FY17/2 Corporate Presentation
January13,
2017
April 19,2017

Ichigo (2337)© 2017 Ichigo Inc. All rights reserved.

www.ichigo.gr.jp

Ichigo Preserves andImproves Real Estate© 2017 Ichigo Inc. All rights reserved.

© 2017 Ichigo Inc. All rights reserved.

Contents
FY17/2 Full-Year Earnings‒ Operating Profit 1.4X, Net Income 1.2X YOY‒ Segment Earnings Details‒ Stock + Flow Earnings Model‒ Robust Cash Flow and Cash-On-Hand‒ Strong Financial Position‒ Prudent Balance Sheet Management

Appendices−−Financial & Real Estate Data
Power Up 2019 Mid-Term Business Plan

Powerful Value-Add Business Model Underpins Growth‒ Real Estate Owner Services Launch‒ REtech Business Tie-Up‒ Ichigo Boutique Hotel Entry‒ Tradepia Odaiba Value-Add‒ Value-Add Driving Rental Income Growth‒ Asset Management Business Expansion‒ Ichigo Green (9282): Japan’s First Ten-Year Earnings Forecast‒ Ichigo Office REIT and Ichigo Hotel REIT Dividend Growth‒ Clean Energy Business Growth‒ Share Buyback

FY18/2 Full-Year Forecast‒ FY18/2 Full-Year Forecast‒ FY18/2 Full-Year Forecast Details© 2017 Ichigo Inc. All rights reserved.

FY17/2 Full-Year Earnings© 2017 Ichigo Inc. All rights reserved.

5

Operating Profit 1.4X, Net Income 1.2X YOY‒ Operating Profit, Recurring Profit, and Net Income All Record Highs‒ Beat April 2016 Forecast: OP +17%, RP +20%, NI +12%
‒ ROE >20% for Second Consecutive Year
(JPY million)

FY16/2

FY17/2YOY

Initial Full-Year
Forecast

vs. Full-Year
Forecast

Revenue

49,699109,253+119.8%125,600-13.0%

Gross Profit

19,86326,806+35.0%

23,867+12.3%

Operating Profit

15,417

21,781+41.3%

18,500+17.7%

Recurring Profit

13,88919,755+42.2%

16,400+20.5%Net Income

12,925

14,894+15.2%

13,300+12.0%EPS

JPY 25.86

JPY 29.66+14.7%

JPY 26.43+12.2%

ROE

21.0%

20.2%

JPY 3.00

JPY 5.00

Dividend Per Share© 2017 Ichigo Inc. All rights reserved.

–

18.1%

–

+66.7%

JPY 5.00–

6

Segment Earnings Details‒ Significant Value-Add (+28%) and Clean Energy (+920%) Earnings Growth‒ AM Earnings Down, but Stock Earnings +45% YOY(JPY million)
Revenue
Segment

FY16/2

FY17/2

Operating Profit
InitialForecast

YOY

vs. Initial
Forecast

FY16/2

FY17/2

InitialForecast

YOY

Earnings Drivers(Parentheses show YOY change
in Gross Profit)vs. Initial
Forecast

AM Fees 1,606 (+505)
Acquisition/Disposition Fees 512 (-28)
Performance/Brokerage Fees 200 (-519)
Sponsor Credit Support Fees 36 (-373)

Asset Management

5,067

4,747

-6.3%

5,079

-6.5%

2,879

2,326

-19.2%

2,386

-2.5%

Value-Add

42,944

92,138+114.6%109,297-15.7%

12,62916,213+28.4%

13,530+19.8%

Clean Energy

1,628

12,352+658.4%

11,152+10.8%

323

3,301+918.9%2,608+26.6% Profits on Sale of Solar Power Plants

Rental Income 9,670 (+1,615)
Profits on Sale 10,559 (+2,730)

FIT Solar Electricity Sales 957 (+273)
2,808 (+2,808)

Other

58

14

-74.7%

71-79.9%

-32

-165

–

-84

–

Total

49,699109,253+119.8%125,600-13.0%

15,79921,676+37.2%

18,440+17.6%

–

–

–

–

–

-382

104

–

59

–

49,699109,253+119.8%125,600-13.0%

15,417

21,781+41.3%

18,500+17.7%

Adjustment (including
offsets of inter-segment
transactions)Total© 2017 Ichigo Inc. All rights reserved.

Up-Front Loan Fees & Related Expenses
14 (-39)7

Stock + Flow Earnings Model
Stock Earnings (Primarily Rental Income, AM Fees, & FIT Solar Power Sales)
Flow Earnings (Primarily Profits on Value-Add Real Estate Sales )Fixed Expenses (Fixed SG&A + Interest Expense)(JPY million)

26,806

19,86325,99414,011

12,94912,795

13,045

8,973

12,166
4,553

7,435

Gross
Profits

2,518

4,974

10,890

924
4,050

7,613
3,129

FY13/2

4,917

3,499

FY14/2© 2017 Ichigo Inc. All rights reserved.

4,342
FY15/24,876

FY16/2

5,382

FY17/2

6,045

FY18/2(Forecast)8

Robust Cash Flow and Cash-On-Hand
FY17/2 (12M)
JPY +21.5B
Value-Add Real Estate Sales

Cash Flow fromOperating Activities

Buy− Deploy cash
− Increase borrowings

JPY +66.4B
Value-Add Real Estate Acquisitions

JPY -72.1B
Solar Power Plant Sales

JPY +7.2B

JPY -11.9B
Cash Flow from
Investing Activities

ValueAdd

Solar Power Plant Development

JPY -11.7B

Cash Flow from
Financing Activities

Cash-on-Hand

JPY +6.3B
JPY 41.3B (+13.0B)

Sell− Receive cash
− Repay borrowings* Parentheses show change vs. FY16/2© 2017 Ichigo Inc. All rights reserved.

9

Strong Financial Position
Weighted Average Interest Rate and Weighted Average Loan Term

Weighted Average Interest Rate
WeightedLoan
AverageLoan Term
Average
Period(Interest Rate)(Loan Term, Years)

2.5%

12
2.22%

10.8 years

1.96%

2.0%

9
9.0 years

8.7 years

1.71%
1.5%

6
4.7 years

5.9 years

1.41%
1.24%

1.0%

3
FY13/2

FY14/221% (JPY 1.5B)

14% (JPY 4.1B)

79%(JPY 5.5B)

86%(JPY 26.1B)

FY15/2

FY16/2

FY17/2

8% (JPY 4.9B)

10% (JPY 10.3B)

6% (JPY 6.1B)

92%(JPY 53.4B)

90%(JPY 94.4B)

94%(JPY 92.2B)

Term Structure of Loans

Short-Term
Long-Term© 2017 Ichigo Inc. All rights reserved.

10Prudent Balance Sheet Management (1)Uncollateralized Loans & Lines (JPY 29B)
LenderUncollateralized Loans

Uncollateralized
Commitment Lines

Uncollateralized
Credit Facilities

AmountSMBC-Led

Loan Period

Use of Proceeds

JPY 8B

7 years

Refinancing of existing loans

SMBC

JPY 10B

2 years from drawdown date

Acquisition of new hotels

Mizuho Bank

JPY 4B

2 years from drawdown date

Acquisition of new hotels

Mizuho Bank

JPY 5B

3 years from drawdown date

Solar power plant development and acquisition

Mizuho Bank

JPY 2BMar 31, 2018

Capex in the event of natural disasters

1

Syndicated Loan

Total

JPY 29B

1 Syndicate: SMBC, Shinsei Bank, Hokuriku Bank, Yamaguchi Bank, Tokushima Bank, ShinGinko Tokyo© 2017 Ichigo Inc. All rights reserved.

11

Prudent Balance Sheet Management (2)75% of Loans Fixed to Lock-in Japan’s Historically Low Interest Rates andSupport Ongoing Earnings Stability
Fixed vs. Floating Loans (as of Mar 31, 2017)

Interest Rate Hedge Details
Counterparty
Interest Rate
Swaps
(JPY 44B)

Interest Rate
Caps
(JPY 10B)

AmountPeriodSMBC

JPY 15B

5 years

Mizuho Bank

JPY 10B

5 years

SMBC

JPY 10B

7 years

Mizuho Bank

JPY 7B

7 years

Sumitomo Mitsui Trust Bank

JPY 2B

7 years

Tokyo Star Bank

JPY 5B

7 years

Mizuho Bank

JPY 3B

7 years

Shinsei Bank

JPY 1B

7 years

Citigroup Global Markets JapanJPY 1B

7 years

Total© 2017 Ichigo Inc. All rights reserved.

JPY 93.5B
Fixed(JPY 69.7B)

Floating(JPY 23.8B)

74.6%

25.4%

Note: Excludes loan for the Ichigo Showamura Ogose ECO Power
Plant, because the loan will convert to a non-recourse loan with interest
rate hedge already completed once the plant commences operation thisfall.
Fixed = Total of fixed interest rate loans (JPY 15.7B) and floating-tofixed interest rate hedges (JPY 54.0B )JPY 54B

12

Powerful Value-Add Business Model Underpins Growth© 2017 Ichigo Inc. All rights reserved.

13

Real Estate Owner Services Launch
Ichigo Owners Established in March to Serve Clients by Leveraging Ichigo’s
Value-Add Capabilities to Increase the Value of their Real Estate
Value-Add Business Model
Green
Infrastructure

Solar Plants

Ichigo Green(9282)

Sell

OfficeIchigo Office REIT
(8975)
Hotel

Ichigo Hotel REIT
(3463)© 2017 Ichigo Inc. All rights reserved.

Real
不動産
EstateBuy

Buy

Value-Add
Preserve &Improve
Ichigo Owners

Real
EstateThirdParty
Investors

Sell
Real Estate Investment Needs
Tailored Client Services

Real
EstateOwners14

REtech Business Tie-Up
REtech Business Tie-Up with ITANDI and KDDI− Support Ichigo’s leasing using ITANDI’s AI and KDDI’s big data
− Increase sales of ITANDI’s services leveraging Ichigo’s real estateexpertise and network
Real EstateAI×© 2017 Ichigo Inc. All rights reserved.

Big Data×15

Ichigo Boutique Hotel Entry
Transformation of the Historic Yokohama Kokusai Hotel Working in Close
Coordination with the Operator− Collaboration with Japanese designer and major interior goods brand, ACME
Furniture; Guests can buy ACME goods that they use in the hotel− While preserving the hotel’s history, updating the interior spaces to today’s
standards
HOTEL THE KNOT YOKOHAMA

hotel-the-knot.jp

Interior

Brand
HOTEL THE KNOT YOKOHAMA

Image

Concept
An urban hotel that brings people and travel to the city.
A place to meet new experiences, new people, andnew things.
© 2017 Ichigo Inc. All rights reserved.

16

Tradepia Odaiba Value-Add
Increasing Tenant Satisfaction− Ichigo staff deployed on-site for quick tenant
response− Tenant satisfaction surveys to establish value-add
agenda; enhancing cooperation with PM

Strengthening Leasing− Online virtual building tour

www.vr-view.jp/ichigo/trade0411

Tradepia Odaiba

Participating in Tokyo Waterfront City Association
to Support Odaiba Development
Value-Add Agenda
Increase
TenantSatisfaction

Asset Overview
Improve building security
Improve common areas (shared meeting rooms andlounge) and create separated smoking zone
Conduct tenant satisfaction surveys
Increase occupancy

Increase
Profitability

Ichigo Branding

Optimize property management standards
Lower energy costs and acquire environmental
management certification
Monetize currently unused excess FAR

Name
Location
AccessLand Area
Total
Floor Area
ZoningStructure

Improve the building entrance

BuilderIntroduce Ichigo's Property Management Standards
and respond more promptly to tenant needs

Date Built
Date Acquired© 2017 Ichigo Inc. All rights reserved.

Tradepia Odaiba
2-Chome, Daiba, Minato-ku, Tokyo
3-min walk from Tokyo Teleport Stationon the Tokyo Rinkai Line
12,910.26㎡
76,580.43㎡
Commercial
Steel & Steel-Reinforced Concrete
23 Floors plus 2 Basement Floors
Joint Venture of Shimizu, Taisei,
and Obayashi
February 2001
October 18, 2016

Tradepia Odaiba
Virtual Tour17

Value-Add Driving Rental Income Growth
Keys: Improving Tenant Experience & Increasing Leasable Area
Office(Weighted average holding period: 1.1 years)

Hotel(Weighted average holding period: 1.6 years)+32.3%+46.6%+27.8%+13.8%+68.5+28.3%+16.6

As of February 28, 2017+13.8% Rental Income

At
Acquisition

FY17/2

FY18/2(Forecast)+37.1%

+79.5

+34.0

246.3

Plan

(JPY million)

58.5

At
Acquisition

+21.7

+27.3

As of February 28, 2017+28.3% Rental Income

FY17/2

FY18/2(Forecast)Plan* FY17/2 includes newly completed leases at Tradepia Odaiba© 2017 Ichigo Inc. All rights reserved.

18

Asset Management Business Expansion
Ichigo Green IPO Expands Ichigo’s J-REIT and YieldCo Line-Up
REIT/ YieldCo

Ichigo Office REIT
(8975)

Ichigo Hotel REIT
(3463)

Listing Date

Characteristics

Forecast Dividend Yield(Based on Share Price as of
Mar 31, 2017)86 assets JPY 194.5B

・ Specialized Office REIT focused on midsize offices with return stability and upside
potential
October 12, 2005

5.5%
・ 13 Consecutive periods of dividend
growth, No.1 among all J-REITs

20 hotels JPY 49.1B

・ Specialized Hotel REIT focused on driving
shareholder value via income stability andearnings growth
November 30, 2015

5.4%
・ Rapidly expanding portfolio via Ichigo'ssponsor support

・ Offers investors an opportunity to invest inJapan's rapidly expanding green
infrastructure asset class
Ichigo Green(9282)

Portfolio

December 1, 2016

・ Renewable energy YieldCo that maximizes
shareholder value via a portfoliothat offers both return stability and growthpotential

13 power plants JPY 10.0B(25.83MW)
6.6%

・ The second YieldCo to be listed on
the TSE* Forecast dividend yield is based on the most recent dividend forecast. Ichigo Green includes dividend in excess of earnings.
© 2017 Ichigo Inc. All rights reserved.

19

Ichigo Green (9282) : Japan’s First Ten-Year Earnings Forecast
Long-Term Earnings Stability Enables 10-Year Earnings Forecast‒ Fixed FIT and purchase period‒ Geographically dispersed, stable solar energy production

Attractive Dividend and Renewable Energy Sustainability Contribution‒ Offers opportunity to invest in rapidly expanding Green Infrastructure market‒ Return full cash earnings (including accelerated deprecation) to shareholders
Ten-Year Dividend Forecast(JPY)
10,000
8,000
6,000
4,000

Dividend per Share (excluding Dividend in Excess of Earnings per Share)
Dividend in Excess of Earnings per Share
6,944
6,817
6,785
6,321
6,168
6,091
5,701

6,757

6,912

1,589

1,652

1,794

2,288

2,252

2,375

2,108

2,224

1,196

4,502

4,505

4,516

4,527

4,529

4,533

4,569

4,649

4,688

June
2018

June
2019

June
2020

June
2021

June
2022

June
2023

June
2024

June
2025

June
2026

3,417
791

2,000

• Solar YieldCo• Invests in renewable energy power
plants that have been in operation
for at least one year
• Geographically dispersed• 13 power plants, JPY 10B(acquisition price)• 25.83MW power output

2,626

0
June
2017*

* Ichigo Green’s actual operating period for the June 2017 fiscal period is the seven months from Dec 1, 2016, the day of the power plant acquisitions, to Jun 30, 2017.
© 2017 Ichigo Inc. All rights reserved.

20

Ichigo Office REIT and Ichigo Hotel REIT Dividend Growth
Ichigo Office REIT (8975) Dividend Growth

Ichigo Hotel REIT (3463) Dividend Growth

13 Consecutive Periods of Dividend Growth –No.1 vs. All J-REITs. Currently Forecasting 15
Consecutive Dividend Increases
Oct 2016 DPS (Actual)

JPY 1,904

1,910 1,920

Oct 2017 DPS (Forecast) JPY 1,920
1,740
1,547
1,541

+3.8%
JPY 5,742

Apr 2017 DPS (Forecast) JPY 1,910

1,494 1,537

Grow Dividend by Leveraging Ichigo’s
Value-Add Capabilities

1,603

1,904

1,706

Jan 2017(Initial
Forecast)

JPY
2,917

1,387

+2.3%
JPY 5,962
Jan 2017(Actual)

JPY
3,137

JPY 6,101
Jan 2018(Forecast)

JPY
3,058

1,219
899*

1,031 *
979 *

737*

Jul 2016(Actual)Jul 2016(Actual)

JPY
2,825

JPY
2,825

Jul 2017(Forecast)

JPY
3,043

FY10/4 10/10 11/4 11/10 12/4 12/10 13/4 13/10 14/4 14/10 15/4 15/10 16/4 16/10 17/4 17/10(Forecast)(Forecast)* Adjusted to reflect stock split on November 1, 2011

© 2017 Ichigo Inc. All rights reserved.

* Annualized dividend shown to offset seasonal volatility

21

Clean Energy Business Growth
New Solar Power Plant Development
 6 plants (12.43 MW) operation-start in FY18/2− Ichigo’s winning Mie public bid solar power
plant under construction− First Ichigo floating solar power plant (Okayama)
forecast operation-start in Jan 2018

Ichigo Showamura Ogose ECO Power Plant

Ichigo Showamura Ogose ECO Power Plant (43.35MW) Operation-start in FY18/2 (Plant currently 80% complete)− Steel pylon construction and power transmission line installation complete− Currently installing power conditioners and transformers; initial connectivity to
EPCO this monthWind Power in Detailed Power Plant Simulation & Design Phase
No.

Location

Expected Output Wind Data Survey

1

Chiba

4.0MW

Completed2

Yamagata

7.5MW

In Progress

3

Iwate

7.5MW

In Progress

4

Iwate

7.5MW

In Progress

5

Mie

7.5MW

In Progress

Wind Survey© 2017 Ichigo Inc. All rights reserved.

22

Share Buyback
Purpose: Grow Value for Ichigo’s Shareholders
Number of Shares
AmountBuyback Period
Buyback Method© 2017 Ichigo Inc. All rights reserved.

5,300,000 shares (maximum)(1.05% of shares outstanding)
JPY 1.5 billion (maximum)
April 24, 2017 – June 23, 2017
In-market purchases via trust bank23

FY18/2 Full-Year Forecast© 2017 Ichigo Inc. All rights reserved.

24

FY18/2 Full-Year Forecast− Assumes no Ichigo REIT/YieldCo Public Offerings− 6th Consecutive Ichigo Dividend Increase (+20% YOY)
(JPY million)

FY18/2(Forecast)

FY17/2(Actual)vs. FY17/2

Revenue

75,500109,253-30.9%

Operating Profit

20,60021,781-5.4%

Recurring Profit

18,30019,755-7.4%

Net Income

13,50014,894-9.4%

EPS

JPY 26.98

JPY 29.66

-9.0%

ROE

15.9%

20.2%

–

JPY 6.00

JPY 5.00+20.0%

Dividend Per Share© 2017 Ichigo Inc. All rights reserved.

25

FY18/2 Full-Year Forecast Details(JPY million)
Revenue
FY18/2(Forecast)

Segment Profit (Operating Profit)

FY17/2(Actual)FY18/2(Forecast)vs. FY17/2

FY17/2(Actual)vs. FY17/2

Asset Management

2,485

4,747

-47.6%

1,656

2,326

-28.8%

Value-Add

69,71992,138-24.3%

18,304

16,213+12.9%

Clean Energy

3,216

12,352-74.0%

620

3,301-81.2%

Other

78

14

+424.3%

-52

-165

–

Total

75,500109,253-30.9%

20,52921,676

-5.3%

–

–

–

70

104

–

75,500109,253-30.9%

20,60021,781-5.4%

Adjustment (including offsets ofcross-segment transactions)Total© 2017 Ichigo Inc. All rights reserved.

26

Appendix: Financial & Real Estate Data

© 2017 Ichigo Inc. All rights reserved.

27

Powerful Value-Add Business Model
Significant Synergies between Ichigo’s Value-Add and Asset Management
Businesses
Value-Add Business Model
Green
Infrastructure

Solar Plants
Buy

Ichigo Green(9282)
OfficeIchigo Office REIT
(8975)
Hotel

Ichigo Hotel REIT
(3463)© 2017 Ichigo Inc. All rights reserved.

Sell

Value-Add
Real
不動産
EstatePreserve &ImproveReal
EstateThirdParty
Investors

Sell

Buy
28

Value-Add Social SignificanceSustainable Real Estate Serving a Sustainable Society
End Demolish and Rebuild and Embrace Value-Add‒ Preserve and enhance high-function real estate‒ Lengthen useful life and improve quality of existing assets via Value-Add

Value‐Add
DemolishandRebuild© 2017 Ichigo Inc. All rights reserved.

Effective
Re-Use of
Key Social
Infrastructure

Preserve & Improve
・ Higher-Quality Tenant Services
・ Higher Functionality (Security, A/C)・ Upgrade Exteriors/Interior Spaces
・ Seismic Reinforcements

HighestEfficiency
LowestImpact29

Value-Add Sample Earnings Model
5.5% NOI yield, JPY 2B purchase, LTV 75%, 1.5% interest rate on
borrowings, JPY 50M Capex, 15% increase in NOI, 3-year Value-Add period
NOI at Acquisition(JPY 110M NOI/year) － (JPY 22.5M interest/year) ＝ JPY 87.5M NOI/yearNOI÷ Initial Investment ＝17.5% NOI return during investment period
.

Debt
Asset

JPY1.5B

JPY 2BNOI after Value-Add(JPY 126.5M NOI/year) － (JPY 22.5M interest/year) ＝ JPY 104M NOI/year
NOI ÷ Total Investment (JPY 500M + JPY 50M) ＝18.9% NOI return during
investment period.

EquityJPY 0.5B

Value-Add for Capital Gain
The 15% increase in NOI at an equivalent cap rate increases the exit price by
15%: JPY 2B * 115% = JPY 2.3B
JPY 2.3B – (JPY 2B + JPY 50M) = JPY 250M capital gain.

Value-Add (Capex JPY 50M )© 2017 Ichigo Inc. All rights reserved.

ResultJPY 550M investment generates JPY 512M over 3 years → 31.1% p.a.

30

Consolidated Risk-Based Balance Sheet
Mark-to-Market Consolidated Balance Sheet: JPY 310.2B(Book Value JPY 273.4B + Unrealized Gains JPY 36.7B)

Non-Recourse LoanRelated Assets

Non-Recourse Loans &Related Liabilities

JPY 83.8B

JPY 116.9B

Cash & Cash Equivalents

Corporate Loans

JPY 38.4B

Consolidated Risk-Based Balance Sheet: JPY 226.4B(Book Value JPY 189.6B + Unrealized Gains JPY 36.7B)
Debt
JPY
193.1B

Non-Recourse LoanRelated ICH Equity

JPY 33.1B
Cash & Cash Equivalents

JPY 38.4B

JPY 98.3B

Operational Loans
JPY 1.3B

Operational Loans
JPY 1.3B

Operational Securities
Investments JPY 1.4B

Operational Securities
Investments JPY 1.4B

Security Deposits Received
JPY 3.9B

Real Estate for Sale

JPY 70.0B

Fixed Assets

JPY 37.1B
Investments in Securities
JPY 1.4B
Other JPY 6.7B

Unrealized Gains
JPY 36.7B

JPY 98.3B

Security Deposits Received
JPY 3.9B

Other JPY 6.9B

Real Estate for Sale

Corporate Loans

Other JPY 6.9B

JPY 70.0B

Shareholder
EquityJPY 80.3B
Unrealized Gains
JPY 36.7B

Debt
JPY
109.3B

Mark-toMarket
Shareholder
Equity Ratio

37.8%

Fixed Assets

JPY 37.1B
Investments in Securities
JPY 1.4B
Other JPY 6.7B

Unrealized Gains
JPY 36.7B

Shareholder
EquityJPY 80.3B

Risk-Based
Mark-toMarket
Shareholder
Equity Ratio

51.7%

Unrealized Gains
JPY 36.7B

Note: Risk-Based Balance Sheet excludes client and non-recourse assets and liabilities.
© 2017 Ichigo Inc. All rights reserved.

31

Significant Unrealized Gains on Balance Sheet
Total Unrealized Gains: JPY 36.7B (Appraisal Value Basis)
Real estate directly held by Ichigo(JPY million)
LocationBook Value as ofFeb 28, 2017NOI

Cap Rate
NOI/Book Value after Write-dow n

Appraisal Value as ofFeb 28, 2017

Unrealized GainsTokyo

105,326

5,846

6.0%

125,304+19,978

Outside Tokyo

83,460

5,244

6.7%

99,951+16,491

Total

188,786

11,0906.3%

225,255+36,469* Cap rate is the simple average of the cap rates for each asset. Excludes development assets (c. JPY 371 million)
which are not currently generating NOI and includes intangible fixed assets subject to appraisal (c. JPY 62 million).

Real estate held by Ichigo within Ichigo-managed funds (SPCs) where there are other non-Ichigo equity holders(JPY million)
Book Value as ofFeb 28, 2017

Appraisal Value as ofFeb 28, 2017

Unrealized Gains

Equity Investments(Non-consolidated)

–

–

–

Equity Investments(Consolidated)

1,047

1,375

+328

Total

1,047

1,375

+328

© 2017 Ichigo Inc. All rights reserved.

32

Business Segments

Asset Management

Asset Management generates fee income via management of Ichigo
Office REIT (8975), Ichigo Hotel REIT (3463), and Ichigo Green(9282), and providing real estate services related to real estate
acquisition, operation (PM/BM), and disposition.

Value-Add

Value-Add preserves and improves real estate. Ichigo receives rental
income during the period in which it is carrying out its value-add,
along with earning profits on sale that reflect the real estate’s higher
value after the value-add is complete.

Clean Energy

Other© 2017 Ichigo Inc. All rights reserved.

Clean Energy is utility-scale solar power production that produces
clean energy and brings productive use to idle land.

Other is primarily legacy securities investments that are not related tothe above three segments.

33

Consolidated Balance Sheet(JPY million)
FY17/2
FY16/2

OutsideInvestors'
Interest

B/S

MarketValue

YOY

Unrealized
Gains

Unrealized
Gains on
ListedSecurities 2

Cash and Cash Equivalents

28,77947,678565+18,899

47,678––Operating Loans Receivable (Value-Add)

1,324

1,324

–

–

1,830

+505

–

Operational Investments in Securities

1,784

1,433

–

-351

1,433

–

+2

844

84

–

-760

84

–

–

–

512

–

+512

512

–

–

939

837

–

-102

837

–

+2

172,833

167,805

3,014-5,028200,646+32,047

–

–

–

–

–

–

–

–

31,54645,654–+14,108

49,888+4,234

–

39

30

–

-9

30

–

–

Value-Add

15,89725,920–+10,023

30,154+4,234–

Clean Energy

15,56019,620–+4,06019,620––

Other1

48

82

–

+34

82

–

–

Intangible Assets

2,373

1,956

–

-417

1,956

–

–

Investments in Securities

5,486

1,426

–

-4,060

1,426

–

+174

Other

7,628

6,178

-2

-1,450

6,178

–

–

251,757

273,459

3,576+21,702311,046+36,786+177

Value-Add
Clean Energy
Other
Real Estate for Sale (Value-Add)
Power Plants for Sale (Clean Energy)
Fixed Assets
Asset Management

Total Assets

1 Other refers to company assets that are not allocated to the three business segments
2 Unrealized Gains on Listed Securities is recorded in Unrealized Gains on Operational Investments in Securities and in Investments in Securities.

© 2017 Ichigo Inc. All rights reserved.

34

Consolidated Balance Sheet: Segment Breakdown(JPY million)
Segment

Cash andCash
Equivalents

Operational
Loans

Operational
Securities
Investments

Real Estatefor Sale

Fixed
AssetsIntangible
AssetsSecurities
Investments

Other
AssetsTotal Assets

534

–

–

–

30

1,522

–

734

2,821

Value-Add

14,535

1,324

84

167,805

25,920

160

–

3,415

213,245

Clean Energy

1,063

–

512

–

19,620

250

–

760

22,208

91

–

837

–

–

–

1,426

-449

1,906

Company-Wide Assets

31,453

–

–

–

82

23

–

1,717

33,277

Total

47,678

1,324

1,433

167,805

45,654

1,956

1,426

6,178

273,459

Asset Management

Other© 2017 Ichigo Inc. All rights reserved.

35

Consolidated P&L: Gross Profit Segment Breakdown(JPY million)

Segment

Revenue
FY16/2Gross Profit

FY17/2

ChangeFY16/2

FY17/2

ChangeYOY(Gross Profit)

5,067

4,747

-320

3,281

2,910

-371

-11.3%

Asset Management Fees

1,670

2,177

+507

1,658

2,167

+509

+30.7%

PM/BM Fees

2,201

2,313

+112

492

505

+12

+2.6%

Other

1,195

255

-939

1,129

236

-892

-79.1%

Value-Add

42,944

92,138+49,194

15,877

20,229+4,352+27.4%

Rental Income

12,45914,645+2,186

8,054

9,670

+1,615+20.1%

Asset Sales

30,48577,493+47,008

7,823

10,559+2,736+35.0%

Clean Energy

1,628

12,352+10,724

683

3,772

+3,089+451.9%

Other

58

14

-44

21

-105

-126

–

Total

49,699109,253+59,554

19,86326,806+6,943+35.0%

Asset Management© 2017 Ichigo Inc. All rights reserved.

36

Consolidated P&L: Results vs. Forecast(JPY million)
FY17/2 (12M)
Segment

vs. Full-Year
Forecast

Revenue

Gross
ProfitFY17/2 Full-Year Forecast (12M)

vs. Full-Year
Forecast

Operating
Profitvs. Full-Year
Forecast

Gross
ProfitRevenue

Operating
Profit

4,747

-6.5%

2,910

-3.0%

2,326

-2.5%

5,079

2,999

2,386

Asset Management Fees

2,177

-1.9%

2,167

-1.9%

–

–

2,219

2,209

–

PM/BM Fees

2,313

-10.6%

505

-4.9%

–

–

2,588

531

–

255

-5.6%

236

-8.7%

–

–

271

259

–

92,138-15.7%

20,229+13.5%

16,213+19.8%

109,297

17,82013,530Rental Income

14,645

+9.7%

9,670

+10.8%––

13,346

8,727–

Asset Sales

77,493-19.2%

10,559+16.1%––

95,950

9,093–

Clean Energy

12,352+10.8%

3,772+23.1%

3,301+26.6%

11,152

3,065

2,608

Other

14

-79.1%

-105

–

-165

–

71

-18

-84

Total

109,253-13.0%

26,806+12.3%

21,676+17.6%

125,600

23,86718,440

–

–

–

–

104

–

–

–

59

109,253-13.0%

26,806+12.3%

21,781+17.7%

125,600

23,86718,500Asset Management

Other
Value-Add

Adjustm ent (including
offsets of inter-segm ent
transactions)Total© 2017 Ichigo Inc. All rights reserved.

37

Asset Management AUM Detail

Ichigo Office REIT
(8975)

FY12/2(12M)

FY13/2(12M)

FY14/2(12M)

FY15/2(12M)

FY16/2(12M)

FY17/2(12M)

JPY 106.1B

JPY 104.3B

JPY 120.5B

JPY 123.8B

JPY 165.1B

JPY 194.5B

0.61%

0.63%

0.65%

0.65%

0.64%

0.69%

JPY 719M

JPY 663M

JPY 733M

JPY 759M

JPY 1,016M

JPY 1,291M

AUM (Fiscal Year End)

–

–

–

–

JPY 20.4B

JPY 47.6B

AM Fee % (Average)

–

–

–

–

0.59%

1

0.90%

AM Fee Gross Profit (Actual)

–

–

–

–

JPY 30M

JPY 287M

AUM (Fiscal Year End)

–

–

–

–

–

JPY 10.0B

AM Fee % (Average)

–

–

–

–

–

0.83%

AM Fee Gross Profit (Actual)

–

–

–

–

–

JPY 5MJPY 213.3B

JPY 169.7B

JPY 63.3B

JPY 21.5B

JPY 15.4B

JPY 6.4B

0.15%

0.15%

0.26%

0.37%

0.32%

0.25%

JPY 284M

JPY 285M

JPY 257M

JPY 114M

JPY 60M

JPY 27M

JPY 319.3B

JPY 274.1B

JPY 183.8B

JPY 145.3B

JPY 200.9B

JPY 258.6B

0.33%

0.33%

0.47%

0.59%

0.61%

0.69%

JPY 1,004M

JPY 948M

JPY 989M

JPY 872M

JPY 1,106M

JPY 1,610M

AUM (Fiscal Year End)AM Fee % (Average)
AM Fee Gross Profit (Actual)

Ichigo Hotel REIT
(3463)

Ichigo Green(9282)

Private Equity Real
Estate Funds(excluding
consolidated funds)

AUM (Fiscal Year End)AM Fee % (Average)
AM Fee Gross Profit (Actual)

Total(excluding
consolidated funds)

AUM (Fiscal Year End)AM Fee % (Average)
AM Fee Gross Profit (Actual)

1

1

1

1

1

1 Annualized© 2017 Ichigo Inc. All rights reserved.

38

Ichigo-Owned Real Estate Portfolio
Asset Location

Asset Class
Other
2%

Ground Lease
3%

Sendai
3%

Mixed
5％
Residence
12%

Office34%

Retail
19%
Hotel
25%

(JPY billion)

Nagoya
2%
Other
6%
Osaka
5%

Fukuoka
14%

Tokyo
56%

Kanto
14%

Tokyo
105.7

Kanto
26.0

Asset Size
Osaka
8.7

≧JPY 10B
15%

Sendai
5.8<JPY 1B
12%

Nagoya3.4

Fukuoka
25.8

Other
14.4

JPY 5-10B
12%
JPY 1-5B
61%

Total Ichigo-Owned Assets: JPY 189.8B
Including Ichigo-Managed AUM: JPY 454.1B(Acquisition price basis. Total Ichigo-Owned Assets Book Value: JPY 189.1B)© 2017 Ichigo Inc. All rights reserved.

39

Value-Add Asset Breakdown (1)92 Assets, JPY 189.8B, Forecast NOI JPY 11.0B (6.4% Yield)
No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

1

Other

Fixed Asset

Matsudo City, Chiba

44 years

JPY 2B-3B

2005/06

JPY 74M

JPY 1,900M

–

–

2

RetailReal Estate for Sale

Minato-ku, Tokyo

47 years

JPY 2B-3B

2005/10

JPY 147M

JPY 1,033M

–

–

3

RetailReal Estate for Sale

Minato-ku, Tokyo

31 years≧JPY 3B

2006/03

JPY 191M

JPY 1,356M

–

–

4

RetailFixed Asset

Yokohama City, Kanagawa

12 years

JPY 1B-2B

2006/09

JPY 73M

JPY 1,157M

–

–

5

OfficeReal Estate for Sale

Sendai City, Miyagi

8 years≧JPY 3B

2006/10

JPY 275M

JPY 1,042M––

8 years≧JPY 3B

2006/12JPY 391M

JPY 1,339M

–

–

–

JPY 1B-2B

2007/02–

JPY 1,055M

–

–

6

OfficeFixed Asset

Fukuoka City, Fukuoka

7

Other

Fixed Asset

Isumi City, Chiba

9

Residence

Real Estate for Sale

Ota-ku, Tokyo

12 years<JPY 1B

2007/04

JPY 56M

JPY 403M––

10

RetailReal Estate for Sale

Chiyoda-ku, Tokyo

37 years<JPY 1B

2007/06

JPY 85M

JPY 240M––

11

RetailReal Estate for Sale

Chiyoda-ku, Tokyo

35 years<JPY 1B

2007/06

JPY 123M

JPY 233M––

12

RetailReal Estate for Sale

Chiyoda-ku, Tokyo

53 years

JPY 2B-3B

2007/06

JPY 252M

JPY 554M––

13

OfficeReal Estate for Sale

Minato-ku, Tokyo

43 years≧JPY 3B

2007/11

JPY 388M

JPY 2,049M

–

–

14

Ground Lease

Real Estate for Sale

Atsugi City, Kanagawa–

JPY 1B-2B

2011/06

JPY 176M

JPY 147M––

15

Mixed(Office/Retail)Fixed Asset

Hiratsuka City, Kanagawa

21 years<JPY 1B

2012/02

JPY 86M

JPY 172M––

16

RetailReal Estate for Sale

Yokohama City, Kanagawa

3 years<JPY 1B

2012/10

JPY 33M

JPY 171M

–

–

1
2

Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

40

Value-Add Asset Breakdown (2)No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

17

RetailFixed AssetToshima-ku, Tokyo

5 years≧JPY 3B

2013/03

JPY 230M

JPY 340M–

18

RetailReal Estate for Sale

Shibuya-ku, Tokyo

30 years<JPY 1B

2013/05

JPY 46M

JPY 154M–

19

Mixed(Office/Retail)Fixed Asset

Chofu City, Tokyo

31 years

JPY 1B-2B

2013/06

JPY 122M

JPY 310M––

21

Residence

Real Estate for Sale

Minato-ku, Tokyo

1 year<JPY 1B

2013/06

JPY 45M

JPY 203M––

23

Residence

Real Estate for Sale

Osaka City, Osaka

10 years<JPY 1B

2013/08

JPY 46M

JPY 81M––

24

OfficeReal Estate for Sale

Chiyoda-ku, Tokyo

26 years

JPY 1B-2B

2013/08

JPY 86M

JPY 520M––

26

RetailFixed Asset

Kobe City, Hyogo

16 years

JPY 1B-2B

2013/09

JPY 149M

JPY 616M––

27

RetailFixed Asset

Tokorozawa City, Saitama

9 years

JPY 1B-2B

2013/11

JPY 62M

JPY 92M––

28

Ground Lease

Real Estate for Sale

Chiba City, Chiba–

JPY 2B-3B

2014/02

JPY 128M

JPY 342M––

29

Ground Lease

Real Estate for Sale

Fujisawa City, Kanagawa–

JPY 1B-2B

2014/03

JPY 115M

JPY 273M

7.52 x44.5%30

Mixed(Office/Retail)Real Estate for Sale

Shibuya-ku, Tokyo

33 years<JPY 1B

2014/03

JPY 39M

JPY 108M

6.95 x26.0%

31

OfficeReal Estate for Sale

Shibuya-ku, Tokyo

6 years

JPY 1B-2B

2014/04

JPY 61M

JPY 1,090M

1.25 x12.0%

32

RetailFixed Asset

Fukuoka City, Fukuoka

10 years

JPY 1B-2B

2014/04

JPY 60M

JPY 279M––

33

OfficeReal Estate for Sale

Shinagawa-ku, Tokyo

28 years

JPY 2B-3B

2014/05

JPY 157M

JPY 530M

2.04 x20.0%

34

OfficeReal Estate for Sale

Shinagawa-ku, Tokyo

23 years

JPY 1B-2B

2014/05

JPY 133M

JPY 515M

2.27 x

23.4%

1
2

*

–
–

Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

41

Value-Add Asset Breakdown (3)Acquisition
Date

Expected NOI/Year

Ichigo Investment

JPY 2B-3B

2014/05

JPY 162M

JPY 434M

3.08 x15.2%

10 years≧JPY 3B

2014/06

–

–

–

–

Minato-ku, Tokyo

45 years<JPY 1B

2014/07

JPY 39M

JPY 77M

10.47 x23.9%

Real Estate for Sale

Shinjuku-ku, Tokyo

41 years≧JPY 3B

2014/07

JPY 188M

JPY 645M

3.32 x21.1%

RetailFixed Asset

Fukuoka City, Fukuoka

12 years<JPY 1B

2014/07

JPY 47M

JPY 213M––

40

RetailFixed Asset

Fukuoka City, Fukuoka

31 years<JPY 1B

2014/09

JPY 52M

JPY 252M

–

–

41

Hotel

Real Estate for Sale

Utsunomiya City, Tochigi

29 years

JPY 1B-2B

2014/09

JPY 144M

JPY 400M

1.97 x28.3%

42RetailReal Estate for Sale

Fukuoka City, Fukuoka

16 years<JPY 1B

2014/09

JPY 54M

JPY 177M

5.54 x26.2%

43RetailReal Estate for Sale

Osaka City, Osaka

14 years

JPY 1B-2B

2014/09

JPY 102M

JPY 301M

4.64 x24.3%

44RetailReal Estate for Sale

Machida City, Tokyo

30 years<JPY 1B

2014/10

JPY 51M

JPY 82M

11.34 x43.9%

45RetailReal Estate for Sale

Fukuoka City, Fukuoka

14 years

JPY 1B-2B

2014/11

JPY 76M

JPY 135M

10.70 x33.8%

46

Residence

Real Estate for Sale

Chiyoda-ku, Tokyo

13 years

JPY 2B-3B

2014/12JPY 116M

JPY 332M

2.18 x29.2%

47

Residence

Real Estate for Sale

Koto-ku, Tokyo

10 years

JPY 1B-2B

2014/12JPY 90M

JPY 270M

1.56 x14.6%

48

Residence

Real Estate for Sale

Minato-ku, Tokyo

13 years

JPY 1B-2B

2014/12JPY 79M

JPY 238M

1.67 x16.6%

49

Residence

Real Estate for Sale

Minato-ku, Tokyo

12 years

JPY 1B-2B

2014/12JPY 64M

JPY 185M

1.63 x15.7%

No.

Classification

35

Mixed(Office/Retail)Real Estate for Sale

Minato-ku, Tokyo

8 years

36

Residence

Real Estate for Sale

Kumamoto City, Kumamoto

37

RetailReal Estate for Sale

38

Mixed(Office/Retail)

39

1
2

Location

Building
Age

Asset Class

Acquisition Price

Forecast Equity
Multiple 1

Forecast
IRR2

Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

42

Value-Add Asset Breakdown (4)No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

50

Residence

Real Estate for Sale

Sumida-ku, Tokyo

11 years

JPY 1B-2B

2014/12JPY 60M

JPY 163M

1.55 x15.2%

51

Residence

Real Estate for Sale

Ota-ku, Tokyo

15 years<JPY 1B

2014/12JPY 57M

JPY 150M

2.21 x35.7%

52

Residence

Real Estate for Sale

Osaka City, Osaka

9 years<JPY 1B

2014/12JPY 58M

JPY 148M

1.86 x24.8%

53

Residence

Real Estate for Sale

Chuo-ku, Tokyo

13 years<JPY 1B

2014/12

JPY 40M

JPY 99M

2.96 x44.4%

54

Residence

Real Estate for Sale

Minato-ku, Tokyo

12 years<JPY 1B

2014/12JPY 39M

JPY 123M

1.97 x23.3%

55

Residence

Real Estate for Sale

Shinjuku-ku, Tokyo

12 years<JPY 1B

2014/12JPY 28M

JPY 82M

2.05 x25.8%

56

Residence

Real Estate for Sale

Shibuya-ku, Tokyo

11 years

JPY 1B-2B

2014/12JPY 85M

JPY 270M

2.00 x23.2%

57

Residence

Real Estate for Sale

Minato-ku, Tokyo

13 years

JPY 1B-2B

2014/12JPY 57M

JPY 186M

1.90 x21.0%

58

Residence

Real Estate for Sale

Shibuya-ku, Tokyo

12 years<JPY 1B

2014/12

JPY 49M

JPY 157M

1.89 x21.5%

59

Residence

Real Estate for Sale

Setagaya-ku, Tokyo

12 years<JPY 1B

2014/12

JPY 42M

JPY 117M

2.11 x27.2%

60

Residence

Real Estate for Sale

Shinjuku-ku, Tokyo

10 years<JPY 1B

2014/12JPY 19M

JPY 55M

1.80 x21.1%

61

Mixed(Office/Retail)Operating Loan

Shinjuku-ku, Tokyo

53 years

JPY 1B-2B

2014/12JPY 118M

JPY 57M

15.26 x51.7%

62RetailReal Estate for Sale

Fukuoka City, Fukuoka

13 years<JPY 1B

2014/12

JPY 43M

JPY 212M––

63

RetailFixed Asset

Meguro-ku, Tokyo

10 years

JPY 1B-2B

2014/12JPY 83M

JPY 129M––

64

RetailReal Estate for Sale

Shinagawa-ku, Tokyo

62 years<JPY 1B

2015/01

JPY 17M

–

–

–

1
2

Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

43

Value-Add Asset Breakdown (5)No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

66

RetailReal Estate for Sale

Sendai City, Miyagi

13 years<JPY 1B

2015/02

JPY 49M

JPY 8M

42.58 x198.9%

68

RetailReal Estate for Sale

Shibuya-ku, Tokyo

15 years<JPY 1B

2015/04

JPY 39M

JPY 79M

5.65 x

27.9%

69

Hotel

Real Estate for Sale

Osaka City, Osaka

14 years

JPY 2B-3B

2015/05

JPY 194M

JPY 633M

1.56 x

58.3%

70

Hotel

Real Estate for Sale

Aomori City, Aomori

9 years<JPY 1B

2015/06

JPY 51M

JPY 113M

2.10 x20.2%

71RetailReal Estate for Sale

Fujisawa City, Kanagawa

1 yearJPY 1B-2B

2015/07

JPY 97M

JPY 126M

6.80 x37.3%

85

OfficeReal Estate for Sale

Bunkyo-ku, Tokyo

24 years

JPY 2B-3B

2015/07

JPY 114M

JPY 428M

1.34 x16.8%

88

OfficeReal Estate for Sale

Shinagawa-ku, Tokyo

29 years

JPY 1B-2B

2015/07

JPY 94M

JPY 355M

1.32 x15.8%

89

OfficeReal Estate for Sale

Musashino City, Tokyo

28 years≧JPY 3B

2015/07

JPY 128M

JPY 670M

1.72 x13.3%

92

OfficeReal Estate for Sale

Fukuoka City, Fukuoka

9 years

JPY 1B-2B

2015/07

JPY 91M

JPY 353M

1.82 x17.7%

93

OfficeReal Estate for Sale

Fukuoka City, Fukuoka

14 years

JPY 1B-2B

2015/07

JPY 90M

JPY 358M

1.92 x

18.8%

96

Hotel

Real Estate for Sale

Sapporo City, Hokkaido

24 years<JPY 1B

2015/08

JPY 27M

JPY 2M

5.52 x291.5%

98

Hotel

Real Estate for Sale

Naha City, Okinawa

28 years

JPY 2B-3B

2015/11

JPY 232M

JPY 640M

1.91 x

25.9%

105

Hotel

Real Estate for Sale

Kumamoto City, Kumamoto

32 years

JPY 1B-2B

2015/12JPY 142M

JPY 453M

1.61 x61.2%

12

Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

44

Value-Add Asset Breakdown (6)No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

109

Hotel

Real Estate for Sale

Nagoya City, Aichi

8 years

JPY 2B-3B

2016/03

JPY 124M

JPY 525M

1.84 x

37.7%

110

Hotel

Real Estate for Sale

Fukuoka City, Fukuoka

31 years≧JPY 3B

2016/03

JPY 273M

JPY 905M

2.05 x104.5%

111

Hotel

Real Estate for Sale

Yokohama City, Kanagawa

33 years

JPY 2B-3B

2016/03

JPY 192M

JPY 228M

5.32 x

23.3%

112

Hotel

Real Estate for Sale

Yokohama City, Kanagawa

29 years≧JPY 3B

2016/03

JPY 249M

JPY 354M

10.64 x

36.2%

113

Hotel

Real Estate for Sale

Yokohama City, Kanagawa

29 years≧JPY 3B

2016/03

JPY 223M

JPY 344M

5.84 x

25.5%

114

Hotel

Real Estate for Sale

Fukuoka City, Fukuoka

27 years≧JPY 3B

2016/04

JPY 177M

JPY 550M

1.73 x

72.6%

115

Hotel

Real Estate for Sale

Osaka City, Osaka

9 years

JPY 2B-3B

2016/04

JPY 117M

JPY 274M

2.96 x30.7%

116

RetailReal Estate for Sale

Sendai City, Miyagi

28 years<JPY 1B

2016/04

JPY 48M

JPY 86M

7.50 x28.4%

118

RetailReal Estate for Sale

Nagoya City, Aichi

19 years

JPY 1B-2B

2016/06

JPY 84M

JPY 102M

7.71 x32.6%

119RetailReal Estate for Sale

Shibuya-ku, Tokyo

29 years<JPY 1B

2016/06

JPY 31M

JPY 136M

3.91 x

17.4%

120

Hotel

Real Estate for Sale

Shinjuku-ku, Tokyo

37 years≧JPY 3B

2016/09

JPY 288M

JPY 349M

2.70 x39.9%

121

OfficeReal Estate for Sale

Minato-ku, Tokyo

16 years≧JPY 3B

2016/10

JPY 1,352M

JPY 3,450M

2.87 x

43.5%* Assets acquired in the current FY17/2 period12Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

45

Value-Add Asset Breakdown (7)No.

Asset ClassClassification

Location

Building
Age

Acquisition Price

Acquisition
Date

Expected NOI/Year

Ichigo Investment

Forecast Equity
Multiple 1

Forecast
IRR2

122

Hotel

Real Estate for Sale

Shima City, Mie

19 years<JPY 1B

2017/01

JPY 47M

JPY 73M

5.49 x

43.1%

123

Hotel

Real Estate for Sale

Shibuya-ku, Tokyo

22 years≧JPY 3B

2016/12JPY 152M

JPY 1,123M

1.25 x

25.4%

124

Hotel

Real Estate for Sale

Asahikawa City, Hokkaido

27 years<JPY 1B

2016/12JPY 74M

JPY 593M

1.48 x

48.5%

125

Hotel

Real Estate for Sale

Kurashiki City, Okayama

23 years

JPY 1B-2B

2016/12JPY 93M

JPY 484M

1.53 x

53.0%

126

Hotel

Real Estate for Sale

Fukuoka City, Fukuoka

26 years

JPY 1B-2B

2016/12JPY 67M

JPY 505M

1.25 x

25.4%

127

Hotel

Real Estate for Sale

Ishigaki City, Okinawa

14 years

JPY 2B-3B

2017/02

JPY 162M

JPY 544M

1.80 x

80.2%

128

Hotel

Real Estate for Sale

Mito City, Ibaraki

23 years

JPY 1B-2B

2017/02

JPY 97M

JPY 602M

1.47 x

47.0%

JPY 11,089M

JPY 39,437M

2.67 x

38.6%

Total

92 Assets

JPY 189,833M

Total

92 Assets

JPY 189,157M

Assets acquired in FY17/2 Q1 Total 9 Assets

JPY 23,485M

JPY 1,441M

JPY 3,392M

3.66 x85.8%

Assets acquired in FY17/2 Q2 Total 2 Assets

JPY 2,100M

JPY 115M

JPY 238M

5.54 x25.0%

Assets acquired in FY17/2 Q3 Total 2 Assets

JPY 35,100M

JPY 1,640M

JPY 3,799M

2.86 x41.7%

Assets acquired in FY17/2 Q4 Total 7 Assets

JPY 10,061M

JPY 692M

JPY 3,924M

1.51 x46.1%

Assets acquired in FY17/2 Cumulative (12M) Total 20 Assets

JPY 70,747M

JPY 3,889M

JPY 11,354M

2.69 x61.4%

Note: Assets acquired and sold in FY17/2 Total 1 Asset

JPY 670M

JPY 38M

JPY 126M

1.57 x413.7%(Book Value)* Assets acquired in the current FY17/2 period12Forecast Equity Multiple is based on the business plan of each asset and is the expected sum of rental income and profits on sale divided by Ichigo Investment.
Forecast IRR is the forecast internal rate of return based on each asset’s actual cash flow. The total Forecast Equity Multiple and Forecast IRR reflect assets
acquired from FY15/2 onward and exclude Fixed Assets.

© 2017 Ichigo Inc. All rights reserved.

46

Reference: Japan’s Feed-in-Tariff (FIT)
What is a FIT?
‒‒

A policy mechanism designed to accelerate the deployment of renewable energy such as solar andwind, guaranteeing a long-term sale price for electricity (in Japan, 20 years) at a fixed price.
Japan’s FIT is updated every year.
Contract Date

Tariff per
1kWhGuarantee
PeriodContract Date

Tariff per
1kWhGuarantee
PeriodFY2012

JPY 4020 years

FY2015 (7/1～3/31)

JPY 2720 years

FY2013

JPY 3620 years

FY2016

JPY 2420 years

FY2014

JPY 3220 years

FY2017

JPY 21*20 years

FY2015 (4/1～6/30)

JPY 2920 years* Tariff for >2MW non-residence solar power fixed at bid pricesince FY2017
Pre-consumption tax FIT for power plants with output of >10kW
Source: METI, Agency for Natural Resources and Energy

Current Regulatory Framework and Ichigo Plant Status‒‒‒

Utilities are allowed to suspend renewable energy supply, without compensation, if supply exceeds
demand. The maximum suspension duration is either 30 days per year or 360 hours per year.
Although utilities are not allowed to suspend acceptance of applications (based on the “Act on Special
Measures concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities”),
approval for grid connection is pending for many solar power suppliers.
In certain cases, utilities that are potentially subject to renewable energy production in excess of theirgrid capacity are allowed to suspend renewable energy supply from new suppliers without limit andwithout compensation. None of Ichigo’s power plants are subject to these suspensions.

© 2017 Ichigo Inc. All rights reserved.

47

Clean Energy Earnings
Earnings Growth via Solar Power Plant Sales to Ichigo GreenOP 10X YOY (JPY 3.3B in FY17/2 vs. JPY 323M in FY16/2)
FY16/2(12M)

FY17/2(12M)

FY17/2 Full-Year
Forecast (12M)vs. of Full-Year
Forecast

JPY 1,628M

JPY 12,352M

JPY 11,152M+10.8%

Cost of Goods Sold

JPY 945M

JPY 8,580M

JPY 8,087M–

Gross Profit

JPY 683M

JPY 3,772M

JPY 3,065M+23.1%

SG&A

JPY 358M

JPY 470M

JPY 456M

–

–

–

–

–

JPY 323M

JPY 3,301M

JPY 2,608M+26.6%

Revenue

Adjustments(including offsets of intersegment transactions)Operating Profit

Solar Power Plant
Schedule

IchigoIchigo Green(9282)

24 Plants Online
41.97MW

19 Plants Online
28.37MW

30 Plants (Forecast)
102.57MW

13 Plants
25.83MW

Total operating and in-development: 43 plants, 128.35MW© 2017 Ichigo Inc. All rights reserved.

48

Solar Power Plant Portfolio (1)Ichigo (In-Development)

Ichigo (Operating)

Ichigo Tokushima Higashi Okinosu

Shikoku

Panel
Output(MW)
2.52

JPY 40Aug 2013

Ichigo Memuro Nishishikari

Hokkaido

Panel
Output(MW)
1.33

Ichigo Fuchu Jogecho Yano

Chugoku

0.99

JPY 40Mar 2014

Ichigo Showamura Ogose

Kanto

43.35

JPY 36

Jan 2018

Ichigo Yubetsu Barou

Hokkaido

0.80

JPY 40

Apr 2014

Ichigo Kure Yasuuracho Nakahata

Chugoku

2.65

JPY 36

Jan 2018

Ichigo Maebashi Naegashima

Kanto

0.67

JPY 40

Apr 2014

Ichigo Kasaoka Iwanoike

Chugoku2.61

JPY 24

Jan 2018

Ichigo Betsukai Kawakamicho

Hokkaido

0.88

JPY 40

Oct 2014

Ichigo Tsu

Chubu

2.95

JPY 24

Feb 2018

Ichigo Toyokoro Sasadamachi

Hokkaido

0.61

JPY 40

Oct 2014

Ichigo Higashi Hiroshima Saijocho Taguchi

Chugoku

2.73

JPY 40Jan 2015

Ichigo Toki Tsurusatocho Kakino

Chubu

1.27

JPY 24

Mar 2018

Ichigo Akkeshi Shirahama

Hokkaido

0.81

JPY 40Mar 2015

Ichigo Sera Aomizu

Chugoku

2.87

JPY 32

May 2018

Ichigo Yamaguchi Aionishi

Chugoku

1.24

JPY 40Dec 2015

Ichigo Itoshima Ihara

Kyushu1.30

JPY 36

Jul 2018

Ichigo Hamanaka Bokujo Tsurunokotai

Tohoku2.31

JPY 36

Dec 2015

Ichigo Minakami Aramaki

Kanto

10.26

JPY 36

Apr 2019

Ichigo Yonago Izumi

Chugoku

2.61

JPY 40Jan 2016

Ichigo Hitachi Omiya

Kanto

2.97

JPY 24

Nov 2019

Ichigo Kasaoka Takumicho

Chugoku

1.12

JPY 32

Mar 2016

Ichigo Miyakonojo Takazakicho Tsumagirishima

Kyushu2.65

JPY 32

Nov 2021

Ichigo Yamaguchi Sayama

Chugoku

2.36

JPY 36

Apr 2016

Ichigo Kijo Takajo

Kyushu0.90

JPY 40

May 2016

Ichigo Toki Oroshicho

Chubu

1.40

JPY 36

Jun 2016

Ichigo Toride Shimotakai Kita

Kanto

1.03

JPY 32

Jul 2016

Ichigo Toride Shimotakai Minami

Kanto

0.54

JPY 32

Jul 2016

Ichigo Hamanaka Bokujo Kajibayashi

Tohoku2.31

JPY 36

Oct 2016

Ichigo Sera Tsukuchi

Chugoku

2.54

JPY 32

Feb 2017

Solar Power Plant

Area

FIT
Operation(Pre-tax) Start Date

Total Solar Plant Output
128.35MW

Solar Power Plant

FIT
Operation(Pre-tax) Start Date
JPY 40Dec 2017

102.57MW

Total (Operating & In-Development)

Ichigo Green (9282)

Ichigo Kiryu Okuzawa

Kanto

Panel
Output(MW)
1.33

JPY 40

Sep 2013

Ichigo Motomombetsu

Hokkaido

1.40

JPY 40Feb 2014

Ichigo Muroran Hatchodaira

Hokkaido

1.24

JPY 40Mar 2014

Ichigo Engaru Kiyokawa

Hokkaido

1.12

JPY 40Mar 2014

Ichigo Iyo Nakayamacho Izubuchi

Shikoku

1.23

JPY 40

Apr 2014

Ichigo Nakashibetsu Midorigaoka

Hokkaido

1.93

JPY 40

Nov 2014

Ichigo Abira Toasa

Hokkaido

1.16

JPY 40Dec 2014

Ichigo Toyokoro

Hokkaido

1.02

JPY 40Dec 2014

Solar Power Plant

Area

FIT
(Pre-tax)

Operation
Start Date

Ichigo Nago Futami

Okinawa

8.44

JPY 40Feb 2015

Ichigo Engaru Higashimachi

Hokkaido

1.24

JPY 40Feb 2015

Ichigo Takamatsu Kokubunjicho Nii

Shikoku

2.43

JPY 36

Jun 2015

Ichigo Miyakonojo Yasuhisacho

Kyushu1.44

JPY 36

Jul 2015

Ichigo Toyokawa Mitocho Sawakihama

Chubu

1.80

JPY 32

Sep 2015

Total© 2017 Ichigo Inc. All rights reserved.

Area

25.83MW49

Solar Power Plant Portfolio (2)Serving Local Communities and the Environment
Total Operating and In-Development
Ichigo Solar Power Plants

Ichigo Motomombetsu(1.40MW)43 Plants (128MW)

Ichigo Yamaguchi Sayama(2.36MW )Ichigo Itoshima Ihara(1.30MW) Online in 2018/7
Ichigo Kijo Takajo(0.90MW)

Ichigo Akkeshi Shirahama(0.81MW)

Ichigo Sera Tsukuchi(2.54MW)

Ichigo Memuro Nishishikari(1.33MW) 2017/12

Ichigo Sera Aomizu(2.87MW) Online in 2018/5
Ichigo Maebashi Naegashima(0.67MW)

Ichigo Minakami Aramaki(10.26MW) Online in 2019/4

Ichigo Fuchu Jogecho Yano
(0.99MW)

Ichigo Showamura Ogose(43.35MW) Online in 2018/1

Ichigo Yonago Izumi(2.61MW)

Ichigo Kiryu Okuzawa(1.33MW)

Ichigo Kasaoka Iwanoike(2.61MW) Online in 2018/1

Ichigo Toyokoro
Sasadamachi (0.61MW)
Ichigo Toyokoro(1.02MW)

Ichigo Hitachi Omiya (2.97MW)
Online in 2019/11
Ichigo Toride Shimotakai Kita
(1.03MW)

Ichigo Kasaoka Takumicho(1.12MW)

Ichigo Toride Shimotakai Minami(0.54MW)
Ichigo Toki Tsurusatocho Kakino(1.27MW) Online in 2018/3
Ichigo Toki Oroshicho(1.40MW)
Ichigo Tokushima
Higashi-Okinosu (2.52MW)
Ichigo Takamatsu
Kokubunjicho Nii (2.43MW)
Ichigo Iyo Nakayamacho Izubuchi(1.23MW)© 2017 Ichigo Inc. All rights reserved.

Ichigo Betsukai Kawakamicho(0.88MW)

Ichigo Hamanaka Bokujo Kajibayashi(2.31MW)

Ichigo Miyakonojo Takazakicho
Tsumagirishima (2.65MW)
Online in 2021/11
Ichigo Miyakonojo
Yasuhisacho (1.44MW)

Ichigo Nakashibetsu
Midorigaoka(1.93MW)

Ichigo Hamanaka Bokujo Tsurunokotai(2.31MW)

Ichigo Higashi-Hiroshima
Saijocho Taguchi (2.73MW)

Ichigo Yamaguchi Aionishi(1.24MW)

Ichigo Yubetsu Barou(0.80MW)

Ichigo Muroran Hatchodaira(1.24MW)

32 Plants (54MW)

Ichigo Nago Futami(8.44MW)

Ichigo Engaru Kiyokawa(1.12MW)

Ichigo Abira Toasa(1.16MW)

Currently Operating

Ichigo Kure Yasuuracho Nakahata(2.65MW) Online in 2018/1

Ichigo Engaru Higashimachi(1.24MW)

Ichigo Tsu(2.95MW) Online in 2018/2

Ichigo Toyokawa Mitocho Sawakihama(1.80MW)

IchigoIchigo Green (9282)
50

Ichigo-Owned Solar Power Plant Details
 By Feed-In-Tariff By Customer(Electric Power Utility Co)
Chubu
6%

Tohoku5%

 By Operating Timeline

Kyushu 5%

JPY 24
10%

Shikoku2%

JPY 32
10%

Hokkaido
4%>1 year inoperation
17%

JPY 4016%

0.5-1 year inoperation 6%

TEPCO
57%

Chugoku
21%

Starting operation
within 1-2 years
70%

JPY 3664%

 By Output

 By Solar Intensity
B(In-Development)
12%

<2MW
10%
>10MW
(In-Development)
52%

C (In-Development)
1%
A
6%

B
18%

2-10MW20%

2-10MW(In-Development)
14％© 2017 Ichigo Inc. All rights reserved.

C 7%

<2MW
(In-Development)
4%<0.5 year inoperation
7%

A(In-Development)
56%

Rank
A
B
C
D

Solar Intensity≧4.00≧3.75, <4.00≧3.50, <3.75<3.50

Unit: kWh/m² per day

51

Consolidated Balance Sheet: Assets(JPY million)
FY13/2
AssetsCurrent Assets
Cash and cash equivalents
Trade notes and accounts receivable
Operational loan investments
Operational securities investments
Real estate for sale
Deferred tax assets
Other
Less: allowance for doubtful accounts
Total Current Assets
Fixed Assets
Property, Plant, and Equipment
Buildings and structures (net)
Solar power plant equipment (net)Land
Other (net)Total Property, Plant, and Equipment
Intangible Assets
Goodwill
Leasehold rights
Other
Total Intangible Assets
Investments and Other Assets
Securities investments
Long-term loans receivable
Deferred tax assets
Other
Less: allowance for doubtful accounts
Total Investments and Other Assets
Total Fixed Assets
Total Assets© 2017 Ichigo Inc. All rights reserved.

FY14/2

FY15/2

FY16/2

FY17/2

Change
(YOY)

9,713
548
3,636
4,271
46,176369
2,042-3,177
63,581

24,991
451
1,100
3,583
54,084
576
1,384
-410
85,761

19,383
519
2,330
1,965
109,769
1,200
2,657
-484
137,342

28,779
691
1,324
1,784
172,833
1,766
3,966
-458
210,687

47,678
913
1,324
1,433
167,805
516
3,125
-453
222,344+18,899+222–-351-5,028-1,250-841+5+11,657

2,863
21
7,082
80
10,0474,901
2,044
12,433
1,922
21,3004,021
9,168
12,142989
26,321

3,830
12,256
12,192
3,264
31,546

7,375
7,246
18,627
12,40245,654+3,545-5,010+6,435+9,138+14,108

2,203
–
20
2,223

2,221
392
71
2,686

2,082
392
27
2,502

1,942
392
38
2,373

1,864
62
29
1,956

-78
-330
-9
-417

4,117
13
–
545
-101
4,575
16,84680,428

4,278
13
222
780
-97
5,196
29,183
114,944

5,266
12
2
1,392
-95
6,578
35,402
172,744

5,486
12
39
1,736
-124
7,149
41,069251,757

1,426
10
339
1,820
-92
3,504
51,115
273,459-4,060
-2
+300
+84
+32
-3,645+10,046+21,70252

Consolidated Balance Sheet: Liabilities & Net Assets(JPY million)
FY13/2
Liabilities
Current Liabilities
Trade notes and accounts payable
Short-term loans
Short-term non-recourse loans
Bonds (due within one year)
Long-term loans (due within one year)
Long-term non-recourse loans (due within one year)
Income taxes payable
Deferred tax liabilities
Accrued bonuses
Other current liabilities
Total Current Liabilities
Long-Term Liabilities
Bonds
Non-recourse bonds
Long-term loans
Long-term non-recourse loans
Deferred tax liabilities
Long-term security deposits received
Negative goodwill
Other long-term liabilities
Total Long-Term Liabilities
Total Liabilities
Net Assets
Shareholders’ Equity
CapitalCapital reserve
Retained earnings
Treasury shares
Total Shareholders’ Equity
Accumulated Other Comprehensive Income
Valuation gain (loss) on other securities
Deferred gain (loss) on long-term interest rate hedges
Foreign currency translation adjustment
Total Accumulated Other Comprehensive Income
Stock Options
Minority Interests
Total Net Assets
Total Liabilities and Net Assets© 2017 Ichigo Inc. All rights reserved.

FY14/2

FY15/2

FY16/2

FY17/2

Change
(YOY)

64
484
–
–
966
2,263
65
15
25
3,419
7,304

132
950
–
–
3,123
428
96
24
14
2,817
7,588

124
1,416
48
–
3,488
786
284
30
16
3,677
9,872

80
2,188
79
–
8,161
2,975
631
53
13
3,979
18,161

110
805
611
112
5,209
6,825
1,655
62
36
4,119
19,548+30-1,383+532+112-2,952+3,850+1,024+9+23+140+1,387––
5,456
32,776
277
3,230
270
46
42,05649,361––
26,12624,178
1,213
4,770
180
44
56,51364,102–100
53,40943,004
1,402
6,391
90
96
104,494
114,367–100
94,40956,193
1,543
8,707
–
475
161,430
179,591

632
100
91,60468,319
1,147
8,038
–
624
170,467
190,015+632－-2,805+12,126
-396
-669
–
+149
+9,037+10,424

18,113
2,429
7,923
-187
28,27926,443
10,808
10,891-92
48,05026,49910,873
17,201-78
54,496

26,575
10,96829,454-41
66,956

26,65011,05642,840-15
80,532+75+88+13,386+26+13,576

160
–
16
177
143
2,466
31,06680,428

400
–
9
409
121
2,261
50,842
114,944

1,208
-36
6
1,177
198
2,505
58,377
172,744

761
-251
23
533
319
4,357
72,166
251,757

117
-365
55
-192
491
2,612
83,443
273,459

-644
-114
+32
-725
+172
-1,745+11,277+21,70253

Consolidated P&L(JPY million)
FY13/2(12M)
Revenue
Cost of Goods Sold
Gross Profit
SG&A
Operating Profit
Non-Operating Income
Interest income
Dividend income
Amortization of negative goodwill
Other
Total Non-Operating Income
Non-Operating Expenses
Interest expense
Stock issuance cost
Other
Total Non-Operating Expenses
Recurring Profit
Extraordinary Gains
Gain on sale of fixed assets
Gain on sale of securities investments
Receipt of share trading proceeds
Other
Total Extraordinary Gains
Extraordinary Losses
Loss on sale / retirement of fixed assets
Valuation loss on securities investments
Office move expenses
Impairment loss
Earthquake-related damages
Other
Total Extraordinary Losses
Pre-Tax Net Income
Income Taxes – Current
Income Taxes – Deferred
Total Income Taxes
Pre-Minority Interest Net Income
Net Income Attributable to Minority Interests
Net Income© 2017 Ichigo Inc. All rights reserved.

FY14/2(12M)

FY15/2(12M)

FY16/2(12M)

FY17/2(12M)

FY17/2Full-Year
Forecast

Change(YOY)

vs.
Forecast

16,397
11,422
4,974
3,130
1,844

35,101
27,666
7,435
3,522
3,912

42,70530,53912,166
3,977
8,189

49,69929,835
19,863
4,446
15,417109,253
82,44626,806
5,025
21,781+59,554+52,611+6,943+579+6,364

125,600
23,86718,500-13.0%+12.3%+17.7%

3
24
90
36
155

4
112
90
31
238

5
78
90
39
213

2
79
90
43
215

–
85
–
32
118

-2
+6
-90
-11
-97

–
–
–
–
–

–
–
–
–
–

238
–
26
265
1,734

370
89
93
553
3,597

943
–
202
1,146
7,255

1,277
–
465
1,743
13,889

1,303
–
839
2,144
19,755

+26
–
+374
+401
+5,866––––
16,400––––+20.5%

9
72
–
–
83

7
204
434
33
680

–
–
–
57
57

–
223
–
–
223

–
2,466
–
–
2,466

–
+2,243––+2,243

–
–
–
–
–

–
–
–
–
–

1
62
19
33
–
8
124
1,693
54
-106
-51
1,745
108
1,637

1
–
21
307
–
13
344
3,933
43
-616
-573
4,506
-19
4,526

–
–
1
–
–
91
93
7,220
564
-220
343
6,876
115
6,761

–
49
9
–
–
31
89
14,022
1,330
-369
960
13,062
136
12,925

–
–
31
1,090
244
224
1,590
20,630
4,863
573
5,436
15,194299
14,894–-49+22+1,090+244+193+1,501+6,608+3,533+942+4,476+2,132+163+1,969

–
–
–
–
–
–
–
–
–
–
–
–
–
13,300

–
–
–
–
–
–
–
–
–
–
–
–
–
+12.0%

54

Consolidated Cash Flows from Operating Activities(JPY million)
FY13/2 (12M)

FY14/2 (12M)

FY15/2 (12M)

FY16/2 (12M)

FY17/2 (12M)

Cash Flows from Operating Activities:
Pre-tax net income
Depreciation
Share-based compensation expenses
Amortization of goodwill
Amortization of negative goodwill
Increase (decrease) in accrued bonuses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in other allowancesInterest and dividend income
Interest expense
Loss (gain) on sale of securities investments
Loss (gain) on sale / retirement of fixed assets
Impairment loss
Valuation loss on securities investments
Decrease (increase) in trading notes and receivables
Decrease (increase) in operational loan receivables
Decrease (increase) in operational securities investments
Valuation loss on operational securities investments
Decrease (increase) in real estate for sale
Decrease (increase) in solar power plants for sale
Valuation loss on real estate for sale
Valuation loss on SPC capital contributions
Decrease (increase) in advances paid
Decrease (increase) in accounts receivable
Increase (decrease) in accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Increase (decrease) in security deposits received
Other
Sub-totalInterest and dividend income received
Interest expense paid
Income taxes paid and refunded

1,693
230
49
114
-90
3
195
-11
-28
238
-72
-8
33
62
515
-1,100
723
63
2,556
–
119
1
–
-380
-39
519
11
-253
-239
4,908
28
-220
-106

3,933
304
69
139
-90
-11
33
–
-116
370
-204
-6
307
–
97
218
1,635
114
-6,729
–
–
12
–
-255
-139
137
38
1,230
522
1,611
116
-378
-94

7,220
565
112
139
-90
1
65
–
-83
943
–
–
–
–
-68
-1,2301,110–-42,991––
91–-1,079
388
16
211
1,391
-407
-33,693
83
-843
161

14,022
792
174
139
-90
-3
3
–
-81
1,277
-223
–
–
49
-172
1,006
1,239
19
-63,070––11-990-1,140
535
42
317
2,380
435
-43,324
81-1,226-186

20,630
778
223
141
–
23
-3
–
-85
1,303
-2,466
–
1,090
–
-367
–
2,727
–
-6,303
7,251
–
16
-190
-193
204
92
-49
-667
1,304
25,46085-1,146-2,852Net Cash from (Used for) Operating Activities

4,609

1,254

-34,292-44,654

21,547© 2017 Ichigo Inc. All rights reserved.

55

Consolidated Cash Flows from Investing & Financing Activities(JPY million)
FY13/2 (12M)
Cash Flows from Investing Activities:
Payments into time deposits
Redemptions of time deposits
Payments for securities investments
Proceeds from sale of securities investments
Proceeds from redemptions of investments
Acquisition of property, plant, and equipment
Proceeds from sale of property, plant, and equipment
Acquisition of intangible assets
Payments of SPC capital contributions
Redemption of SPC capital contributions
Payments of security deposits
Acquisitions of subsidiary shares resulting in change ofconsolidation scope
Payments for acquisitions of newly consolidated subsidiaries
Other
Net Cash from (Used for) Investing Activities
Cash Flows from Financing Activities:
Net increase (decrease) in short-term loans
Net increase (decrease) in short-term non-recourse loans
Proceeds from bond issuance
Redemptions of corporate bonds
Proceeds from long-term loans
Repayment of long-term loans
Proceeds from long-term non-recourse loans
Repayment of long-term non-recourse loans
Proceeds from issuance of common shares
Proceeds from employee exercise of stock options
Payments received from minority interests
Payments to minority interests
Dividends paid
Dividends paid to minority interests
Net Cash from (Used for) Financing Activities© 2017 Ichigo Inc. All rights reserved.

FY14/2 (12M)

FY15/2 (12M)

FY16/2 (12M)

FY17/2 (12M)

–
151
-15
76
30
-124
17
–
-4
–
–

–
–
–
282
2
-7,150
72
-389
-5
7
-5

-325
325
-210
–
–
-10,769
–
-23
-10
–
-127

–
–
-671
296
3
-6,628
–
-21
-9
6
-37

-6,100
201
-300
6,136
–
-11,719
–
-1
-63
–
-5

-218

-1,389

–

–

-93

–
60
-27

–
-35
-8,610-1,3494-12,485–
9-7,052–
11-11,933

314
–
–
–
5,440
-8,19912,346-13,885
–
48
20
-19
–
–
-3,935465–––
26,777-5,388
5,675-19,030
16,387
242
–
–
-445
–
24,682466
48––
47,203-19,557
19,900-5,958
–
99
–
–
-543
–
41,658771
31––64,866-19,192
18,150-2,772
–
153
2,000
–
-646
-43
63,318-1,383532
785-56
55,674-61,22130,850-15,400–
137–-2,000-1,501
-39
6,377

56

Appendix: Power Up 2019 Mid-Term Business Plan

© 2017 Ichigo Inc. All rights reserved.

57

Power Up 2019 Key Goals & KPIs
Key Goals
1. Drive Further Sustainable Growth in Ichigo’s Core Businesses
2. Develop New Ichigo Businesses
3. Deepen Ichigo’s Core Capabilities and Corporate Strength
Power Up 2019 KPIs (Key Performance Indicators)(JPY million)

FY16/2 (Actual)

FY17/2 (Actual)

FY18/2 (Forecast)

Operating Profit

15,417

21,781

20,60025,000+62.2%

Recurring Profit

13,88919,75518,30021,400+54.1%

6.9%

26.4%

30.0%

30.0%

–

12,925

14,894

13,50014,800+14.5%EPS

JPY 25.86

JPY 29.66

JPY 26.98

JPY 29.00+12.1%DPS

JPY 3.00

JPY 5.00

JPY 6.00

JPY 7.00+133.0%

ROE

21.0%

20.2%

15.9%

15.6%

–

Tax Ratio
Net Income© 2017 Ichigo Inc. All rights reserved.

FY19/2 (Plan)

vs. FY16/2

58

Target: Top 200 Ranking within the JPX-Nikkei 400 Index
Ichigo Targeting Ranking Within the Index’s Top 200
Companies by August 2019 (the Final Year of Power Up 2019)
Note: While the JPX-Nikkei Index 400 does not provide an official ranking of its 400 constituents, it can becalculated based upon the JPY-Nikkei 400’s publically-available quantitative ranking formula, whichrank orders the top 1,000 companies from the joint set of the 1,200 highest market capitalizationand 1,200 highest value-traded Japanese companies by:(a) 3-year average ROE (40% weighting)(b) 3-year cumulative operating profit (40% weighting)(c) Market capitalization (20% weighting)© 2017 Ichigo Inc. All rights reserved.

59

Power Up 2019 Key Initiatives
Profitability• List Ichigo’s solar assets on the TSE’s new
Infrastructure Market• Support the ongoing growth of Ichigo Office
REIT (8975) and Ichigo Hotel REIT (3463)(1) Core Business
Growth• Expand the architecture and structural
engineering team to deliver real estate that is
high-function, safe, secure, andenvironmentally friendly• Spin out a dedicated leasing team to drive
tenant acquisition and rental income• Extend Ichigo’s REIT-focused asset
management business into the much larger
physical real estate market(2) New Business
Creation

Sustainability• Grow both financial stability and earnings(3) Finance as aStrategic Measure(4) High Capital
Efficiency andOrganic Growth(5) Best Place toWork• De-collateralize loans, lengthen loan
maturities, lower debt costs, get credit
ratings, and issue bonds to diversify funding
profile• ROE >15%

• Support employee health and wellness• Goal: Japan’s number one company inproviding opportunities for employees• Grow Ichigo’s hotel business synergisticallywith Ichigo Hotel REIT
• Launch one or more REtech businesses,
fusing Ichigo’s Real Estate and IT
capabilities© 2017 Ichigo Inc. All rights reserved.

(6) Global Best Practice Governance and Compliance60Adoption of Progressive Dividend & DOE Policy
 Progressive Dividend: The previous year’s dividend is the floor for the current
year’s dividend. Dividend will be raised (or kept flat) but not cut, providing
shareholders with downside dividend protection
 Newly set a minimum DOE (dividend on equity) payout ratio of >3 %‒ Dividend payout ratio policy: Dividends based on annual earnings
 More Volatile‒ DOE policy: Dividends based on shareholder equity
 More Stable The combination of a Progressive Dividend and DOE policy will significantly
increase the stability, certainty, and visibility of Ichigo’s dividend to the benefitof Ichigo’s shareholders
 Adoption of this policy also underscores Ichigo’s commitment to driving
continued organic earnings growth and dividend growth for its shareholders© 2017 Ichigo Inc. All rights reserved.

61

MEMO

© 2017 Ichigo Inc. All rights reserved.

62

These materials were prepared to explain the Company’s businesses and are not for the purpose ofsoliciting investment in marketable securities issued by the Company. The Company does notguarantee the accuracy of the figures, information, estimates or other statements included herein, andaccepts no responsibility for damages or losses arising through the use of the figures, information,
estimates or other statements contained herein.
These materials are based upon information available as of the publication date, and may containforward-looking statements pertaining to the Company’s expectations, targets, plans and strategies.
Such forward-looking statements are not facts, but are the result of management’s judgment based on
information currently available. Actual operating results or developments concerning the Company
may differ substantially from those indicated by forward-looking statements. The information enclosed
is subject to revision without prior notice.
This document is a translation. If there is any discrepancy between the Japanese version and the English
translation, the Japanese version shall prevail.
Contact:
Ichigo (TSE1 2337)
Investor Relations

Ichigo is Japan’s first zero-carbon listed real estate company. We are taking
responsibility for our environmental footprint by offsetting our carbon emissions
and investing in low-carbon technologies such as solar energy.
© 2017 Ichigo Inc. All rights reserved.

TEL: +81-3-3502-4818
E-mail： ir@ichigo.gr.jp
www.ichigo.gr.jp

FAX:+81-3-3502-4801

63