Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Statements for theSecond Quarter of the Fiscal Year Ending
March 31, 2019
Our goal is to be the real estate company
that customers love and choose over any other worldwide.
1) Executive Summary Results for the Second
Quarter of the Fiscal Year Ending March 31, 2019

1-10

2) Business Conditions

11-13

3）1st half Fiscal year initiatives and Future Growth
Strategies

14-36

Reference

37-38

November 8, 2018
Stock Code：8934

Highlights of the Second Quarter
Summary for the Second Quarter of the Fiscal Year Ending March 31, 2019
Sales and income reached new record highs in the Second Quarter(¥ Million, except for per share figures. )Results

Profit margin

YoY change

Rate of
ChangeFull-year
forecast

Progress

Sales

33,029―+8,543+34.9%

58,00056.9%

Operating income

9,040

27.4%

+3,506+63.4%

12,30073.5%

Ordinary income

8,744

26.5%

+3,403+63.7%

11,80074.1%

Net income*

5,976

18.1%

+2,326+63.7%

8,200

72.9%

* Quarterly net income attributable to owners of parent

Highlights
1) High profit margins in the replanning business are driving
business performance2) The operation business showed steady growth.

• At 32.1%, the segment profit margin remains high (vs. 27.6% in the FY
ended March 2017 and 29.7% in the FY ended March 2018).
• Progress is currently underway on procuring properties. The procurementof properties scheduled for sale in the fiscal year has been nearlycompleted. Current efforts seek to build up inventory through property
procurement for growth in rent.
• The stock of buildings associated with the replanning business stood at 57
buildings at the end of this quarter. The balance of inventory assets was¥49.2 billion, up 34.5% YoY compared to 41 buildings and ¥36.5 billion at
the end of September 2017.

• Sales in the operation business grew 1.4-fold year on year. Segment
income was up 1.5-fold.
• The new hotels that opened in Q1 (Tabino Hotel Hida-Takayama, Tabino
Hotel Sado, Sky Heart Hotel Shimonoseki) reached full-scale operational
status, contributing to sales growth. The number of hotels we manage inJapan has grown to 10 hotels, accounting for 1,191 guest rooms in the two
and one-half years since this business was launched.
• With the October opening of “Vision Center Tokyo Station”, the rental
conference room business grew to a total of 14 sites, corresponding tocapacity for 5,000 people (compared to 10 sites with capacity for
approximately 3,000 people at the end of September 2017).

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Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary(¥ million)
FY Ended March
2018
April-September

FY Ended March
2019
April-September

FY Ended March
2018
April-September

FY Ended March
2019
April-September

24,48633,029Operating income

5,534

9,040

21,34829,202Non-operating income

637

20,19927,750Non-operating expenses

199

333

Rental Building, Sublease

1,149

1,452

5,341

8,744

Real Estate Service Business

1,600

1,684

Operation Business

1,392

1,963

Extraordinary loss/income--

Other Business

450

563

Corporate income tax, etc.

1,700

2,768

Adjustment

(306)

(385)

Profit or loss of Non-controllinginterest（9)(0)

Gross Profit

7,863

11,961

Net income

3,649

5,976

6,431

10,294

5,993

9,627

Rental Building, Sublease

438

666

• The replanning business showed 1.4-fold growth insales and 1.6-fold growth in gross profits.
• The gross profit margin rose to 34.7% (compared to29.7% in the same period last year).

Real Estate Service Business

1,006

1,048

Operation Business

203

285

Other Business

325

379

Adjustment

(103)

(46)

2,329

2,921

Sales
Real Estate Revitalization Business
Replanning Business(including Hotel Development)

Real Estate Revitalization Business
Replanning Business(including Hotel Development)

Selling and general administrative
expenses
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Ordinary income• The operation business a stable revenue source, isgrowing steadily, recording 1.4-fold growth in both sales
and gross profits.
• Operating income grew by 63.3% thanks to growth of
52.1% in gross profits, which handily outpaced a 25.4%
increase in sales expenses.

2

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Assets(¥ million)

FY Ended
March 2017

FY Ended
March 2018

End of
September 2018

Increase/Decrease(Compared to theend of Mar. 2018)55,19580,17485,993+5,419Cash and deposits

16,24623,892

23,388(504)

Inventory assets

36,18654,59359,680+5,086

Breakdown)

26,0397,254
2,892

45,525
5,291
3,775

49,202
6,878
3,584+3,677+1,587

2,762

1,687

2,925

+1,237

8,458

11,587

12,267

+680

7,288

8,565

8,953

+387

Intangible assets

562

474

448

(26)

Investments and other assets

608

2,546

2,865

+318

63,654

91,761

98,260+6,499Current assets

RP
Hotel
Overseas, etc.

Other current assets

Noncurrent assets
Property, plant, and equipment

Total assets(191)

Since we procured more than properties than we sold, the balance of inventory assets in the replanningbusiness grew by ¥3.6 billion. Due to the acquisition of land for a project in Okinawa, the inventory assetsof the hotel business grew by ¥1.5 billion.
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Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Liabilities/EquityFY Ended
March 2017

FY Ended
March 2018

End of
September 2018(¥ million)
Increase/Decrease(Compared to theend of Mar. 2018)

Current liabilities

8,281

10,155

11,278+1,123

Short-term loans payable, etc.

3,438

2,716

2,912

+196

802

3,178

3,147

(30)

4,040

4,260

5,218

+957

19,68632,75633,992+1,236Long-term loans and bonds
payable18,62630,86531,839+973

Other noncurrent liabilities

1,059

1,890

2,153

+262

27,96842,91245,271+2,35935,52848,75053,093+4,343

157

99

(105)

(203)

Total net assets

35,686

48,84952,989+4,139Total liabilities and capital

63,654

91,761

98,260+6,499

Income taxes payable, etc.
Other current liabilities

Noncurrent liabilities

Total liabilities
Shareholders’ equity
OthersTransition of Equity Ratio
End of Mar. 2017

End of Mar. 2018

End of Sep. 2018

Due to progress with property procurement the replanning business, loans payable grew by¥1.1 billion compared to the end of the previous FY. The balance of interest-bearing debt at
the end of September stood at ¥34.7 billion.

56.0%

53.2%

53.9%

Retained earnings, equivalent to the difference between quarterly net income (up ¥5.9
billion) and dividend payment of the previous term (negative ¥1.6 billion), rose by ¥4.3 billion.

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Sun Frontier Fudousan Co., Ltd.

Performance ofReplanning Business(Replanning (RP)/ Hotel Development)
FY 2018
AprilSeptember

FY 2019
AprilSeptember

Increase/decrease

20,19927,750+37.4%

5,640

8,904

+57.9%

27.9%

32.1%

+4.1%pt

No. of procured
properties

24

27

+3

No. of sold properties

17

18

+1

(Note2)(Note2)+16(¥ million)

Sales
Segment income (Note1)
Profit margin

No. of properties in stock
as of the end Mar.

46

62

Both sales and profits grew significantly.
Thanks to sustained creative efforts in procurement,commercialization, and sales efforts and efforts to increase added
value, margins grew dramatically.
The average business period is 342 days.
Procurement progressed steadily. Our property inventory at the end of
the period stood at 62 properties (accounting for ¥55.8 billion).
(Breakdown)
Replanning business: 57 properties (¥49.2 billion)
Hotel business:
5 properties (¥6.8 billion)(¥ million)

30,000527,75027,00021,00020,19918,00015,000

40%
32.1%

27.9%

30%

12,000
8,904

9,000
6,000

60%
50%

24,000* Overseas business is excluded.
* We also procured or contracted for 12 replanning properties through the end of October
worth ¥15.5 billion in addition to the above-mentioned properties.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Sales
Segment Income
Profit Margin

5,640

20%
10%

3,000
0

0%
FY 2018

April-September

FY 2019

April-September(Note1) “Segment income” is calculated by subtracting various expenses ofrespective businesses from gross profit on sales. Various expenses
include interest paid, sales commission and goodwill amortization, etc.
(Note2) Land procurement and development cases are also included in theinventory of replanning business.

Sun Frontier Fudousan Co., Ltd.

Performance ofRental Building Business(Rental Building / Sublease)(¥ million)

Sales
Segment
incomeProfit margin

FY 2018
AprilSeptember

FY 2019
AprilSeptember

1,149

1,452

438
38.1%

666
45.9%

Sales

Increase/decrease(¥ million)+26.3%+52.2%+7.8%pt

1,600

Segment Income
Profit Margin

100%

1,452
1,400
1,200

1,149

75%

1,000

In the replanning business, income from rents
increased, due primarily to office buildings for which
commercialization has advanced.
Income also grew from rents from the hotel business.
To add to our sources of stable income, we aremoving forward with efforts to procure and build
office buildings suitable for long-term holding.

800
600
400

45.9%
38.1%

666

438

25%

200
0

0%
FY 2018

April-September

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

50%

6

FY 2019

April-September

Sun Frontier Fudousan Co., Ltd.

Performance ofReal Estate Service Business(Property Management(PM) / Building Maintenance(BM) / Sales Brokerage / Rental Brokerage)(¥ million)

FY 2018
AprilSeptember

FY 2019
AprilSeptember

1,600

1,684

Sales
Segment
income

1,006
62.9%

Profit margin

Increase/decrease

1,048
62.2%

+5.3%

1,800

+4.1%

1,600

(0.7%pt)

We offer high-value-added services by providing meticulous tenant
management and solving customer’s troubles, as well as improving
revenue by modifying conditions to achieve fair rents. As a result, we
contributed to expand the customer base and the business base forthe entire group.
[Number of managing properties buildings for
PM and occupancy rate]
No. ofmanaging properties
362
372
378

1,000

100%

80%

62.9%
1,006

62.2%
1,048

800

60%

40%

600
Occupancy
rate

400

96.6%
95.7%
97.2%

20%

200

<Sales Brokerage Business/Rental Brokerage Business>
The brokerage business contributes to the revenue of the entire
corporate group by driving the creation of high added value from thecustomer’s viewpoint in the procurement, commercialization, and saleof RP real estate.
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1,600

1,684

1,400
1,200

<PM Business/BM Business>

End of March 2017
End of March 2018
End of September 2018(¥ million)

Sales
Segment Income
Profit Margin

7

0

0%
FY 2018

FY 2019

April-September

April-September

Sun Frontier Fudousan Co., Ltd.

Performance ofOperation Business(Hotel Management / Rental Conference Room)(¥ million

Sales

FY 2018
AprilSeptember

FY 2019
AprilSeptember

1,392

1,963

+40.9%

2,000

168

257

+52.1%

1,750

12.1%

13.1%

+1.0%pt

1,500

Segment
incomeProfit margin

Increase/decrease<Hotel Management Business>(¥ million)

Sales
Segment Income
Profit Margin

1,963

40%

30%

1,392

1,250

Strong occupancy ratio and average daily rates per room at Sky Heart
Hotel (formerly the Hotel Sky Court), Hiyori Hotel Maihama, andSPRINGSUNNY Hotel contributed to both sales and income growth. 1,000
Tabino Hotel opened in Hida-Takayama in May and Sado Island in July.
In June, we acquired VIP Nangoku (now Sky Heart Hotel Shimonoseki).
The number of hotels managed grew to 10 hotels as of the end of
September 2018.
(April-September: total sales of ¥1,547 million, segment income of¥159 million)<Rental Conference Room Business>
The total number of facilities grew to 14 as of the end of October
2018 (nine rental conference room facilities, three rental officefacilities, and two coworking space facilities).
Vision Center Tokyo Station opened on October 29.
(April-September: total sales of ¥415 million, segment income of ¥97
million)Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

8

750

20%

12.1%

13.1%

500
250

10%
168

257

0

0%
FY 2018

FY 2019

April-September

April-September

Sun Frontier Fudousan Co., Ltd.

Performance of

Other Business(Rent Guarantee / Overseas Business, etc.)
FY 2018
AprilSeptember

FY 2019
AprilSeptember

Sales

450

563

+25.1%

Segment
income325372+14.6% 600

72.2%

66.1%

(6.0%pt) 500(¥ million)

Profit margin

Increase/decrease<Rent guarantee business>■ We achieved steady growth in numbers of new and renewed
guarantees through efforts to increase name recognition,
which increased both sales and income.
■ The revised Civil Code set to enter into effect in 2020 is
expected to strengthen demand for institutional guarantees.
In response, we plan to expand seminar activities targetingbuilding owners and to undertake other such efforts tocreate opportunities to deliver new added value.

700

100%

563
72.2%
450

400

66.1%

372
325

75%

50%

300
200

25%

100

<Overseas Business>■ Danang, the Largest City in Central Vietnam
Sale of units in HIYORI Garden Tower, a high-rise urban
apartment house of 28 floors (306 units), was completedin August 2018. Construction is slated for completion in
September 2019.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

(¥ million)

Sales
Segment Income
Profit Margin

0

9

0%
FY 2018

FY 2019

April-September

April-September

Sun Frontier Fudousan Co., Ltd.

Variation of Key Performance Indicators◆Transition of Equity ratio◆Transition of ordinary income ratio¥ million(We are promoting high added value management.)

60,000

30%

Sales
売上高
Ordinary Income
経常利益

22.9%

22.0%

70,000Full-year
forecast

20.2%
40,00060,00025%

22.7%

30,000(We are building a stable financial base.)70%

純資産
Net Assets
Equity Ratio
自己資本比率26.5%

Ordinary Income Ratio
経常利益率50,000¥ million

56.2% 55.7%

56.0%

60%
53.2%

53.9%

50,00050%

40,00040%

30,00030%

20,00020%

10,000

10%

20%

15%

20,00010%
Full-year
forecast

10,0005%02015/3

2016/32017/3

2018/3Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2018/3
2018/９2019/30%0
2015/310

2016/32017/3

2018/3

2018/3
2019/3
2018/９0%Sun Frontier Fudousan Co., Ltd.

2) Business Environment

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11

Sun Frontier Fudousan Co., Ltd.

Business Environment
1. Although the global economy is expected to remain in a pattern of gentle recovery, there are growing
downside risks.
The IMF’s forecasts of economic growth for both 2018 and 2019 have been revised downward by 0.2% pts., from 3.9% to
3.7%.
A cautious approach is advisable due to downside risks resulting from increased US interest rates and intensifying trade
frictions between the US and China.
Other circumstances that prompt caution include various political and economic factors, including the global rise of
populism, situation in the Middle East, and Brexit issues.

2. As employment and income conditions continue to improve, the Japanese economy is projected toexperience gentle recovery.
The real grows rate in the Japanese economy remains in a growth trend, underpinned by strong capital investment andforeign demand.
While the number of foreign visitors to Japan fell YoY in September due to the impact of natural disasters and other factors,
the overall rising trend remains unchanged.
The looming increase in consumption tax in October 2019, trends in financial and capital markets, and the continuing at ahigh level of crude oil prices all suggest the need for caution.

3. Conditions in the market for office buildings in central Tokyo remain brisk, thanks to steady demand
generated by strong corporate business performance.
Average rent continues its strong growth. Vacancy rates remain low, as a sense of tight supply in the rental office market
continues to strengthen.
Vacancy rates fell below previous lows and are expected to remain low due to continuing tightening of the demand-supply
balance in the office market.
The Tokyo Exchange Stock REIT Index is strong, rising about 90 pts. to roughly 1,750 pts from the end of 2017.
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12

Sun Frontier Fudousan Co., Ltd.

Changes in office rent and vacancy rate
in 5 wards of central Tokyo
(¥)

(%)

Average rent [¥/tsubo]

Average vacancy rate [%]Average rent in Sep. 2018

¥20,438(+¥147 from last month)
Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%
Peak of average rent
Aug. 2008¥22,901 yen

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

Bottom average rent
Oct. 2004¥17,526 yen

Bottom average rent
Dec. 2013¥16,207

Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%

Average vacancy ratein Sep. 20182.33%

( (0.12%pt)from last month)※Source: Created based on Miki Shoji’s “Office Report.” Graph reflects office buildings within the 5 wards of Tokyo of which have a standard floor area of
100 tsubo (roughly 331 square meters) or larger.

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13

Sun Frontier Fudousan Co., Ltd.

3) 1st half Fiscal year initiatives andFuture Growth Strategies
Goal:
To become a company that is based on thebusinesses contribute to the national interests.

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14

Sun Frontier Fudousan Co., Ltd.

Review of 1st half Fiscal year : Factors Driving Business Growth

The Replanning Business is
Driving Business Performance.
70%
Maintaining high profit
margins

Profit margin vs. costs (after deducting
sales commissions)

1. Development capabilities that enable 60%
differentiation with respect to qualityand design, by matching customers’
50.7%
ideals and true needs using familiarity 50%
45.0%
with local information and community
ties.
38.4%
2. The interpersonal skills of PM
40%
managers that increase value by
37.3%
providing inspiration and strengthening
understanding of our business vision30%
through harmonious relationships withexisting tenants
24.9%
Grounded in the ability of our staff todeliver solutions and create added value
by working together, based on a shared
philosophy and shared altruistic values

49.6%
44.8%

42.9%

32.7%

20%

10%

H1

H2

FY no. 16

H1

H2

FY no. 17

H1

H2

FY no. 18

H1

H2

FY no. 19

H1
FY no.
20

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15

Sun Frontier Fudousan Co., Ltd.

1st half Fiscal year initiatives

The Property Procurements Scheduled for the
Next Year Are Largely Complete.
A revenue-generating building in
Nihonbashi

Book value/¥ million
70,000Assets in inventory: trends in numbers of buildings
and ending book value
Book
簿価
value

Buildings
80

Buildings
棟数

67

60,00058

60

50,00038

30,00040

2754,59359,68030

20

20,00032,71410,00050

4440,00070

818,72936,18620

23,480

10

6,425

0
End of
2013年3末March 2013

End of
2014年3末March 2014

End of
2015年3末March 2015

End of
2016年3末March 2016

End of2017年3末March 2017

End of2018年3末March 2018

End of2018年9末
September2018

0

We are currently strengthening our management foundations. We see the second half as theperiod in which we will take action to bring our vision to fruition.
We will focus on realizing high value added and quality to achieve business progress and thereby meetcustomer expectations. We will also proceed with procurement and commercialization with a view to thenext fiscal year and beyond.
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16

Sun Frontier Fudousan Co., Ltd.

Progress on the Medium-termManagement Plan

Overview of the mid-term 5 years management plan till the fiscal year
ending March 2023

Basic policy:
Expansion of the business that are specialized in central Tokyo and growth market

Three policies① Intensification and expansion of the highly influential“urban office building business”② Focusing on “hotels and Asia” as growth markets③ Making proactive use of “M&As” to accelerate growth<Quantitative targets>
FY ending March 2023
Sales
Ordinary
income¥100 billion¥20 billion

Net income¥14 billion

Equity ratio

50% or better

20,00020% or better0

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

to achieve stable growthover the medium and long term

Ordinary
経常利益
incomeSales
売上高27,70017,7004,300
4,000
2014/3期
FY 201417

40,30030,6005,500
5,000
2015/3期
FY 2015

100,000

Net income
当期純利益60,00040,000Ordinary profit
marginstructure that

Trends over the past five years andtargets for FY ending March 2023(¥ million)

100,000
80,000As a result, establishing a business

2,000

47,40020,000

8,100

8,800
6,400

10,7007,400

2017/3期
FY 20172018/3期
FY 2018

14,000・・・

2016/3期
FY 2016

FY2023(forecast)

Sun Frontier Fudousan Co., Ltd.

Product and Customer
Positioning Map
Product scale/type

Purchasing customer side

Office focus zone

Residential
focus

Other
regions

23 wardsof Tokyo

Residential
focus

Five
centralwards

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23 wards Otherof Tokyo regions

Professional
investors“Yield focus”

Assetinvestment“Building afortune”

Asset
Private funds, etc.
management“Focusing on“Tax savings, capital gains”
estateplanning”

Wealthy and high-income individuals

18

Sun Frontier Fudousan Co., Ltd.

Product and Customer
Positioning Map
Product scale/type

High-income individuals
earning at least several
hundreds of millions of yen
annuallyandCustomers who continued topurchase real estate evenafter the 2008 financial crisis

Office focus zone

Residential
focus

Other
regions

23 wardsof Tokyo

Purchasing customer side

Residential
focus

Five
centralwards

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23 wardsof Tokyo

Otherregions

Professional
investors“Yield focus”

Assetinvestment“Building afortune”

Asset
Private funds, etc.
management“Focusing on“Tax savings, capital gains”
estateplanning”

Wealthy and high-income individuals

19

Sun Frontier Fudousan Co., Ltd.

Four-pronged Strategy for Future Growth
Deepening and expansion of

1) Existing

Office Building BusinessBusiness Expansion

Accommodation-focused hotels

2) Hotel Businessfor tourism and business3) Overseas
Business Development

Vietnam & Indonesia

Stock Acquisition,4) M&A

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Capital Participation, Business Alliance20

Sun Frontier Fudousan Co., Ltd.

Growing Current Businesses
Deeping and expansion of the office building business

Office building business sales target for FY ending March 2023:¥80 billion (approximately twice as much as the fiscal year
ended March 2018)<Replanning Business>

Seeking to deepen and expand the office building revitalization business, focusing
on small and medium-sized office buildings in central Tokyo<Real Estate Service Business (rental brokerage, property management, etc.)>

Contributing to office building owners through familiar and specialized services notoffered by competitors
Deepening ties by repeatedly delivering solutions to even minor issues and thereby
becoming a trusted “real estate partner” with whom clients feel free to consult on
any topic
Basing our business strength on a customer base of office buildings owners incentral Tokyo<Rental Conference Room Business>

Rapidly expanding sharing businesses—for example, the Rental Conference RoomBusiness—using available spaces and available time and grounded in our
experiences, thereby adding to office building value

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21

Sun Frontier Fudousan Co., Ltd.

To produce differentiated added values.

Business Structure of Office Buildings Business1. In vertical real estate utilization business, we survey and solve difficulties by listening to customers’ concerns.
2. In horizontal real estate revitalization business, first, we put together the know-how and customer needs
learned from the process above. Then we apply this knowledge to renovate used buildings we purchased andtransform them into high value-added products. After this, we sell the products to customers.

②

Fund –Raising
Consulting

Asset Consulting

Rent Guarantee

Construction
Planning

Building
Management

Rental Brokerage

Sales Brokerage

Acquisition of
Property

Real estate
revitalization
Added value
linked products① Real Estate Utilization

To be a partner to solve troubles from the customers’
perspectives

Customers (Building owners, asset owners, and wealthy people)
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22

Sun Frontier Fudousan Co., Ltd.

Shibaura Riverside: Revenue-generating building

Replanning Business

Creating Added Value through CeaselessCreativity
Winner of Minato Ward Encouragement Award forCityscape Development

In the first industry-government-academic partnership to revitalize an
existing building, this property was renovated to connect the community to
the canal and to create an inviting space where local residents can gather.
Half of the first-floor
parking facility wasconverted to a public
walkway. A popular
restaurant was secured
as a tenant for theother half.

First foor AfterFirst foor Before

40-year-old
building

Creating a bustlingwaterfront space
Rear of building Before

Rear of building After

Connected tocanalside
walkway

Stepped terrace
installed

State of levee
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Rear of building After

23

Sun Frontier Fudousan Co., Ltd.

Replanning Business

Setup Office Spaces in Anticipation of
Changing Times

BeforeResponding to changing tenant needs by creating comfortable, high-quality,“setup office” spaces

After

We installed a meeting room with a reception
desk and glass partitions based on an
approach emphasizing both design andfunctionality.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

BeforeFour types of value generated by setup offices:(i) Design style, functionality, comfortable, and luxury(ii) Ease of use that minimizes necessary costs forentering.
(iii) Freedom from complexities such as the need toreconfigure interior construction(iv) Increased employee vocation , motivation andproductivity

After

After

We created an open office space, with theceiling height of over 5m.

We created a highly designable space whichmakes tenants calm and convenient, functionaland stylish space .

24

Sun Frontier Fudousan Co., Ltd.

Tsukiji: Revenue-generating building

Replanning BusinessState-of-the-Art Offices with a Focus on the
Needs and Perspective of Office Workers

Quality office spaces make it easier to secure outstanding human resources. Offices can provide value as investments ingrowth.

Adopting IoT systems

In this connected office, everything can be controlled with a single
smartphone!
Turning lights on/off

Creating a new kind ofstate-of-the-art office

Calling an elevator

Checking restroom
occupancy

Turning air conditioning
on/off

Interior perspective drawing
Linked to Amazon Alexa

Entry controlled using facialrecognition technology

Opening/closing the firstfloor entrance

Instant-dimming glass“Alexa, apply the morning
settings!”

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Property management –Area and occupancy rates of buildings
managed by PM

100.0%

98.0%

(㎡)

97.7%

Area of buildings managed by PM (right axis)

800,000(As of end of Sep. 2018)
Occupancy rate for buildings
managed by PM (left axis)

Occupancy rate of medium-sizedbuildings in 23 wards of Tokyo(left axis)

700,000

Occupancy rate of real estate
managed by PM

96.0%

600,000

97.9%

94.0%

(As of end of Sep. 2018)

Average occupancy rate of
medium-sized buildings in 23
wards of Tokyo

92.0%

400,000

90.0%

88.0%

86.0%

500,000

300,000

200,000

As about 75% of real estate managed by PM are over 20
years old, we received inquiries about repair andreplacement of assets, meaning we are exerting thecomprehensive capability of solving problems, which is ourstrength.

100,000

84.0%

0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY ended
March 2009

FY ended
March 2010

FY ended
March 2011

FY ended
March 2012

FY ended
March 2013

FY ended
March 2014

FY ended
March 2015

FY ended
March 2016

FY ended
March 2017

FY ended
March 2018

FY endingMarch 2019

※Source: The average occupancy rate of medium-sized buildings in 23 wards of Tokyo was calculated by our company with reference to “Monthly Report on Office Market Surveys” by Sanko Estate.
※Occupancy rate: Total Area Occupied / Total Area for Rental; Occupancy rate and managed area include those of real estate subject to our RP.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

22

Sun Frontier Fudousan Co., Ltd.

Real Estate Services Business —Rental Brokerage—

Enhancing Our Ability to Provide Solutions
Suited to Community Needs

The Akasaka office opened in July; the Kodenmacho office isslated to open in January 2019.

1. To specialize in small to mid-sized office Target regions
buildings located in the central Tokyo
We operate 10 locations, with a focus on central
Tokyo.
Their strengths are the ability to find tenants
through a familiarity with local information andcommunity ties.

2. To be a trusted real estate
partner with whom clients canconsult on any topic

Akihabara
Ikebukuro

Koujimachi

Shinjuku

Shibuya

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Imperial
PalaceToranomon

Akasaka

GotandaYokohama

27

HibiyaHeadquarters

KodenmachoTokyo

New officeplanned

Ginza
New

Ebisu

Exterior of
Kodenmacho officeNihonbashi

Aoyama4. To serve as a contact point for
procuring real estate for the Real Estate
Revitalization BusinessWe buy buildings directly in certain cases: forexample, when owners acquire properties byinheritance, their buildings deteriorate, and soforth.

Kanda

Kudan

Serving as a contact point for solutions
based on the perspectives of building owners

3. Identifying tenant needs tocontribute to commercialization in
the revitalization business

Ueno

Shimbashi

Hamamatsucho

Shinagawa
represents the major area
covered by a branch
New offices

Exterior of the
Akasaka office

Sun Frontier Fudousan Co., Ltd.

Real Estate Services Business —Specified Joint Real Estate Venture—

First Sales of Real Estate Securitization
Products
October 29: We secured a license under the Act
on Specified Joint Real Estate Ventures.
Buildings in thereplanning business

Sales started in November.

Partnership※based on Civil cord Section 12

Operating partner

Tenants

Rents
Profits

Investment
Dividends
Investors(Significance)
These products make it easy to
subdivide assets for worry-free asset
investment across multiple
generations. By handling property
management for these buildings, we
also improve property values inperpetuity.

Purposes:

As a trust partner for our clients, this business seeks to help current workers plan for theirretirement, to preserve assets, and to facilitate asset inheritance for the next generation.

Strengths:

In addition to serving as investments that pay returns from building operation in accordancewith amounts invested, these affordable investment assets are also ideal for reducing gift
and inheritance taxes.
We handle all management for the investment
target buildings, eliminating client concerns
８
for such responsibilities.

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

28

Sun Frontier Fudousan Co., Ltd.

Expanding the sharing business using space
The rentar conference room business grew to a total of 14 sites , corresponding to capacity for 5,000 people.
【Purpose of rental conference rooms 】
Various purposes including conference, seminar, lecture,
exhibition, test, training, briefing, and party, etc.

Rental conference rooms (Vision Center)・・・ 9 locations (3,650 seats)NEW

Rental offices (Vision Office)・・・3 locations (19 rooms)

Kanda

Co-working (Vision Works) ・・・ 1 location

Nihonbashi●Vision Office Kanda●Vision Office Kanda ANNEX

Nagatacho
Shinjuku

Yurakucho

Hamamatsucho
Shinagawa●Vision Center Yokohama

Yokohama

NEW●Vision CenterTokyo Station

Tokyo●Vision Center Nagatacho●Vision Office
Shinjuku●Vision Center Tokyo Nihonbashi

Tamachi●Vision Center Tamachi●Vision Center
Hamamatsucho

The newly opened “Vision Works Tokyo Yurakucho” became black by 80% rate of operation.
A new Vision Center was opened in Tokyo Station in October 2018.
We will increase the number of locations to 45 by the end of March 2023.

1 min. on footfrom Tokyo station●Vision Works Tokyo●Vision Center Yaesu minamiguchi●Vision Center Yaesu Chuoguchi
NEW●Vision Works Tokyo Yurakucho
NEW●Vision Center Tokyo Yurakucho※ The number of seats in a conference room is calculated according to the school seating arrangement (three-person seat). For the rooms where school type is not possible, the number ofseats in the quadrilateral arrangement was added.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Sun Frontier Fudousan Co., Ltd.

The first hotel in our Tabino Hotel brandGrand opening of Tabino Hotel Hida-Takayama
The only one newly-built hotel made of wood in Takayama, which inherited Japanese beautiful tradition
We opened this hotel in May 2018 as the first one of casual brand “TABINO HOTEL” of “ HIYORI HOTELS & RESORTS”. This hotel which was usedfrequently wood from local aims for the warm-hearted hotel wrapped in the warmth of trees. The strength is the convenient location when visiting
actively various areas from the hotel for the sightseeing and tour.

Twin room

May 2nd, 2018
GRAND OPEN

A Japanese-style entrance
welcomes guests

The hotel exterior: A hotel with warm hearted
staffs, surrounded by natural wood

Open-air bath

Breakfast buffet madewith local ingredients

Spotless, spacious bathrooms

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

The traditional Japanese-style
entrance evokes the ancient capital.

33

Sun Frontier Fudousan Co., Ltd.

The second hotel in our Tabino Hotel brandGrand opening of Tabino Hotel Sado
We opened this hotel as the second one of “TABINO HOTEL” in July 2018. This warm-hearted hotel with ahomey atmosphere, located in the center of Sado is designed with a motif of the bamboo of Sado's
specialty. Also, we aim for contributing the development of Sado tourism as the center of regional
revitalization business.
Tabino Hotel Sado, the second hotel in the Tabino Hotel brand
Deluxe double room

July 20, 2018
GRAND OPEN

Contemporary Japanese entranceCentral location offering
panoramic views of Sado

Exterior design based on a bamboo theme
Large bath with deep sea water
inflows

A wealth of local Sado
ingredients

Guestrooms where guests can relax on
comfortable tatami mats
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

Sun Frontier Fudousan Co., Ltd.

List of domestic hotels of ourGroup companies＜List of Domestic Hotels＞＜Domestic Hotel＞

Open (Plan)

Brand

1,401
756
679

In
operation

Apr. 2016

Collabora
Spring SunnyTokoname
tive

In
operation―

Original Sky Heart Hotel Kawasaki

200

In
operation―

Original Sky Heart Hotel Koiwa

105

2,836

In
operation―

Original Sky Heart Hotel Narita

100

In
operation―

Original Sky Heart Hotel Hakata

159

In
operation

Apr. 2017

Original Hiyori Hotel Maihama

80

Rented―Other
Company Toyama

210

In
operation―

Original Sado (Azuma)

57

In
operation

May. 2018

Original Tabino Hotel Hida-Takayama

80

In
operation―

Original Sky Heart Hotel Shimonoseki

105

In
operation

Jul. 2018

Original Tabinohotel Sado (Chigusa)

111

Under
Construction

Jun. 2019

Original Nanba, Osaka

224

Under
Construction

Oct. 2019

Original Honmachi, Osaka

193

Under
Construction

Dec. 2019

Original Ginza-higashi

135

Under
Construction

Jul. 2020

Original Onnason, Okinawa

204

In planDec. 2019

Original －155

In planFeb. 2020

Original －190

In planDec. 2020

Original Oike, Kyoto

200

In planApr. 2022

Original Shijo, Kyoto

134

In operation
Under construction
In plan & preparation
Total No. of Rooms※ As of November 8, 2018
※ Hotels “in service” include hotels “in operation,”“rented,” and “being renovated” in the redframe of the right table.

Sado (Chigusa)
Sado (Azuma)
ToyamaHida-Takayama

MaihamaOike, Kyoto
Shijo, Kyoto

Okinawa

Honmachi, Osaka
Nanba, Osaka

NaritaKoiwa
Ginza-higashi

HakataNo. ofRooms

StatusTokoname

Kawasaki

Shimonoseki(Note) Schedule & scale are still being planned, may change in future.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

32

Hotel Name Location

194

Sun Frontier Fudousan Co., Ltd.

Hotel Business

Goals and Themes in the Hotel Business
The target number of rooms in operation for the Hotel Business(FY ending March 2023): 5,000 rooms (approximately 4.5 times thenumber in FY ending March 2018)<Theme: Warm-hearted Hotels>① Hotels that are grown by the employees② Hotels that are grown by the customer’svoice③ Hotels that grow with the community

The power of self,
the power of others, thepower of community
We will grow on a daily
basis with 3 types of power

High-quality and personalized hotels offered
warm-hearted workers from the customer’s point of view

<Growing the number of rooms managed through various methods
to reach the target of 5,000 rooms>• Our core hotel brand, Hiyori Hotels & Resorts, will establish premium brand status throughdevelopment on vacant sites.
• Deploying a flexible range of brands (Hiyori, Springsunny, Sky Heart, etc.) for different guest
classes and increasing the number of rooms through various methods, including in-housedevelopment, leasing, revitalization, and M&As
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

33

Sun Frontier Fudousan Co., Ltd.

Proactive development in the growing “hotel” market.

Introduction of hotels under development
Ginza-Higashi
Appearance

Namba, Osaka

Our first hotel in Ginza【Property Outline】

Appearance

Location: Chuo-ku, Tokyo

Number of guest rooms： 135 rooms

To be opened in Jun. 2019Land area: 551.38 ㎡ (166.79 tsubo)

Number of guest rooms： 224 rooms

Gross floor area: 3,725.00 ㎡ (1,126.81
tsubo)
An open-air bath and a large bath fromwhich Ginza and the Skytree can beviewed are equipped on the top floor.

Land area: 1,281.4㎡ (387.62 tsubo)
Gross floor area: 6,784.41㎡ (2,052.28 tsubo)
There are various types of restaurants andcool café-type bar in the Twin Tower.

Urban tourist hotel at a good
location along the Kawaramachi Street

Honmachi, Osaka
Appearance

Overseas-brand hotel in the heart of Osaka.
【Property Outline】

Location: Shimogyo-ku, Kyoto-shi, Kyoto

Location: Chuo-ku, Osaka-shi, Osaka

Structure: 9-story reinforced concretebuilding with one basement

Structure: a 17-story steel-framed (partiallyreinforced concrete) building with one
basement

To be opened in Apr. 2022

Guest room with an open-air bath

Location: Naniwa-ku, Osaka-shi, Osaka

To be opened in Dec. 2019

【Property Outline】

Rooftop terrace for enjoying
the landscape of Kamogawa【Property Outline】
Structure: (Northern premises) 10-story steelframed building with one basement,(Southern premises) 9-story steel-framed building
with one basement

Structure: 11-story reinforced concretebuilding

Shijo , Kyoto

Twin-tower hotel 1 min. on foot from “Namba
Station” of the Nankai LineTo be opened in Oct. 2019

Number of guest rooms： 146 rooms

Number of guest rooms： 193 rooms

Land area: 871.70㎡ (263.68 tsubo)

Land area: 754.75㎡ (228.31 tsubo)

Gross floor area: 6,617.83㎡ (2,001.89
tsubo)

Gross floor area: 8,194.32㎡ (2,478.78 tsubo)

An open-air bath and a large bath, from which
Kamo-river, Gion and Higashi-yama can beviewed, are equipped on the top floor.

A restaurant with a famous chef, gym, largebath and open-air bath are equipped.

※ The photos, schedule, scale, etc. are based on the current plan, and they may be changed.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

Sun Frontier Fudousan Co., Ltd.

Progressing of Da Nang, Vietnam, Project- High-rise Urban Apartment House Project Bldg. No. 2
High-rise urban apartment house

Image(Da Nang night view)

Under construction“HIYORI Garden Tower"
Effect Drawing (Appearance)
High-rise urban apartment
house with 28 floors

306 units,
Sold Out

Direct flights from Narita/Kansai Airport to
Da Nang went into service (Narita: 5 flights
per week / Kansai: 11 flights per week.)
60 direct flights per week from China.
134 direct flights per week from Korea.
Da Nang is an area that many companies
want to help develop, while gathering
worldwide attention as a fascinating resort
area.

Mockup (Living Room)
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

35

NEXT PROJECTIn Plan
Sun Frontier Fudousan Co., Ltd.

Roadmap of 1,000 hundred million sales totargets for the FY ending March 2023
Sales
（ ¥hundred million ）■売上高
Sales

Ordinary income（¥ hundred million）■経常利益
Ordinary income
FY endingMarch 2023

FY ending March 2023
Sales
1,000 hundred million
Ordinary income 200 hundred million
Net income
140 hundred million

1,000

800

Current

200

580
474

403

400

277
200

105
20

177
43

55

306

300

250

Current FY
Sales
580 hundred million
Ordinary income 118 hundred million
Net income
82 hundred million

600

1,000

107

200

150

118

88

100

70

50

0

0
2012年度
2013年度
2014年度
2015年度
2016年度
2017年度
2018年度
2022年度FY
2013/3 FY
2014/3 FY
2015/3 FY
2016/3 FY
2017/3 FY
2018/3 FY
2019/3 2019年度･ 2020年度･･････2021年度 FY
2023/3
第14期

第15期

第16期

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

第17期

第18期

第19期

36

第20期

第21期

第22期

第23期

第24期

Sun Frontier Fudousan Co., Ltd.

Sun Frontier’s Vision and Policies
VisionAs professionals in real estate utilization, our goal is to be “thecompany that customers love and choose the most in theworld.”

Customers Building owners, asset holders, and wealthy individualCore
Business

Real estate revitalization and utilization

Policies Not for profit, but for trust.

To focus on people rather than property
Solve any real estate related difficulties from the perspective of
our customers

Strategies

CentralTokyo

OfficeStrength

Tenant Finding
Capability

Real Estate
Revitalization
Capability

Operation Capability
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

Company Overview
Name

Sun Frontier Fudousan Co., Ltd.

Head Office

1-2-2 Yurakucho, Chiyoda-ku Tokyo

Established

April. 8, 1999

Date of listing

November 19, 2004 (JASDAQ Securities Exchange)
February 26, 2007 (The first section of the Tokyo Stock Exchange)

Capital*Representative¥11,965 million
President: Tomoaki Horiguchi

Employees*

Full-time employees: 498 (Including part-time employees: 812)

Average Age*

32.9 years old(* As of the end of September 2018)

Revitalization of real estateBusiness

Real Estate Service

Management, brokerage, construction planningfor real estate, compensation for rent in arrears
Rental building operation, consultancy for assets

Hotel Development and operation

Settlement Month March
Listed in

The first section of the Tokyo Stock Exchange (Code Number: 8934)

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

36

Sun Frontier Fudousan Co., Ltd.

Disclaimer

Sun Frontier Fudousan Co., Ltd.

This reference material is intended for providing information, not for soliciting or promoting you
to purchase 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 andExchange Act, the Building Lots and Buildings Transaction Business Act, the regulations for thecompanies listed in Tokyo Stock Exchange, etc.
This reference material mentions our future business performance, but it does not guarantee
the performance.
This reference material was produced carefully, but we do not guarantee the accuracy andcertainty of its contents. In addition, the contents may be changed or deleted without notice.
We appreciate your understanding.

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