Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Results for theThird Quarter of the Fiscal Year ending
March 31, 2017
Our goal is to be the real estate company

that customers love and choose the most in the world.

Company Overview

1

Executive Summary
Results for the Third Quarter of the FY ending Mar 31, 2017

2～12

Future activities
1) Business environment

13～15

February 8, 20172) Managerial policy and business model

16～253) Growth strategies

26～38

Stock Code：8934

Company Overview
Name
Head Office
Established

Stock Listing
CapitalRepresentative

Employees
Average AgeMain Group
Companies

Settlement Month: Sun Frontier Fudousan Co., Ltd.
Toho Hibiya Building (Hibiya Chanter) 14F:
2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006: April 8, 1999
: First Section of the Tokyo Stock Exchange
on February 26, 2007 (Stock code 8934): ¥8,387 million: President, Tomoaki Horiguchi
Full-time staff 324 Consolidated(610 including temporary and part-time staff): 32.3 (as of Jan 31, 2017)
SF Building Support Inc.
Sun Frontier Real Estate Investment Advisors Inc.
: Yubi Inc.
Sun Frontier Fudousan Taiwan Co., Ltd.
Sun Frontier Hotel Management Inc.
: MarchBusinesses
1. Real Estate Revitalization Business
Replanning Business/ Rental Building Business

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

3.Hotel development and operation
Investment, development, operation
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

1

Sun Frontier Fudousan Co., Ltd.

Highlights of the results for the third quarter
Summary of the Third Quarter for Fiscal Year Ending Mar. 31, 2017

Quarterly profit increased steadily as planned
Resultsyr/yr change

increase rate(¥ million)

Forecast for FY 2017

Sales

27,168+9,812+56.5％

41,000Operating income

6,904+2,382+52.7％

8,500

Ordinary income

6,534+2,313+54.8％

8,200

+230

+5.4％

5,600

（※）親会社株主に帰属する四半期純利益
Net income
4,513High Profit margin of Revitalization Business is increasing
continuously.
• By linking up and combining our specialties througheach process of acquisition, commodification and sales,with inventive approach, we have maximized the value
extracted from properties.
• Segment profit margin is keeping increasing at a highlevel (same period last year of which is 30.2%⇒now is
31.3%).
• As for the third quarterly consolidated financial results,
both ordinary income and net income has reached thehighest-ever level.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2

Stock-type business is growing well.
• Acquired 100% issued shares of Sky Court
Hotel Co., Ltd. which is a hotel managementcompany.
• Started running the serviced apartment (90rooms in total) for Japanese from December
in Jakarta.
• Planetyze Hostel, the accommodation facility
for foreign visitors to Japan will open on
February 13, 2017 in Higashi-nihonbashi.
• As for "Space Rental" business , we will open
2 new branch offices which make our offices
become 6 in total.
Sun Frontier Fudousan Co., Ltd.

Summary of the results for the third quarter(¥ million)
Apr. to Dec.
in FY ended
Mar 31, 2016

Profit margin
to sales―Apr. to Dec.
in FY ending
Mar 31, 201727,168

Profit margin
to sales―Forecasts for
FY ending
Mar 31, 2017

Progress ratewith respect tothe initial
forecast

41,000

66.3％

Sales

17,356

Operatingincome

4,521

26.1％

6,904

25.4％

8,500

81.2％

Ordinary
income

4,221

24.3％

6,534

24.1％

8,200

79.7％

Net income

4,283

24.7％

4,513

16.6％

5,600

80.6％

Specializing in the small and medium-sized office buildings in central Tokyo and maintaining a high level ofprofitability. Achieved about 80% profit amount of whole financial year plan.

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3

Sun Frontier Fudousan Co., Ltd.

Revenaue / Profit Summary(¥ million)
Apr. to Dec. in
FY ended
Mar 31, 2016

Apr. to Dec. in
FY ending
Mar 31, 2017

4,521

6,904

Non-operating income

137

Non-operating expenses

313

377

4,221

6,534

Extraordinary loss/income

1,245

0

Corporate income tax, etc.

1,186

2,023

Income(loss) attributable tonon-controlling interests

▲2

▲1

4,283

4,513

Apr. to Dec. in
FY ended
Mar 31, 2016

Apr. to Dec. in
FY ending
Mar 31, 2017

17,35627,168

Real estate revitalization

12,821

22,399Real estate securitization

145－

Rental building business

1,592

1,285

Brokerage

1,233

922

Property management

1,097

1,280

Other businesses

466

1,281

Gross Profit Sales

7,048

10,012

Net income

Real estate revitalization

4,246

7,403

Real estate securitization

145－

Revitalization business sales and gross income both increased
greatly. Profit margin is hovering at a high level and driving
the whole business performance.

Rental building business

825

698

1,082

744

499

557

248

609

2,526

3,108

Sales

Brokerage
Property management
Other businesses
Selling and general administrative
expenses

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Operating income

Ordinary income

Rental building business and sales brokerage business isdecreasing.
Hotel and Space Rental business which started in theprevious year expanded well and enhanced performance.
Expanded profit cut down the tax loss carried forward, andtax cost increased.
About 1.2 billion yen income taxes-deferred was added up.

4

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Assets(¥ million)

End of Mar. 2015

End of Mar. 2016

End of Dec. 2016

Increase/decrease(from the end of
Mar. 2016)

Current assets

37,45251,36551,001▲364

Cash and deposits

12,686

15,413

15,050▲363

Inventory assets

23,48032,71434,143+1,428Brteakdown） RP
Hotel
Overseas, etc.

22,3401,140－

27,1895,525－

26,709
6,134
1,299

▲480
+608
+1,299Other current assets

1,285

3,237

1,806

▲1,430

2,971

2,718

8,272

+5,553

2,483

1,919

7,201

+5,281Intangible assets

76

278

553

+275

Investments and other assets

412

520

517

▲3

40,42454,08459,273+5,189Noncurrent assets
Property plant and equipment

Total assets

Increased by 600 million yen for hotel business and increased by 1.3 billion yen for overseas business. On the other hand,decreased by 500 million yen in real estate revitalization business (Sales: 16 properties , acquisition: 22 properties.)

As loss carried forward was set off, there would be a reversal of 1.2 billion yen in deferred tax asset.
As acquisition of hotel land in September for long-term hold, it increased by 5 billion yen.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

5

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Liabilities/Equity(¥ million)
Increase/decrease(from the end of
Mar. 2016)

End of Mar.
2015

End of Mar.
2016

End of Dec.
2016

3,550

7,641

7,499

▲142

Short-term loans payable, etc.

1,004

3,353

3,956

+602

Income taxes payable, etc.

221

973

356

▲616

2,324

3,314

3,185

▲128

14,172

16,29818,265+1,967Long-term loans and bonds
payable12,98815,055

16,945

Other noncurrent liabilities

1,183

1,242

1,320

+77

17,72323,93925,764+1,824

22,69330,14433,589+3,444

8

▲0

▲80

▲80

Total net assets

22,70130,14433,508+3,364

Total capital and liabilities

40,42454,08459,273+5,189Current liabilities

Other current liabilities
Noncurrent liabilities

Total liabilities
Shareholders’ equity

OthersChanges in capital adequacy ratios
End of Mar. 2015

End of Mar. 2016

End of Dec. 2016

56.2%

55.7%

56.5%

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

+1,889Loans payable of hotel business increased 2.49 billion yen, interestbearing debt at the end of December is 20.9 billion yen.

Retained earnings (3.44 billion yen)increased as difference of net income(＋4.46 billion yen) and dividend payment (▲1.06 billion yen).

6

Sun Frontier Fudousan Co., Ltd.

Performance of

Revitalization business
Apr. to Dec.
in FY ended
Mar 31, 2016

Apr. to Dec. in
FY ending
Mar 31, 201712,821

Segment income (Note1)
Profit margin

Sales

Increase/decrease(¥ million)

22,399+74.7%

25,000

3,871

7,000

+80.8%

30.2%

31.3%

+1.1%pNo. of procuredbuildings

24

22

▲2

No. of sold buildings

16

16

±0

35

49(Note2)+14(¥ million)

Sales

No. of buildings instock as of the end of
the term

Segment income
Profit margin50%
22,39920,00040%
15,980

30.2%

31.3%

15,00030%
23.8%

12,821

10,000■ In order to create high added values, we take about one year to do attractive
commodification which could be highly valued by purchasers. Then we
progress proposal type sales to specific customers.
■ While making efforts on commodification and procurement, direct sales toour customers also increased. As a result, profit margin keep increasing at ahigh lever over 30%.
■ The average business period for selling the 16 properties is 324 days
(except for middle-term revitalization projects).
■ The stocks of revitalization property at the end of the third quarter are 49
buildings(6 of which belong to hotel business and 4 of which belong tooverseas business). Properties worth is 34.1 billion yen (6.1 billion ofwhich is hotel business and 1.3 billion yen of which is overseas business).

20%
7,000

5,000

3,795

10%

3,871

0

0%
2015/3 3Q

2016/3 3Q

2017/3 3Q※ Besides above, there are also 8 buildings for revitalization business worth 3.9 billion yen which areprocured and contracted at the end of January.
(Note1) “Segment income” is calculated by subtracting various expenses of respective businesses from gross profit on sales. Various expenses include interest paid, sales commission and goodwill amortization.
(Note2) Land procurement and development cases are also included in the inventory of revitalization business.

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7

Sun Frontier Fudousan Co., Ltd.

Performance ofRental building business
Apr. to Dec.
in FY ended
Mar 31, 2016

Apr. to Dec.
in FY ending
Mar 31, 2017

1,592

1,285

▲19.3%

Segment income

808

654

▲19.0%

Profit margin

50.8%

51.0%

+0.2％p(¥ million)

Sales

Increase/decrease(¥ million)

2,000

Sales
Segment Income
Profit Margin

1592

1,600

80%

1,330

1,200
 Because medium-sized projects operated over about
two and a half years were sold as scheduled, bothsales and profits decreased (contributed a lot torevitalization business).

800

1,285

52.8%

8

50.8%

51.0%

808
702

60%

40%
654

400

20%

0

0%
2015/3 3Q

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

100%

2016/3 3Q

2017/3 3Q

Sun Frontier Fudousan Co., Ltd.

Performance ofBrokerage business(¥ million)

Sales
Segment income

Profit margin

Apr. to Dec. in
FY ended
Mar 31, 2016

Apr. to Dec.
in FY ending
Mar 31, 2017

1,233

922

Sales

Increase/decrease744▲31.1%

87.6%

80.7%

▲7.0%pProfit Margin

1,400▲25.1%

1,080

Segment Income(¥ million)

100%

1,233

1,200

84.4%

87.6%
80.7%

1,080

1,000

922

878
< Sales brokerage>■ Some financial institutions become cautious about lending to realestate investment for local overheating in real estate market.
Against this background, many investors are in a wait-and-see
mood for the yen’s continuing strength. Also we didn’t makeenough effort to meet the needs of customers, therefore both sales
and profits decreased compared to previous year.

800

60%
744

740

600

40%

400

< Rental brokerage>■ In respective area of each branch office, we dig deep to understandcustomers and work hard for them with the strength of rental
brokerage based on community sales in the 5 wards of central Tokyo.
Therefore, the entrusted buildings of property management businessincreased, and both sales and profits increased from previous year.
■ In the process of revitalization property’s commodification, The
planning ability based on tenant’s perspective become motive powerfor improvement in added value and early high occupancy rate. Also
it contributed a lot for the profit of whole company.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

80%

20%
200
0

0%
2015/3 3Q

9

2016/3 3Q

2017/3 3Q

Sun Frontier Fudousan Co., Ltd.

Performance ofProperty management business(¥ million)

Sales
Segment
incomeApr. to Dec. in
FY ended
Mar 31, 2016

Apr. to Dec.
in FY ending
Mar 31, 2017

1,097

1,280

Increase/
Decrease(¥ million)

1,400

70%
1,280

+16.6%
1,200

499

594

45.5%

46.4%

1,097

+0.9%p

955
43.7%

45.5%

46.4%

800

<Property management business>■ Both sales and profit increased.
■ No. of managing properties : 356 (up by 41 compared to the same
period of the previous year)■ Occupancy rate: 96.5% (up by 0.2%)【Changes in the number of entrusted buildings and occupancy rate】
No. of properties Occupancy rate
End of Dec. 2014
255
97.2%
End of Dec. 2015
315
96.3%
End of Dec. 2016
356
96.5%

50%
40%

594

600

30%

499
417

<Building maintenance business>■ Growth of PM’s entrusted property has an effect on growth of BM’s
entrusted property and spot case, both sales and profit increased.

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60%+18.9%
1,000

Profit margin

Sales
Segment Income
Profit Margin

400

20%

200

10%

0

0%
2015/3 3Q

10

2016/3 3Q

2017/3 3Q

Sun Frontier Fudousan Co., Ltd.

Performance of Other Business(Delinquent rent guarantee, construction solution, space rental, hotel operation, etc.)
Apr. to Dec. in
FY ended
Mar 31, 2016

Apr. to Dec.
in FY ending
Mar 31, 2017

Sales

466

1,277

+174.1%

Segment
income248608+144.8%

1,200

53.4%

47.7%

▲5.7%p

1,000< Delinquent rent guarantee business>
By holding seminar toward building owners and cooperative companies,
guarantee system got spread. Also we endeavored in quick guarantee
judgement. Therefore, new customer development also improved.
Both sales and profit increased.

800(¥ million)

Profit margin

Increase/decrease

Sales
Segment Income
Profit Margin(¥ million)

1,400

70%
1,277

60%
53.4%

600

<Construction solution business>
Due to commodification specialized in revitalization business withincompany, sales decreased and profits slightly increased.

49.6%

47.7%

40%
608

514

30%

466

400

20%
255

<Space rental business>
Users are increasing steadily based on repeaters and referrals. Both sales andprofits increased remarkably.

50%

248

200

10%

0

0%

(Apr. to Dec. in FY 2017, sales are 281 million yen, segment income is 87 million yen.)< Hotel Operations>Occupancy rate of “SPRINGSUNNY Hotel Nagoya Tokoname”, thecollaborative brand hotel with Shanghai Spring Group, remains at a high level
over 96% and average daily rate is improving remarkably as well. Both sales
and profit increased greatly.

2015/3 3Q

2016/3 3Q

2017/3 3Q(Apr. to Dec. in FY 2017, sales are 504 million yen, segment income is 123 million yen.)
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11

Sun Frontier Fudousan Co., Ltd.

Key Performance Indicators■ Ordinary income margin■ Capital adequacy ratio
Financial stability is being built.

A testament to the development of our high value-added business.
Sales
Ordinary Income
Profit margin to sales

Forecast
for FY 2017(¥ million）
45,000

30%

24.1%

25%

(¥ million）
40,00022.9%80%Capital adequacy ration

40,00024.4%

Net Sales

35,00068.5%

35,000

20.2%

56.2%

30,00019.3%
30,00070%

55.7%

56.5% 60%

53.7%

20%
25,00050%

20,00040%

15,00030%

10,000

20%

5,000

10%

25,00015%
20,000

Forecast
for FY 2017

15,00010,000

10%

5%
5,000

0

0%

2013/3

2014/3

2015/3

2016/3Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

0

2017/3
2016/120%

2013/312

2014/3

2015/3

2016/3

2016/122017/3

Sun Frontier Fudousan Co., Ltd.

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

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13

Sun Frontier Fudousan Co., Ltd.

Business Environment
The global
economycontinues to growmoderately, butthere isuncertainty
regarding its
future.

Financingenvironment
remainsfavorable.

Demand-supply
balance incentral officebuilding market
is tight.

The improvement of U.S. income and employment is driving the economic growth of advanced countries. Focusing on
advanced countries, global economy is expected to grow moderately. On the other hand, economy of emerging countries
focusing on China is bottoming out, but the pace of recovery remains more sluggish.
Due to the emergence of populism, the introverted national particularism, there is uncertainty for policy decision of the
new U.S. administration, anxiety about finance for Brexit and slowdown of emerging countries’ economic growth rate.
The future of global economy remains unclear and can be easily affected by political events and geopolitical risks.
Aiming at increasing the country's nominal GDP to 600 trillion, The government of Japan bound “three arrows" toenhance economy. Through working-style reform, active social participation by women and relaxation of financing
regulation, the government is promoting the Dynamic Engagement of All Citizens and strengthening the virtuous cycleof growth and allocation.
As monetary easing policy of BOJ is continuing and long-term interest is declining, attitudes to lending to real estatebusiness is still positive while some financial institutions are showing negative stance toward rental house loan.

Against the background of graying of society and good financing environment, for small and medium-sized buildings
in central Tokyo which our company is focusing on, the dynamism of purchase demand is still growing as there are
overseas investment, needs of inheritance countermeasure and asset management.
With objective of the realization of Japan as a tourism nation, the government is working on the amendment of HotelBusiness Law. The number of foreign tourists to Japan reached about 24 million and 30 thousand in 2016, lack ofaccommodation became a socially urgent task. Surge of tourist is also showing a sign of spreading to provinces insteadof capital cities. Total overnight guests who visit provinces exceeded those who visit three major metropolitan areas ofJapan.
Active movement such as relocation, expansion and area increase is continuing due to business development andaverage vacancy rate in five wards of central Tokyo remained at a low level. As the tenants’ sense of cost is still high,average rent showed a slight increase. In addition, as demand-supply balance is still tight and market recovery will takea long time, it is predicted that the cycle of rental market would reverse in near future after bottoming out.
Needs for office relocation of information and communication industry as well as human resource and real estatebusiness is growing. Thus negotiation for raising rent of tenant recruitment and contract renewal is increasing. But room
for lowering cap rate of internal real estate is very small, prudence for investment decisions is required.

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14

Sun Frontier Fudousan Co., Ltd.

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

Average vacancy rate [%]Average rent in Dec.
18,540 yen
increased for consecutive
36 months (+14.4% fromthe bottom value)

（％）

（Yen）

Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%

Average rent

Vacancy rate

Peak of average rent
Aug. 2008
22,901 yen

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

Vacancy rate in Dec.

3.61%
Improved 5.82% during thelast 4 years and a half year

Bottom of 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 © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

15

Sun Frontier Fudousan Co., Ltd.

2) Managerial policy and business model“Not for profit, but for trust.”
We change ourselves and solve any real estate relateddifficulties based on the viewpoint of customers.

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16

Sun Frontier Fudousan Co., Ltd.

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

Clients

Building owners, asset holders, and wealthy individualsCorebusiness

Real estate revitalization and utilization

Policies

Strategies

To focus on people rather than property
Solve any real estate related difficulties based on the viewpoint ofcustomers

CentralTokyo

Tenant finding
capability

Strength

OfficeReal estate
Revitalization
capability

Operation capability
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17

Sun Frontier Fudousan Co., Ltd.

Participative management of all employees based on core principles
Change and Challenge ～Sun Frontier Management 3 Core Contents～
1. Mental management based on our ethos and philosophy• We have upheld “altruism” since the establishment ofour company.
• By cleaning our office and reading the philosophy
booklet every morning we become a group that sharethe value of “Feeling happy for others as you do foryourself”.
• Aiming at offering much greater happiness tocustomers, we contribute to the actualization of a richsociety.

Businessmanagement
based on theperspective ofcustomers

2. Management among all employees’ participation based on theaccounting for each section• By developing and diffusing the accounting system foreach division (Amoeba management), we enhance
employees' profit awareness and promote the business
operation involving all employees with management
perspective.
3. Business management based on the perspective of customers• We listen to customers’ requests carefully, handle andsolve even minor troubles, without being stingy withtime.
• We change ourselves from the perspective ofcustomers, making efforts to challenge, create andadvance.
• With internal collaboration of different sections, wecreate high added values that are linked to one another.
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18

Mentalmanagement
based on our
ethos andphilosophy

Management among all
employees’ participation
based on the accounting
for each section

Employees play major roles.
Resonant business administration.
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

Real Estate Services Business
Rental Brokerage Sales Brokerage
Property Management
Building Maintenance
Delinquent Rent Guarantees
Construction Solutions
Space Rental, Small office

HotelOverseas

Hotel Possession and Operation
Development, Revitalization and Sales
M&A for Hotel and Operating Company

Attract investment from Taiwan to Tokyo
Urban Housing and Serviced Apartment in Jakarta
Hotel and Housing Developments in Vietnam

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19

Sun Frontier Fudousan Co., Ltd.

Real Estate Revitalization and the Cycle of
Added Value① 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 link up unrivalled knowhow and grasped needs
through process above. Then we apply the linked up power to used buildings which we purchased, transformthem into high value-added products and sell the products of high added value to customers.
New

Fund –Raising Consulting

Asset Consulting

Delinquent Rent Guarantee

Construction Planning

Building Management

Rental Brokerage

Sales Brokerage

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)
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20

Sun Frontier Fudousan Co., Ltd.

3 main functions of branch office net
focusing on central Tokyo
1. Specializing in central Tokyo
10 footholds in wards of Chiyoda, Chuo, Minato,
Shinjuku, Shibuya, and Yokohama City. Withrental team of 72 members and management
team of 79 members, we draw out the needs from
customers and excel at finding tenants for officebuildings by utilizing our familiarity with local
areas.

Key Areas

Ueno
Akihabara

Ikebukuro

Kanda

Kojimachi

Kudan

Nihonbashi
2. Building owners' preferred point of contact
We solve various problems of customers.
Not only do tenant recruitment but also listen
to customers and help them with internal
cooperation.

Shinjuku

Imperial
Palace

HQ in
Hibiya

Tokyo

Ginza

3. Promote “Efficient utilization of building
AoyamaToranomon
business”
Shimbashi
To meet the rapid change of environment, we
Shibuyastarted building revitalization business. As
Akasaka
additional loans from financial institutions is
Hamamatsu-cho
conditional on company creditworthiness andEbisu
In Preparation
stable profitability of property, we lease the whole
Shinagawabuilding and sublease it to other tenants, provide
Gotandavarious services from renewal construction tobuilding operation instead of owners. Withpowerful trinity of owners, banks and our
Yokohama(
indicate the main target areas of our branches.)
company, we revitalize the building.
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21

Sun Frontier Fudousan Co., Ltd.

Building operation capability is our strength“One price for one article" products of optimal location in central Tokyo.
We draw out buildings’ market value and real estate value which haven’t been noticed yet withexcellent quality and attractive features from continuous research on customer’s perspective, andsell buildings to asset holders and wealthy people at appropriate price.
After the sale, the heart-warming follow up will lead to deep trust and become the profit
opportunities for stock business.

Sales Brokerage

AssetsConsulting

RenewalConstruction

Plan & Design

Rental Guarantee

Building
Maintenance

Building
Management &Operation

Rental Brokerage

Sale of revitalized
property

Menu of after-sale services

Revitalization Business and Rental Building Operation Business
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

22

Sun Frontier Fudousan Co., Ltd.

Entrusted area of PM and clients are
increasing steadily
Changes in occupancy rate and area under our property management
100％

(㎡)

678,639700,000

96.2％(As of Jan. 2017)

About 75% of our entrusted properties aged 20 years or above.

600,000

97.23％

Occupancy rate of PM entrusted buildings
500,000

95％
400,000

Entrusted area
300,000

90％

95.5％(As of Jan. 2017)

200,000

100,000

Average Occupancy rate of middle-sizedbuildings in 23 wards in Tokyo

0

85％

'08/1

'08/7

'09/1

'09/7

'10/1

'10/7

'11/1

'11/7

'12/1

'12/7

'13/1

'13/7

'14/1

'14/7

'15/1

'15/7

'16/1

'16/7

※Source: the occupancy rate of middle‐sized buildings in 23 wards in Tokyo was produced by our company based on "Market Data Rent and Vacancy" of Sanko Estate Co., Ltd.
Note: Occupancy rate of buildings under management of Property Management Section
In the 4th quarter of fiscal year 2014, as important tenants moved to larger offices, some units become vacant. Thus occupancy rate declined
temporarily at the end of the term. Later, tenants have been moving in steadily, occupancy rate got recovered.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

'17/1

～One profitable building in Ginza～

Revitalization case

Mobilizing the internal personnel power,
maximizing the property value.
Appearance After

Entrance Before

Entrance After

廊下
Feeling of spaciousness like in hotel
Interior After

1. Purchased sectional ownershipbuildings from seller who used to be
the customer of rental brokerage.
2. Let 3 tenants vacate their rooms
for value-up construction throughcommunication and support.
3. Demolished the shop on groundfloor, doubled the width of frontage,
widened its space by nearly two andhalf times. Utilized the light to createa spacious entrance.
4. Improved the value of office byusing interior decoration of excellent
design. Corrected the top floor’s noncompliance with Japan's BuildingStandards Act.
5. Succeeded in increasing the rent by
30% of the former price level and 7
vacant floors become fully occupied
within half a year.
脱衣所
6. Sold the revitalizedbuilding toformer customer.
Interior After

5 stations and 9 lines are available
within 10 minutes’ walk
【Property outline】
Location: Ginza, Chuo-ku, Tokyo
Structure: Steel reinforced concrete and Steelframed flat roof, 10 storeys above
ground and 1 basement storey.
Date of completion: 1991
Purposes of use: Office, apartment house, shop,
parking lot.
Site area: 196.04 m2 (59.30 tsubo)
Floor space: 1, 395.66 m2 (422.18 tsubo)
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Well designed setup office24

Sun Frontier Fudousan Co., Ltd.

Others

NEWS
November 25, 2016
We are sponsoring the Japanese Language Course in
National Danang University.

December 14, 2016
Our company has been selected as one of the issues tocompose the index “JPX-Nikkei Mid and Small Cap
Index” which is jointly developed by Tokyo Stock
Exchange, Inc. and Nikkei Inc.

The purpose of this course is to help all students (including
graduate student) in Danang University to master theJapanese language and learn Japanese culture regardless of
their department and major. In this course, we would like tostrongly support Vietnamese students majored in high-levelprofession in Danang to acquire fluent language ability andlearn culture of Japan. As Vietnamese has the same national
characters like Japan such as diligence and conscientiousness,
our purpose is to increase competent Vietnamese personnel
who are able to play active roles in Japanese corporates. We
hope this sponsorship could help to expand the employment ofVietnamese students in Japan, to strengthen personal andtechnical exchanges, and furthermore, to contribute to thebuilding of strong reliant and cooperative relationship between
Japan and Vietnam.

The new index is composed of companies with high appeal
for investors, which meet requirements of global investment
standards, such as efficient use of capital and investor-focusedmanagement perspectives. Eligible Issues would be selectedfrom common stocks whose main market is the TSE 1st
Section, 2nd Section, Mothers, or JASDAQ market, and theindex will start to be calculated from the March 13, 2017.
Specializing in the 5 wards of central Tokyo, our company isworking on revitalization and utilization of real estate fromthe perspective of customers. As for our consolidated
financial results, sales and income increased for the fifth
straight fiscal year from the fiscal year ended March 31, 2012.
In the third quarter of the fiscal year ending March 31, 2017,
capital adequacy ratio is 56.5% and ordinary income ratio is24.1%. We take this selection as acclaim for our stable
growth, financial stability and high profitability.

Signing Ceremony in Danang University

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

3) Growth strategies
Earn by flow and enlarge the stock～Aiming at business model of standing up on two feet of flow and stock～

・・・New information for “Stock Type Buisiness”
・・・New information for “Flow Type Buisiness”

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

26

Sun Frontier Fudousan Co., Ltd.

Four-pronged strategy for future growth
1) Existing
Business Expansion

Development and Expansion of
Office Business

2) Hotel Business

Inbound
City-tourism Hotel3) M&A

Stock Acquisition,

Capital Participation, Business Alliance4) Overseas
Business Expansion
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Indonesia & Vietnam
27

Sun Frontier Fudousan Co., Ltd.

Expansion of existing business～Rental Conference Room and Rental Office business～
Two branches will be newly opened
Vision Center Tamachi

Will be newly opened
on March 1, 2017

Vision Center Yokohama

Will be newly opened
on March 1, 2017

5 minutes’ walk from Yokohama Station of JR lines

2 minutes’ walk from Tamachi Station of JR lines
Appearance

Vision Center
フロアレイアウト（３階）
Yokohama

Vision Center
Tamachi

Entrance

JR各線『田町』駅徒歩２分

8 sections which can seat up to
8 ~ 126 people＜Policy of Rental Conference Room ＞
Change ourselves fromthe perspective of customer,
find and serve the realneed and wish of customer.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

6 sections which can seat up to
30 ~ 100 people

Yokohama Station

After “Vision Center Tokyo” started in April
2015, it become profitable in just half a year andcustomers is increasing steadily. Under the
introduction from leasing section, subsequentcases in good location are also progressing well.
“Vision Center Tamachi” and “Vision Center
Yokohama” will be newly opened in March, 2017as the 5th and 6th branch.
28

Sun Frontier Fudousan Co., Ltd.

Expansion of existing business

Guest House for Foreign Tourists to Japan“Planetyze Hostel” will be newly opened
Will be newly opened
on February 13, 2017

Appearance

Planetyze Hostel【Overview 】
A d d r e s s ： 2-24-9 Higashi-nihonbashi,

Chuo-ku, Tokyo, JapanS t r u c t u r e ： Steel-reinforced building,
10 storeys above ground
Year of Completion ： 1987 (30 years)
B u i l d i n g U s e ： Budget Hotel (Guest House)
S i t eA r e a ： 109.45 m2 (33.10 tsubo)F l o o r S p a c e ： 784.65 m2 (237.35 tsubo)C o m p o s i t i o n ： Floor 1 reception desk & cafe & bar

Dormitory

Hostel converted from office building

Community Space at entrance

Four minutes’ walk from Higashi Nihonbashi Station of Toei Asakusa Line
(Along the Yasukuni-dori Street)“Planetyze Hostel”, the accommodation facility for foreign visitors to Japan will
open on February 13, 2017 in Higashi-nihonbashi, Chuo-ku, Tokyo. The hostel is
run through means of joint management with Travelience Inc. We have formed
an alliance with Travelience Inc. which is providing online guidebook towesterners. This hostel is chosen as model project of “New Tohoku” for enlarging
communication and promoting tourism in a bid to attract more foreign visitors
to the Tohoku region. It will devote to tourism revitalization of Tohoku throughgovernment-private cooperation.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Floor 2 office
Floor 3 ～ Floor 10 accommodation
C a p a c i t y ： 104
R o o m T y p e ： Twin Room & Double Room &Dormitory Type Room with Bunk Bed
A m e n i t i e s ： Free Wi-Fi in the entire building, cafe
& bar, coin laundry, laundry drier
L a n g u a g e ： Japanese, English, French, Chinese,
Portuguese and Thai language.

【Operating System of the Hostel】
O w n e r : Sun Frontier Fudousan Co., Ltd
C o n s i g n o r : Sun Frontier Community Arrangement
Co., Ltd. （Wholly owned subsidiary.）

C o n s i g n e e : Travelience Inc.

Sun Frontier Fudousan Co., Ltd.

Hotel Business

Trends in the number of foreign visitors to Japan by country
The number of foreign visitors to in 2016 is 24,030,000 (year-on-year rate +21.8%).
Considering ratio of total visitors to overall population, the number of Chinese visitors to Japanis expected to increase more. We will continue to expand our business by developing inboundcity-tourism hotel targeting on visitors to Japan.
Changes in the number and consumptionof ForeignVisitors to Japan

Trendsin the number of foreignvisitorsto Japanby country

2,403

4,000
3,500

1,973

2,500

2,000

3,000
2,500

3,747

1,341

2,000

1,036

3,477

836

1,500

1,500

1,000

622
2,027

1,000
500

813

Increase
rate（Number of People）（Billion Yen）

1,084

1,416

0

500

0
2011 2012 2013 2014 2015 2016

※Source：Created from documents released fromJapan National Tourist Organization and Tourism Agency.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Nation

2015

2016

（％）

Total
visitors
ratio to（million） population

Population

1

China

4,993,689

6,372,984+27.62

1,373.49

0.46%

2

Korea

4,002,095

5,090,308+27.1950.61

10.06%

3

Taiwan3,677,075

4,167,429+13.3423.49

17.74%

4 Hong Kong

1,524,292

1,839,170+20.66

7.31

25.16%

5USA

1,033,258

1,242,705+20.27321.60

0.39%

6

Thailand796,731

901,426+13.14

68.83

1.31%

7

Australia

376,075

445,188+18.38

23.94

1.86%

8

Malaysia

305,447

394,237+29.07

31.18

1.26%

9

Singapore

308,783

361,813+17.17

5.53

6.54%

10 Philippines

268,361

347,838+29.62102.15

0.34%

Total

19,737,409

24,039,001+21.797,206.31

0.33%※Source: Created from documents released from Japan National Tourists Organization.
※Source: Population is calculated from IMF 「World Economic Outlook Databases」(Version April, 2015)30

Sun Frontier Fudousan Co., Ltd.

Concept and Development of Hotel Business－Inbound City-tourism Hotel－“Heart-warming
Hotel”
テーマ“心温かいホテル”＜List of Domestic Hotel＞

１. Hotel which grow continuously with thestaffs’ efforts from customers’ perspective
２. Hotel which can dig up and develop
local charm and Japan culture
３. Hotel which one is willing to stay
＜Domestic Hotel＞

908
270
924

In operation
Under construction
In plan & preparation
Total No. of Rooms

2,102

Sado

Iwaki

Kofu
Takayama
Shijo Kawaramachi
Kyoto

Maihama
Narita Airport

Honmach Osaka

Open（Plan）

Brand

Rented

―

―

Iwaki

150

In operation

Apr. 2016

Collaborative

Tokoname

194

In operation―

Original

Kawasaki200

In operation―

Original

Koiwa

105

In operation―

Original

Narita100

In operation―

Original

Hakata159

Under construction

Apr. 2017

Original

Maihama80

Under construction

Jul. 2017

Original

Kofu

190

In planSep. 2017

Original

Takayama

80

In plan

1st half of 2018

Original

Higashi-ginza

137

In plan

1st half of 2018

Original

Sado

115

In plan

1st half of 2018 Undecided

Narita Airport

210

In plan

2nd half of 2018

Original

In plan

1st half of 2019

Original

Honmach
193
Osaka
Shijo
Kawaramachi 189
Kyoto

NaritaKoiwa
Ginza-higashi
HakataTokoname

KawasakiHotel Name No. of
Location Rooms

StatusTogether with collaborative brand “SPRINGSUNNY”,
original brand of our own which targets at upper middle classin central Tokyo is also in plan & progress. Development is
progressing under concept of “Inbound City-tourism Hotel”.
Collaborative
brand

Original
brand

3131

（Note）Schedule & scale are still being planned, may change in future.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

Our company acquired 100% issued shares of hotel managementcompany Sky Court Hotel Co., Ltd. through M&A.
Our company acquired 100% issued shares of Sky Court Hotel Co., Ltd. which is operating 4 hotels mainly
located in Tokyo and adjacent prefectures on December 1, 2016. This acquisition is conducted through our
subsidiary Sun Frontier Hotel Management Inc. The location and grade of each hotel is very suitable foraccommodating inbound tour and foreign individual tourist. From now on, we will try our best to boost
customers’ satisfaction by increasing the added value of each hotel. Also, we will strive to improve theprofitability and make contributions for the growth and development of our company.

Introduction of 4 Hotels
Hotel Sky Court Kawasaki■Location：Kawasaki-shi, Kanagawa-ken■Rooms： 200■Site area： 1,175.09 m2（355.46 tsubo）■Floor space： 4,463.67 m2（1350.26 tsubo）

Hotel Sky Court Koiwa■Location：Edogawa-ku, Tokyo■Rooms： 105■ Site area： 717.34 m2（216.99 tsubo）■ Floor space： 2,759.01 m2（834.60 tsubo）

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Hotel Sky Court Narita■Location：Narita-shi, Chiba-ken■Rooms：100■ Site area： 1,526.04 m2（461.62 tsubo）■ Floor space： 2,137.66 m2（646.64 tsubo）

32

4 buildings 564 rooms
in total.
Operation Started
in December 2016

Hotel Sky Court Hakata■Location：Fukuoka-shi, Fukuoka-ken■Rooms：159■ Site area： 808.09 m2（244.44 tsubo）■ Floor space： 3,383.79 m2（1,023.59 tsubo）

Sun Frontier Fudousan Co., Ltd.

SPRINGSUNNY Hotel Nagoya Tokoname

Changes of gross sales and occupancy rate
※Sales: benchmark index to 100 as Dec. 2015
Occupancy Rate

Gross sales

Appearance

93.3% 350

100%
【Occupancy Rate】
Jan. 2017
93.3％

300

90%

272

Apr 25, 2016
Open Ceremony
250

Family room on top floor

80%

200
70%
150

【Gross Sales 】
2.7 times of the
figure in operation
beginning

60%

56.8%
50%

40%

Dec. 2015
acquisition

100

100

50

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1
2015

2016

0

2017年

Extended Restaurant＜Summary of the Hotel Building＞■Location： Shinkaichou, Tokoname, Aichi, Japan（3 minutes by express train from the airport,
Meitetsu Airport Line, near Tokoname Station）■Number of Rooms：194（large bath of artificial hot spring）■Completion Date：January, 2008（8 years）

As the result of our efforts on operation aiming at “heart-warming”
hotel, the occupancy rate remains at a high level over 96%. Sales
increased up to 2.7 times after we started the operation.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

＜Main Renewal＞●Strengthened safeguard●Exterior Wall Repearing●Beds addition, convenient
headboard replacement●Redesign of entrance●Restaurant extension

33

Sun Frontier Fudousan Co., Ltd.

Hotel Business

Hotels scheduled to open in 2017
MaihamaPlanned toOpen on
Apr. 2017

Effect Drawing

Planned toOpen onJul. 2017

Kofu
Effect Drawing

Takayama

Planned toOpen on
Sep. 2017

Effect Drawing

Original Brand Hotel（Name undecided）

Dormyinn Kofu Marunouchi(Tentative name)

Target on visitors to Disney Resort【Property Outline】■Location ： Urayasu-shi, Chiba-ken■Structure： Steel reinforced concrete andSteel framed flat roof, 5 storeys
above ground■Date of completion: Apr. 2017 (In plan)■Number of rooms ： 80
■Land area： 1,623.11 m2（490.99 tsubo）■Gross floor area ： 2,998.55 m2（907.06 tsubo）

High quality bushiness hotel under theoperation of Kyoritsu Maintenance Co., Ltd.
【Property Outline】■Location ： Kofu-shi, Yamanashi-ken■Structure： Steel Construction flat roof,
9 storeys above ground and 1
basement storey■Date of completion: Jul. 2017 (In plan)■Number of rooms ： 190■Land area： 1,476.01 m2（446.49 tsubo）■Gross floor area ： 6,320.90 m2（1,912.07 tsubo）

Original Brand Hotel（Name undecided）
Takayama Area which is very popular
to foreign visitors to Japan【Property Outline】■Location ： Takayama-shi, Gifu-ken■Structure： Wooden Construction galvanizedsteel sheet, 2 storeys above ground.
■Date of completion: Sep. 2017 (In plan)■Number of rooms ： 81
■Land area： 2,421.34 m2（732.45 tsubo）■Gross floor area ： 1,848.11 m2（559.05 tsubo）（Note）Photo image & scale are still being planned, may change in future.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

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 © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

35

Sun Frontier Fudousan Co., Ltd.

Overseas development

Concept and Development of Outbound Business
Concept “Help each Asian to gain happinessthrough cooperative effort with people who share our views. ”
Developing our outbound business in rapidly-growing cities in South-East Asia and contributing to thehappiness and prosperity of local people over there.
Projects in Vietnam

Interior decoration of No.1 overseas hotel“The Blossom City”

StatusOpen

Location /Use

Scale

In operation

Jul. 2016

Danang Hotel“The Blossom City”

45 rooms

In plan

1st half of
2019

DanangCondominium
Residence

312 houses

In planUndecided

Danangcommercial complex

Hotel・SA156 rooms+Residence 229
houses+Shop

In planUndecided

Ho Chi Minh SA

41rooms

Projects in Indonesia
StatusOpen

Location /Use

Scale

For sale―

Jakartadetached house

5 housesUnder
construction

Undecided

Jakartadetached house

9 houses

In operation―

Jakarta Residence+SA“Kasira Residence”

90 rooms

Bath RoomNight View

(Note）”SA”･･･Serviced apartment. Fully furnished apartment available for monthly stay,providing all the hotel-like service.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

36

Sun Frontier Fudousan Co., Ltd.

Danang, Vietnam, No.2 project~ High-rise urban apartment house project ~Danang is chosen to be the host of 2017 Asia-Pacific Economic Cooperation (APEC) summit and is gaining
worldwide attention. We established “Sun Frontier Vietnam” as an overseas subsidiary in December, 2015.
Beside city-tourism hotel “The Blossom City”, we are preparing for the high-rise apartment project as our 2nd
project. No.3 and No.4 project are also in progress.
No. 2 High-rise apartment building「Garden Tower」 PJ

Japanese spring holidays
ranking of popular destination city 2016

Effect Drawing

Rank
Construction will
start in March, 2017

City

y/y

1

Danang

389%

2

Macao

200%

3

Busan

181%

4

Kaohsiung

167%

5Sydney162%※ Source: Created from released documents of Expedia Japan※
information
fromNarita,
ExpediaJapanJapan
1 Baseddirectonflights
per released
day from

since January 1, 2017.
14 direct flights per day from China.
8 direct flights per day from Korea.
Gathering worldwide attention as afascinating resort area.
From Danang Airport to city center it only
takes 10 minutes by car, to beautiful beachwhere there are many hotels it only take 15
minutes. Located at optimal place with very
convenient access.

Effect Drawing
High-rise condominium of 28 floors
with 312 apartments
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

Jakarta, Indonesia~ Urban Housing & Serviced Apartment ~We established “Sun Frontier Indonesia” as an overseas subsidiary.
We are progressing projects in central Jakarta.
No.2 City Type Ready-built House「Gandaria」 PJ
Will be completed

No.3 Serviced Apartment「Kasira Residence」 PJ
Appearance
Operation started
in Dec. 2016

in the 2nd half of 2017

Internal pool

Effect Drawing
Appearance

Bed Room

Effect Drawing Pools areavailable for all houses.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Serviced Apartment with 90 rooms

38

Sun Frontier Fudousan Co., Ltd.

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, etc.
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