate Revitalization Business
Replanning Business/ Building Rental Business/ Real Estate Securitization Business

2. Real Estate Services Business
Rental Brokerage/ Property Management/ Building Maintenance/ Sales Brokerage/
Construction Solutions/ Delinquent Rent Guarantees

3.Hotel development, operation
Investment, development, operating
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

1

Sun Frontier Fudousan Co., Ltd.

our “altruistic” spirit
We have upheld “altruism” since the establishment of our company.
Our company's credo is "altruism".
“Business is to do the benefit for the others” is my principle.
For the last 3 years, I have felt that Sun Frontier had been going through a major transformation and growth. It roots in the every employee, who is working
lively with conscientious sense, less emotional stress and life worth living. That is really like employees’ ‘brain accelerator’ pressed down on. The change inthe basics ethos, “the place where we can work pure-heartedly only for the smiles of clients”, has brought such internal transformation.
3 and a half years ago, I have decided the management policy strong-mindedly as below;
Not to seek gain, we wish to win the trust.
We change ourselves. Based on the viewpoint of clients, we solve any real estate related issues.
With having my principle of “walk the talk”, it was a courageous decision as the company president to declare “Not to seek gain”. Looking back on that time,
however, it was quite natural and reasonable for such company to be regarded necessary and also to grow consistently as a public company. From theperspective of clients’ perception, we spare no time and effort to solve problems related to any real estate issues, and moreover, we are result-oriented to gainclients’ trust by providing credible work.
Sun Frontier changed as a place where we contribute to make people smile without any thought of gaining reward. Since employees also have vigorous senseof altruism, they focus on not to challenge business result but to put the best effort to serve for clients from the bottom of their heart. I feel that now there are
more and more opportunities that our team come up with solutions for clients’ problems by themselves and by improving service quality together withcolleagues and co-workers, and these actions lead to gain clients’ trust as a result.
To reach out our target service level, we have focused and realized to provide in-house operations by well-trained staffs in all domains related to real estatebusiness. The conclusion of my self-analysis for this year’s achievement is that, because these factors worked like intangible asset, we could successfullyacquire clients’ favorable evaluation that Sun Frontier is “trustful and convenient”, “the company that works for the client”, and “people kindly taking actions
for the users”.
I follow no stereotype opinions or consensus. My ideal is to live up with the concept of “altruistic”. With fellows to join our cause, we are aiming to grow up
to be the real estate company best loved and most chosen by clients worldwide.
I appreciate your continuous support and encouragement.

President Tomoaki Horiguchi
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2

Sun Frontier Fudousan Co., Ltd.

Highlights of the results
Summary of the Fiscal Year Ended March 31, 2016

Increases both in sales and profit for 5 consecutive terms,
record-high amount of net income(¥ million)
FY March 31,
2016

yr/yr change

increase rate

Forecast announced
Feb.4 2016

Sales

30,625+2,884+10.4％

33,000Operating income

7,387+1,536+26.3％

7,300

Ordinary income

7,024+1,430+25.6％

7,000

Net income

8,157+3,103+61.4％

7,200

dividends per share

¥25.0

+¥8.5

+51.5％¥25.0

By linking up and combining unrivalled knowhow andexperience gained through the process of providing the various
services, we have been proactively developing real estate
revitalization projects that deliver substantial value added on.
The profit margin of the Revitalization business increased.
Segment Profit margin is 27.8%, which is higher than the profit
margin for the previous year (22.1%).
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

3

We have developed “three-pronged
strategy” for future growth.
Hotel business and Space Rental
business started well. Hotel operating
rate raised to about 90% in the first 2
months. Space Rental business turned
positive in a half year.
Sun Frontier Fudousan Co., Ltd.

5 years Performance (consolidated)(¥ million)
FY endedMar. 31, 2012

FY endedMar. 31, 2013

FY endedMar. 31, 2014

FY endedMar. 31, 2015

FY ended Mar.
31, 2016

6,923

10,58017,772

27,741

30,625－

Operatingincome

861

2,156

4,531

5,850

7,387

24.1％

Ordinary
income

799

2,039

4,341

5,593

7,024

22.9％

Net income

928

2,483

4,020

5,053

8,157

26.6％

Net income pershare (yen)

24.98

66.50

94.03

118.18190.78－Dividends per share
(yen)

3.50

8.50

13.50

16.50

25.00（forecast）

Sales

profit ratio

51.5％up
The Company conducted a 1:100 stock split of common stocks as of October 1, 2013. Figures for the net income per share may
reflect a retroactive adjustment due to the influence of the stock split.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

4

Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary(¥ million)
FY ended Mar 31,
2015

Sales

FY ending Mar 31,
2016

FY ended Mar 31,
2015

Operating income

27,741

30,625

Real estate revitalization

22,03624,546

Real estate securitization

403

145

Rental building business

1,839

2,144

Ordinary income

Brokerage

1,239

1,537

Property management

1,325

1,483

897

769

8,983

10,959Real estate revitalization

5,592

7,377

Real estate securitization

403

145

Rental building business

988

1,117

1,055

1,314

Property management

595

675

Other businesses

349

328

3,133

3,572

Other businesses

Gross profit on sales

Brokerage

Selling and generaladministrative expenses

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

FY ending Mar 31,
2016

5,850

7,387

Non-operating income

1525

Non-operating expenses

272

389

5,593

7,024

Extraordinary loss/income

▲18

1,257

Corporate income tax, etc.

433

115

Minority interests in income/loss

88

▲2

5,053

8,157

Net income• The profit margin of the Revitalization business increased,
improving ordinary income margin.
• The gain on fixed asset sold contributed the highest profit forthe period.
• The Brokerage business grew considerably (up by 24.5%
from the previous fiscal year).
Stable income structure covering SG&A
・The income from rental building and realty service businesses(3,436million yen) exceeds the SG&A(3,239 million yen),excluding Revitalization sales commissions.

5

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Assets(¥ million)

End of Mar. 2014

End of Mar. 2015

End of Mar. 2016

Increase/decrease(from the end of
Mar. 2015)

31,44637,45251,365+13,912

Cash and deposits

11,18012,686

15,413+2,727

Inventory assets

18,72923,47932,714+9,233

Other current assets

1,536

1,285

3,237

+1,951

Noncurrent assets

2,464

2,971

2,718

▲252

Property plant andequipment

2,164

2,483

1,919

▲563

Intangible assets

11

76

278

+201

Investments and otherassets

287

412

520

+108

33,91040,42454,084+13,659

Current assets

Total assets

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

6

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Liabilities/Equity(¥ million)
End of Mar. 2014

End of Mar. 2015

End of Mar. 2016

Increase/decrease(from the end of
Mar. 2015)

3,023

3,550

7,641

+4,090

Short-term loans payable, etc.

1,006

1,004

3,353

+2,349

Income taxes payable, etc.

266

221

973

+751

Other current liabilities

1,750

2,324

3,314

+989

12,417

14,172

16,298+2,125Long-term loans and bonds
payable11,35912,98815,055+2,066

Other noncurrent liabilities

1,057

1,183

1,242

+58

15,44017,72323,939+6,216

18,217

22,69330,144+7,451

252

8

▲0

▲8

Total net assets

18,46922,70130,144+7,443

Total capital and liabilities

33,91040,42454,084+13,659

Current liabilities

Noncurrent liabilities

Total liabilities
Shareholders’ equity
Otherscapital adequacy ratios of at least 50%
End of Mar. 201453.7%

End of Mar. 2015

56.2%

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

As the purchasing of revitalized property progressed, the interest-bearing liabilities
increased from 14.0 billion yen as of the end of the previous year to 18.4 billion yen.

End of Dec. 2015

55.7%

Retained earnings increased due to the difference between net income(+ 8.1 billion yen) and term-end dividend payment (-700 million yen).

7

Sun Frontier Fudousan Co., Ltd.

Performance of

Revitalization business(¥ million)

Sales

FY ended Mar
31, 2015

FY ending
Mar 31, 2016

22,03624,546

Increase/decrease(¥ million)+11.4%

Sales
Segment income
Profit margin

25,00050%

24,54622,036

Segment income (Note 1)

4,879

6,831

+40.0%
20,000

Profit margin
No. of procuredbuildings

22.1%

27.8%

+5.7%p35

34▲1

No. of sold buildings

29

24

▲5

No. of buildings in stock
as of the end of the term

27

38

+11

40%
31.2%

15,00027.8%

13,242

10,000

30%

20%

22.1%
6,831

■ Profit margin increased considerably to over 27%.

5,000

■ The average business period for selling a property is 291 days.

4,879

10%

4,127

■ The stocks of revitalization property as of the end of the term are
38 buildings, worth 32.7 billion yen.

0

FY ended Mar 31,
2014

FY ended Mar 31,
2015

FY ending Mar 31,
2016

0%

(Note 1) “Segment income” is calculated by subtracting the expenses for respective businesses,
such as interest paid, sales commission, and goodwill amortization, from gross profit on sales.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

8

Sun Frontier Fudousan Co., Ltd.

Extended the processing period to create
higher-margin
60.0%●2012.4 - 2015.3●2015.4 - 2016.3

Gross Profit

Taking more measures to reachcommercialization, we generatehigh values.

50.0%

40.0%

30.0%

20.0％
20.0%

Profitable projects by promptly
raising occupancy rates and highvalue-added revitalization,

10.0%

0.0%
0

100

200

180 days
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

300
days
sales
in
inventory
事業期間（日）

9

400

500

600

Sun Frontier Fudousan Co., Ltd.

Performance ofRental building business(¥ million)

2,500(¥ million)

Sales

FY ended Mar
31, 2015

FY ending
Mar 31, 2016

1,839

2,144

100%

Increase/decrease+16.6%

Sales
Segment income
Profit margin

2,000

2,144

80%

1,839

Segment income

987

Profit margin

53.7%

1,096

+11.0%

51.1% ▲2.6%p

1,500

60%
50.6%

51.1%
53.7%

 We purchase and retain properties according to
our well-selected criteria. With a combinationof valuable knowledge and skills in rental
brokerage, property management, construction
solutions and rent guarantee services, we havebeen succeeding in maintaining a high rate ofutilization and securing stable rental income.

1,096

1,044

987

1,000

500

40%

529

20%

0

0%
FY ended Mar 31, FY ended Mar 31, FY ending Mar 31,
2014
2015
2016

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

10

Sun Frontier Fudousan Co., Ltd.

Performance ofReal estate securitization business(¥ million)

FY ended Mar
31, 2015

FY ending
Mar 31, 2016(¥ million)

Increase/decrease

Sales
Segment income
Profit margin

500

100%
100.0%

Sales
Segment income
Profit margin

100.0%

145 ▲63.9%

403

100.0%

403 403400

145 ▲63.9%

403
100.0%

100.0%

80%－

There was the income from investment allocation in
conformity with the sale of collaborative investment
projects(1 project), but both sales and profits dropped.

300

60%

200

40%
145 145

100

20%
34

34

0

0%
FY ended Mar 31, FY ended Mar 31, FY ending Mar 31,
2014
2015
2016

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

11

Sun Frontier Fudousan Co., Ltd.

Performance ofBrokerage business(¥ million)

Sales
Segment income
Profit margin

FY ended Mar
31, 2015

FY ending
Mar 31, 2016

1,239

1,536

1,047
84.6%

1,312
85.4%

Increase/decrease(¥ million)

Sales
Segment income
Profit margin

2,000+24.0%

100%

1,800

+25.2%

1,600

84.6%
1,620 78.2%

1,400

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

12

80%

1,536

+0.9%p< Sales brokerage>
1,200 As for the sales brokerage business, we mostly focused on
the relationship with other departments or the agents to
1,000
obtain the effective information and introduction, put more
800
time, made effort into them and added the value on. In
such a way we succeeded to take some chances to get
600
acquainted with new clients, both sales and profits grewconsiderably in comparison to the same period of the400
previous year.
200< Rental brokerage>0 We concentrated on solving the worries and difficulties ofowners and finding tenants for revitalized buildings,
which is generating to the creation of the future profits forthe entire company.

85.4%

1,267

1,312
1,239

60%
1,047

40%

20%

0%
FY ended Mar 31, FY ended Mar 31, FY ending Mar 31,
2014
2015
2016

Sun Frontier Fudousan Co., Ltd.

Performance ofProperty management business
FY ended Mar
31, 2015

FY ending
Mar 31, 2016

1,325

1,483

+11.9%

Segment income

595

675

+13.5%

Profit margin

44.9%

45.6%

+0.6%p(¥ million)

Sales

Increase/decrease(¥ million)

Sales
Segment income
Profit margin

1,600

80%
1,483
1,325

1,200

60%
1,099

<Property management business>

No. of entrusted buildings: 333 (up 57 compared the end of
previous year)Occupancy rate: 95.5% (up by 2.6p)【The number of entrusted buildings and occupancy rate】
No. of entrusted buildings Occupancy rate
End of Mar. 2014
227
997.1%End of Mar. 2015
276
92.9%
End of Mar. 2016
333
95.5%

43.1%

800
675

473

400

20%

0

We made efforts to increase projects in cooperation with otherbusiness divisions. As a result, sales increased.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

40%
595

<Building maintenance business>


45.6%

44.9%

13

0%
FY ended Mar 31, FY ended Mar 31, FY ending Mar 31,
2014
2015
2016

Sun Frontier Fudousan Co., Ltd.

Performance of

Other Business (Delinquent rent guarantee,
Construction solution, Space rental, Hotel)(¥ million)

FY ended Mar
31, 2015

FY ending
Mar 31, 2016

Increase/decrease(¥ million)

Sales

897

770

▲14.1%

Segment income

349

329

▲5.6%

Profit margin

38.9%

42.7%

+3.8%p

Sales
Segment income
Profit margin

1,000

50%
897

42.8%

42.7%

800

40%

770
730

38.9%

< Delinquent rent guarantee business>We strengthened the relationship with in-house departments
600
including real estate broker and partner companies, so that both sales
and profits increased.
<Construction solution business>Sales and profits decreased compared to the previous year.

30%

400

<Space rental business>Income covered the whole expenditure during the third quarter ofconsolidated fiscal year by the improvement of the recognition by
active marketing.

349

20%
329

200

10%
31

0
< Hotel business >We have agreed to make a business alliance with Shanghai Spring
Group for the hotel business in Japan. April 25, 2016,“SPRINGSUNNY Hotel Nagoya Tokoname” opened its doors to
global travelers as the first hotel of our collaborative brand.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

14

0%
FY ended Mar 31, FY ended Mar 31, FY ending Mar 31,
2014
2015
2016

Sun Frontier Fudousan Co., Ltd.

Key Performance Indicators■ Ordinary income margin■ Capital adequacy ratio(¥ million)(¥ million)

35,00035.0%

35,00030.0%30,000

22.9%
24.4%
25.0%
20.2%

25,00020.0%

20,000

50.0%

15.0%

15,00040.0%

10,00010.0%

10,000

30.0%

5,000

5.0%

5,000

20.0%

0.0%

0

Sales
売上⾼
Ordinary income
経常利益
Profit margin to sales
経常利益率30,00025,00019.3%

20,00015,000

80.0%

Net
asset
純資産
Capitaladequacy ratio
⾃⼰資本⽐率

68.5%

70.0%

57.5%

56.2%

55.7% 60.0%

53.7%

11.5%

0

2012/3

2013/3

2014/3

2015/3Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2016/3
2016/3

2012/315

2013/3

2014/3

2015/3

2016/3
2016/3

10.0%

Sun Frontier Fudousan Co., Ltd.

Profitability (Return on Equity)

35.0%

30.0%

Earning power from• Specialization only in <urban center district> and <office>• Investigation of wealthy individuals' needs and marketing• Revitalization based on the viewpoint of customers• Self-manufactured real estate services
ROE
ROE
ROE (converted to after-tax profit by effective tax rate) note 1
ROE(実効税率換算シミュレーション※）

23.6%

25.0%

30.9%

24.5%

24.7%
21.0%

20.0%

15.5%

16.3%

16.3%
17.2%

15.0%

10.0%

5.0%

6.8%

10.9%

market capitalization top 25 of real-estatecompanies (non-residential category)

4.6%

Average of ROE 10.5％

0.0%
2011/3

2012/3

2013/3

2014/3

2015/3

2016/3Note 1provisional assumption to be subject to taxation by the effective tax rates for removing the influence of tax advantage from loss carried forward,
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

16

Sun Frontier Fudousan Co., Ltd.

Forecast for the Fiscal Year
Ended March 31, 2017

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

17

Sun Frontier Fudousan Co., Ltd.

Forecast for the FY Ended March 31, 2017(¥ million)

2016/32017/3

Increase

30,62541,000+33.9％

26,83536,700+36.8%

Revitalization Business part

24,54635,000+41.7%

Rental building part

2,144

1,700

▲20.7%

Brokerage business

1,536

1,620

+5.4%

Property management

1,483

1,580

+6.5%

770

1,100

+42.8%

10,95913,385+22.1%

8,640

10,600+22.7%

Revitalization Business part

7,377

9,800

+32.8%

Rental building part

1,117

800

▲28.4%

Brokerage business

1,314

1,400

+6.5%

Property management

675

760

+12.5%

Other business

329

625

+89.8%

SGA expenses

3,572

4,885

+36.7%

Operating income

7,387

8,500

+15.1％

Ordinary income

7,024

8,200

+16.7％Net income

8,157

5,600

▲31.3％

Substantial incurred tax rate

1.4％

30.7％

Cash Dividends per Share (Yen)

25.00

28.00

Sales
Real Estate Revitalization

Other business
Gross profit
Real Estate Revitalization

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

18+12.0％

Real estate revitalization and real estateservices are our core business.
In particular, we realize sustainablegrowth of revitalization business thatcombine all of the companies’ force.
Income gain from our own assets will
decrease for deliberate dispositions.
Earnings will be reinvested to the futurebusiness.

Margin rate of Revitalization business isconservatively estimated, based on thepremise of current market situation heldon.
FY 2015/3 ： 25.4％
FY 2016/3 ： 30.1％
FY 2017/3 : 28.0％

Hire add 50 of employees
For our tax advantage from loss carriedforward will be used up in full within the
period of this fiscal year, tax burden rate
comes close to the effective tax rate.

DPS is planned to be ¥28 per share.
Sun Frontier Fudousan Co., Ltd.

Transition prediction of net income
Net income calculation(¥ million)
10,000taxes-deferred＋960

taxes-current▲1,075Extraordinary
income＋1,2458,000

taxes-deferred▲1,470taxes-current▲1,130

6,000

4,000

Ordinary
incomeNet
incomeOrdinary
income

8,154

8,200

7,024

5,600

2,000

0

Net
income2016/3 actual

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2017/3 estimated19

Sun Frontier Fudousan Co., Ltd.

Profits and dividend
03/201103/201203/201303/201403/2015

03/2017(planned)

03/2016

Net income(¥ million)
Net income per share(yen)
Dividends per share
(yen)

363

928

2,483

4,020

5,053

8,157

5,600

9.77

24.98

66.50

94.03

118.18190.78130.97

0.00

3.50

8.50

13.50

16.50

25.00

28.00

Dividend payout ratio

0.0%

14.0%

12.8%

14.4%

14.0%

13.1%

21.4%

Dividend payout ratio
converted to after-tax profit

0.0%

28.2%

22.1%

23.3%

19.7%

19.3%

-

The Company conducted a 1:100 stock split of common stocks as of October 1, 2013. Figures for the net income per share may reflect a retroactive adjustment due to the influenceof the stock split.

Net income/share and Dividend/share

30 yenDividend per share

250 yen

Net income per share

25 yen190.78 yen

200 yen

20 yen130.97 yen

150 yen118.18 yen

15 yen28.0 yen

94.03 yen
10 yen25.0 yen

100 yen66.50 yen
16.5 yen
13.5 yen
24.98 yen

5 yen
9.77 yen

50 yen8.5 yen

3.5 yen
0 yen

0 yen
FY 2011/3

FY 2012/3

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

FY 2013/3

FY 2014/3

20

FY 2015/3

FY 2016/3

FY 2017/3(estimated)

Sun Frontier Fudousan Co., Ltd.

<Future activities>
1) Business environment2) Managerial policy and business model3) Growth strategies

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

21

Sun Frontier Fudousan Co., Ltd.

Business environment
The global
economymoderates to asustainablegrowth.

The global economy is expected to grow moderately, because of the healthy U.S. economy, but we need to pay
attention to the sluggish growth of the Chinese economy, the downturn of Europe, etc.
As continuation of economic growth strategy by the government, growth of inbound market as a result of thepromotion of tourism have contributed to the positive growth rate of Japanese economy this term. On the other
hand, growth slowdown of emerging economies still give national economy an uncertain outlook.
The Government continuously pursues to expand the economic virtuous cycles, through directing growing
corporate profits towards investment, wage increase and further improvement in the employment situation.

Financial inflow
by strengthen
the easy-money
policy, andtourism demand
growthNegative interest policy will provide a financial inflow to the real estate market.

The demand of
urban officebuilding market
will be growing

Based on healthy corporate performance, the transaction of relocating to a larger office, enlarging the officespaces etc. becomes more achieve than before. In the five center district wards of Tokyo, the demand-supply
balance will be tightened due to the decline in supply, and this leads the rent upward and vacancy rate
downward.

As population is aging and the fund procurement environment is favorable because of low interest rates, there
is a growing demand for the purchase of real estate, for coping with inheritance tax, managing assets, andbracing for inflation.
The number of foreign tourists to Japan reached about 20 million people in the previous year, the supply ofaccommodation in Tokyo, Osaka, and Kyoto has become a socially urgent.

Mainly for urban office buildings in good locations, the advertised rents will be raised, or rent increasenegotiation at the renewal of contract is necessary. This enhances the advantage of lessors. But Cap Rate has
little scope to down. Caution and prudence are required.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

22

Sun Frontier Fudousan Co., Ltd.

Changes in office rent and vacancy rate
in center district 5 wards in Tokyo
Average rent [yen/tsubo]

Average vacancy rate [%]Average rent in
Apr.

（％）

（yen）

18,061 yen
Increase for
28 months in a row(+11.4% fromthe bottom value)
Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%

Peak of vacancy rate
Aug. 2003
Vacancy rate: 8.57%

Average rent

Vacancy rate

Peak of average rent
Aug. 2008
22,901 yen

Vacancy rate in Apr.

4.23%
Improved 5.2% during
the last 46 months

Bottom average rent
Oct. 2004
17,526 yen
Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%

Bottom average rent
Dec. 201316,207 yen* Source: Produced by our company based on the “office report” of Miki Shoji. This researched the office buildings whose reference floor’s area is over 100 tsubo in 5 wards in Tokyo.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

2. Managerial policy and business modelNot to seek gain, we wish to win the trust.
We change ourselves. Based on the viewpoint of customers, and wesolve any real estate related difficulties.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

24

Sun Frontier Fudousan Co., Ltd.

Sun Frontier’s Vision and Policies
VisionWe aim to become the real estate company loved and chosen
the most by clients in the world as “professionals in real estateutilization”

Clients

Building owners, asset holders, and wealthy individualsCorebusiness

Real estate revitalization and utilization

Policies

Strategies

To focus on people, rather than property
To keep the viewpoint of customers, and solve any real estaterelated difficulties

Urban
centerTenant finding
capability

Strength

OfficeReal estate
Revitalization
capability

Building operation capability
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

Classification chart of our business
Office buildings
Real Estate Revitalization Business
Re-planning Business
Building Rental Business
Real Estate Securitization Business

Hotel business
Operations
Development, Regeneration
Stock holdings, Funding

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Real Estate Services Business
Rental Brokerage Sales Brokerage
Property Management
Building MaintenanceConstruction Solutions
Delinquent Rent Guarantees
Space Rental, Small officeAbroadTaking over the investment by Taiwanese investors
Public housing in Indonesia
Hotel and housing Developments in Vietnam

26

Sun Frontier Fudousan Co., Ltd.

To offer services to nearby owners
1. Specializing in the center of Tokyo
10 footholds in Chiyoda, Chuo, Minato, Shinjuku
Shibuya Wards, and Yokohama
We excel at finding tenants for office buildings,
by utilizing our familiarity with local areas.
2.We are not only broker
rental, but also listen to and solve
the troubles of owners, and thenproduce various earning opportunities.
3. We have various consultations such as
renovation, sale of the building with owners
through the conclusion of the contract. As aresult, we procure real estate to be revitalized.

Prioritized districts

Akihabara
Ikebukuro

Kanda

Kudan
Koujimachi

Nihonbashi
Imperial
PalaceShinjuku

Aoyama

HQ in
Hibiya

Tokyo

Ginza

Toranomon
Shinbashi

Shibuya

Akasaka
Hamamatsu-cho

Contribution by solving any realestate related difficulties, based on
the viewpoint of customers.

Ebisu
Shinagawa

Yokohama(

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Ueno

27

indicate the main target areas of our branches.)
Sun Frontier Fudousan Co., Ltd.

Real Estate Revitalization and the Cycle of
Added Value①

In the vertical service business, we survey and solve complaints, inconveniences, and discomforts, while
listening to clients’ voices. We combine the know-how and grasped needs, and apply them to used buildings
we acquired, and then② revitalize the real estate with added values in the horizontal real estate revitalization business, and sell them.

Asset consultancy

Rent guarantee

Construction
planning

Building management

Brokerage in rental

Brokerage in sale

Acquisition ofproperty

Real estate
revitalization

Added value-linked products

To research how to solve clients’ troubles
at the site, and offer solutions

Clients (Building owners, asset owners, and wealthy people)
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

28

Sun Frontier Fudousan Co., Ltd.

Company credo “altruism”
We aim to offer greater happiness to customers and promote the business operation among
all employees.

IssuesSolutions

Value

Follow Up

customers’ requests
and troubles

Provision toinheritance tax
Business succession
Sales brokerage
Rental brokerage

Manufacturing
Development
Regeneration
construction

Property Management
Building MaintenanceRepairRedesigned

producting

operations

viewpoint ofcustomers

resolve

Maximization of customers’ profit is just “altruism”.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Sun Frontier Fudousan Co., Ltd.

Earning Opportunities even after sale
“Revitalized buildings with one price for one buildings” located at good places in the urban center
We increase market values with excellent quality and attractive features, and sell real estate
to asset holders and wealthy people at the right price. Even after the sale, we have important earning
opportunities.

Menu of after-sale services
Sale of revitalized
property

Building
management/
maintenanceRentalbrokerage

Rent
guarantee

Interior
finishing・Accountmanagement
・To listen toopinions
・Accounting report
・Negotiation withtenants
・Buildingmaintenance・Emergency
measures・Equipment
management

・To findoccupants
・brokage for
furnished office・Nonpayment is

・Interiorplanning
・Design・Interiorfinishing・Restoration tothe original state・Undertaking of
tenant’s
construction

・Marketing
・Consultancy

immediately
guaranteed
・To guarantee
rent, etc. forup to 18 months

RenewalAssetconsultancy

Sales
brokerage

・Renewal of theentrance, airconditioner,
outer walls,
etc.
・Repair
・Buildinginspection

・Specialist
consultation
・Measures forinheritance tax
・Assetmanagement
・Business
succession
・Consultancy

・Purchase of new
real estate
・Sale of assets
・Replacement bypurchase of new
real estate forbusiness
・Replacement ofassetsBusinesses of both revitalizing real estate and operating rental buildings
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

30

Sun Frontier Fudousan Co., Ltd.

Entrusted area by PM and clients are
increasing steadily.
Variation in the occupancy rate and entrustment area of entrusted real estate

100％

95.8％

(As of Apr. 2016)

Entrusted area
Occupancy rate of entrusted real estate
Occupancy rate of middle‐sized buildings in 23 wards in Tokyo(㎡)

646,893

60000097.41％

500000Occupancy rate of PM entrustment buildings

95％

40000030000090％20000094.5％

Occupancy rate of middle-sized buildings
in 23 wards in Tokyo(As of Apr. 2016)

10000085％

0Jan‐08Jul‐08Jan‐09Jul‐09Jan‐10Jul‐10Jan‐11

Jul‐11

Jan‐12

Jul‐12

Jan‐13

Jul‐13

Jan‐14

Jul‐14Jan‐15

Jul‐15

Jan‐16Top-ranked companies in the number of owners※
2015

2014

1

Vortex

360

283

2

XYMAX

251

243

3

Sun Frontier Fudousan

207

159

4

RIO CONSULTING

191

－

5

Itochu Urban Community

180

180

Note: Occupancy rate of entrusted buildings under our company for management
In the 4th quarter of fiscal year 2014, important tenants relocated to larger offices, vacating someunits. Consequently, occupancy rate declined temporarily at the end of the term.
Later, tenants have been moving in steadily, recovering occupancy rate.

※Source: Produced by our company based on the Nov. 2015 issue of “Monthly Property Management”
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

Increases both <headcount> and<value-added per person>(¥1,000)

Number of employees and Ordinary income per person

30,000300
ordinary income per person

25,000(person)25,082

number of employees as end of FY

21,81725,450276

250

20,000223

15,00010,000

5,000

206
181

9,900

200

199

150

4,417

0

100
FY 2012/3

FY 2013/3

FY 2014/3

FY 2015/3

FY 2016/3

By the recovery of the market encouraged, management policy clarified and re-forming staff
consciousness, we push forward confidently toward demand-to-additional value creation, throughsolving real estate related difficulties, based on the viewpoint of customers.
We have received high commendation from our clients such as “the company will work best for me” ,so that supportive push is expanded and it has lead to our growth.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

32

Sun Frontier Fudousan Co., Ltd.

Basic Principles for our business
1. Mental management based on our ethos
and philosophy• We have upheld “altruism” since the establishmentof our company.
• We together clean our office, etc. and read thephilosophy booklet every morning, to share thevalue “the pleasure of others pleases us.”
• We aim to offer greater happiness to customers, andcontribute to the actualization of a rich society.

Businessmanagement
based on the
viewpoint ofcustomers

2. Management among all employees based on theaccounting for each division• By developing and diffusing the accounting systemfor each division (Amoeba management), we
enhance employees’ profit awareness and promote
the business operation among all employees withmanagement perspective.

Management among
all employees based on
the account for eachdivision

3. Business management based on the
viewpoint of customers• We listen to customers’ requests carefully, deal withand solve even minor troubles, without stint.
• We change ourselves from the viewpoint ofcustomers, and challenge, create, and advance.
• Based on the collaboration among different sections,
we create high added values that are linked to one
another.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Mentalmanagement
based on our
ethos andphilosophy

Employees play major roles.
Resonant business administration.
33

Sun Frontier Fudousan Co., Ltd.

Enrichment of corporate governanceReasons for appointing 4 external executives
Toshio Takahara (external director)• As an executive of “UniCharm,” he grew businesses and has plenty of experience.
• In the decision making process of the board of directors of our company, he gives effective and appropriate advices,from the standpoint independent from the management that executes businesses.

Yukitoshi Kubo (external director)• He is the former chief of the Screening Section of Tokyo Stock Exchange, and qualified as a certified public
accountant, and has the expertise and plenty of experience in the Financial Instruments and Exchange Act, theCompanies Act, and financial affairs.
• In the decision making process of the board of directors of our company, he gives unbiased, fair, appropriate advices,from the standpoint independent from the management that executes businesses.

Koichi Kase (external auditor)• He is versed in tax affairs and accounting as a tax accountant, and audits the business operation of directors strictly,
based on his knowledge of finance and accounting.
• He possesses the profound knowledge of philosophy and amoeba management, as a student of Seiwa Juku.

Koichi Moriya (external auditor)• As a lawyer, he specializes in real estate and finance, has accumulated plenty of experience, and gives appropriate
advices for improving our systems for complying with law.
• He also has the experience of serving as an external auditor of “Tamura Corporation” and “Samantha Thavasa Japan
Limited.”

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

Sun Frontier Fudousan Co., Ltd.

Revitalization case 1
Best renovation to take advantage of location “Ginza”
appearance renewaled

rooftop terrace renewaled
Reassurance for tenants by
antiseismic reinforcement
improved earthquake resistancefor about 40% up in rent thanassumed at planning.

We produce “premium set-up
office” with envision forprospective tenants.
garden terrace with panoramic view of Ginzaroom inside Before

room inside After【Property outline】
Location: Ginza, Chuo-ku, Tokyo
Structure: a steel reinforced concrete and light-gauge steel
flat-roofed 9-story building
Date of completion: 1980
Purposes of use: store, officeLand area: 98.17 ㎡
Gross floor area: 763.01 ㎡
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

35

Sun Frontier Fudousan Co., Ltd.

Revitalization case 2
Sourcing and Add-value creation
appearance renewaled

entrance Before

Rental brokerage mediator made continuous
efforts to solve any real estate related difficulties,
we won the trust of the client. Based on theperformance, we purchased the property directly.
Lease contracts have been signed with rent being
about 20% higher than the previous contracts.
entrance Ａｆｔｅｒ

Renewal work brought the most out of classy atmosphere produced by archedceiling & marble【Property outline】
Location: Yoyogi, shibuya-ku, Tokyo
Structure: a steel reinforced concrete and lightgauge steel flat-roofed 10-story
building
Date of completion: 1992
Purposes of use: residence, officeLand area: 153.05 ㎡
Gross floor area: 1,097.25 ㎡
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Beautiful Welcome flower arrangement replaced in every two weeks

36

Sun Frontier Fudousan Co., Ltd.

3. Growth strategies

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

Activities of “three growth directions”

1) Strengthen our existing business

Expanding office business&hotel business, high demand of inbound2) M&A

capital alliancebusiness alliance3) Overseas expansion

Indonesia
Vietnam

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

38

Sun Frontier Fudousan Co., Ltd.

Strengthen our existing business<Space rental business>
Vision center Tokyo

Space Rental business established in this term has started toachieve positive monthly financial result since this 3rd quarter.
We have strong leasing capability in finding tenants for officebuildings, and that has been producing new branches in
excellent locations.

New branches in progress

1 min. on foot from Tokyo Station of JR
many Lines
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Vision Office Kanda

Vision Office Shinjuku

1 min. on foot from Kanda
Station of JR Lines

1 min. on foot from Shinjuku
Station of JR Lines

39

Sun Frontier Fudousan Co., Ltd.

The Grand Opening of the heart-warming hotel

SPRINGSUNNY Hotel Nagoya Tokoname
appearance【Property outline】
Location: Shinkaichou, Tokoname, Aichi
The Number of Rooms: 194 rooms
large bath: “maneki-yu”of artificial hot spring using
natural mineral togoal
Date of completion: 2008
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Sun Frontier Fudousan has agreed to make a business alliance with Shanghai
Spring Group for the development of inbound city-tourism hotel. Apr. 25,“SPRINGSUNNY Hotel Nagoya Tokoname” opened its doors to global
travelers as the first hotel of our collaborative brand.
We are operating “SPRINGSUNNY Hotel Nagoya Tokoname” together by
combining our strength of revitalization and operation of real estate from theperspective of customers, and the Spring Group’s strength of attracting thecustomers in travel and air transport business and tourist-sending to Japan.
Aiming at becoming “heart-warming” hotel which is attractive to foreign group
tourists and independent travelers, we are trying our best to make
improvements every day.

ceremony for our business luck

floral tributeinterview excerpt

Japanese-inspired twin room40

Sun Frontier Fudousan Co., Ltd.

Relaunch to reach for the heart-warming
hotel, and sales improved remarkably
Main renewal items
security measures enhancement, external wall repair,more beds and more comfortable headboard installation,
entrance redesigned, restaurant expansion
entrance Before

500

Change of gross sales
178.9% increase YoY

450
400

restaurant expansion

350

CY 2016300
CY 2015

large bath “Manekiyu” ofartificial hot springaquisition
Dec. 2015250

elevators up to 3
200

CY 2014150
100

large bus parking

in-room amenities and toiletries

CY 201350

Jan
1⽉ Feb
2⽉ Mar
3⽉ Apr
4⽉ May5⽉ Jun
6⽉ Jul
7⽉ Aug
8⽉ Sep
9⽉ Oct10⽉ Nov
11⽉ Dec
12⽉( index 100 as sales amount in Jan. 2013 )We kicked off the operation and implement the renewal. Re-form staff
consciousness aiming at becoming “heart-warming” was successful,service quality progress has arose from a spirit of self-sufficiency and asense of togetherness, thereby sales increased about 180% YoY.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

41

Sun Frontier Fudousan Co., Ltd.

Changes in Visitor Arrivals
The government positioned tourism industry as a key industry in the national growth strategy, doubled the target figure of travelers
and set it as 40 million in 2020, 60 million in 2030. The number of foreign tourists visiting Japan in March 2016 is 2,010,000, leaping
by 31.7% compared with the same month of the previous year.
The number of Chinese visitors to Japan is expected to increase more, as considering to total visitors in ratio to population. We willdevelop inbound city-tourism hotel chain, to expand our scope of business to target foreign tourists visiting Japan mainly.
2014
visitors
total

2015

2014-2015

Total visitors
ratio topopulation

increase
rate

visitors

2016（Jan.-Mar.）

Total visitors
ratio topopulation

visitors

Population

Total visitors （million)
ratio topopulation

13,413,467

0.19%

47.15%

19,737,429

0.28%

5,752,795

0.08%

7,105.15

1

China2,409,158

0.18%

107.28%4,993,805

0.37%

1,472,116

0.11%

1,367.82

2

Korea

2,755,313

5.46%

45.25%

4,002,094

7.94%

1,379,789

2.74%

50.42

3

Taiwan2,829,821

12.08%

29.94%

3,677,065

15.69%

998,363

4.26%

23.43

4

Hong Kong

925,975

12.75%

64.61%

1,524,291

21.00%

437,812

6.03%

7.26

5

Thailand

657,570

0.96%

21.16%

796,708

1.16%

222,115

0.32%

68.66

6

Malaysia

249,5210.82%

22.44%

305,502

1.01%

87,943

0.29%

30.26

7

Singapore

227,9624.17%

35.45%

308,777

5.64%

68,486

1.25%

5.47

8

USA

891,668

0.28%

15.88%

1,033,239

0.32%

2,445

0.00%

319.059Australia

302,6561.28%

24.28%

376,153

1.59%

2,316

0.01%

23.59

10

UK

220,060

0.34%

17.47%

258,501

0.40%

1,192

0.00%

64.51

－

Others1,943,763

0.06%

26.63%

2,461,294

0.08%

1,080,218

0.04%

3,012.80

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

42

Sun Frontier Fudousan Co., Ltd.

Future development of hotel business
Kofu

We promote the collaborative brand “SPRINGSUNNY” of Shanghai
Spring Group and Sun Frontier Group and the our house brand forurban upper-middle use focusing to inbound city-tourism hotel chain
house brandcollaborative brand

＆

Osaka
MaihamaGinza area, Kyoto, Narita andother major cities’ hotel projects
are under consideration.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

43

Sun Frontier Fudousan Co., Ltd.

Overseas expansion - Two directions -We will develop new investment
products, hone our operation ability
to operate hotels, and play an role ofreceiving investments from wealthypeople in Asia.

Produced by the Cartographic Research Lab University of Alabama
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

44

Sun Frontier Fudousan Co., Ltd.

Da Nang, Vietnam--Urban hotel businessOn the riverside of the largest ward Da Nang in central Vietnam, we will commercialize ahotel as a development project. We are preparing for high-rise apartment house projectas our second project.

1st. Project : river-side Hotel2nd. Project : high-rise apartment houserendering

rendering

actual conditionbuilding frame
30-story, 320 units

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

45

Sun Frontier Fudousan Co., Ltd.

Jakarta, Indonesia--Sale of urban housing
We are constructing urban houses for sale, in the center of Jakarta. We arepreparing for the establishment of a local affiliate in order to operate the businessin Indonesia on a full scale.
1st. Project : urban houses for sale

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

46

Sun Frontier Fudousan Co., Ltd.

Disclaimer
This reference material is intended for providing information, not for soliciting or promoting you topurchase a specific product. When you invest, please do so based on your own judgment and responsibility.
If you want to purchase the shares of our company, please contact securities companies.
The information included in this material may not follow the Financial Instruments and Exchange Act, theBuilding Lots and Buildings Transaction Business Act, the regulations for the companies listed in Tokyo
Stock Exchange, or the like.
This reference material mentions our future business performance, but it does not guarantee theperformance.
This reference material was produced carefully, but we do not guarantee the accuracy and certainty of its
contents.
In addition, the contents may be changed or deleted without notice.
We would appreciate your understanding.

<Sun Frontier Fudousan IR Desk>
Phone：+81-3-5521-1551
URL:http://www.sunfrt.co.jp/en/
Mail:ir-contact@sunfrt.co.jp