R
B-Lot / 3452

COVERAGE INITIATED ON:

2018.01.17

LAST UPDATE:

2021.03.15

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is toprovide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
always present opinions from company management as such. Our views are ours where stated. We do not try toconvince or influence, only inform. We appreciate your suggestions and feedback. Write to us at
sr_inquiries@sharedresearch.jp or find us on Bloomberg.

Research Coverage Report by Shared Research Inc.

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INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.

Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3
Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 8
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------8
Trends and outlook --------------------------------------------------------------------------------------------------------------------------------- 12
Quarterly trends and results --------------------------------------------------------------------------------------------------------------------------------- 12
Full-year company forecast ----------------------------------------------------------------------------------------------------------------------------------- 17
Medium-term outlook ----------------------------------------------------------------------------------------------------------------------------------------- 18
New medium-term management plan (FY12/21–FY12/23) --------------------------------------------------------------------------------------- 18
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 28
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 28
Business model --------------------------------------------------------------------------------------------------------------------------------------------------- 31
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 40
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 41
Historical performance and financial statements ------------------------------------------------------------------------------------------ 46
Historical financial statements ------------------------------------------------------------------------------------------------------------------------------- 46
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 60
Historical performance versus initial company forecasts ------------------------------------------------------------------------------------------- 61
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 62
Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 64
Other information ---------------------------------------------------------------------------------------------------------------------------------- 65
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 65
News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 66
Group companies (as of end-December 2019) ------------------------------------------------------------------------------------------------------- 69
Origin of company name ------------------------------------------------------------------------------------------------------------------------------------- 69
Corporate governance and top management --------------------------------------------------------------------------------------------------------- 69
Dividend policy -------------------------------------------------------------------------------------------------------------------------------------------------- 71
Major shareholders (as of December 31, 2019)------------------------------------------------------------------------------------------------------- 71
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 71
Profile---------------------------------------------------------------------------------------------------------------------------------------------------------------- 72

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Executive summary
Business overview◤ B-Lot is a mid-sized real estate company with three core businesses: Real Estate Investment and Development, Real EstateConsulting, and Real Estate Management. The three founders with different areas of expertise and networks formed thecompany in October 2008: President Makoto Miyauchi with a forte in finance, Deputy President Shinichi Hasegawa, providing
consulting to high net worth individuals and strong in customer development, and Deputy President Masahiro Mochizuki
who has experience in property revitalization (acquisitions and sales). Previously, they managed a real estate company listedon the TSE First Section. In December 2014, B-Lot listed on the Tokyo Mothers market with 24 employees, in the shortest time
for a real estate company established after the global financial crisis to list (six years and two months). In February 2018, thecompany transferred its listing to the TSE First Section.
◤ Backed by its property revitalization performance and nine years of continuous revenue and earnings growth through FY12/19,

B-Lot used private placement bonds and commitment line syndicated loans to boost leverage and grow (the net debt/equity
ratio was 1.98 in FY12/19; average for 23 competitors with similar revenue was 1.30). Over the five years through FY12/19,
revenue grew at a CAGR of 46.6% and operating profit expanded at a CAGR of 60.2%.

◤ Growth is driven by the Real Estate Investment and Development business (83.6% of revenue in FY12/19), where it sold 11–

26 properties a year between FY12/13 and FY12/19 (the operating profit margin during this period was 10–21%). The

company purchases troubled properties (typically single buildings) selling below value due to low profitability or issues withcompliance, boosts asset value and profitability, and sells them. B-Lot also purchases land to develop new buildings. The
company’s sources and customers include high net worth individuals or their asset management companies, real estatecompanies, and funds. B-Lot handles various types of properties, including office buildings, condominiums, and hotels.
Transactions range from JPY100mn to JPY3bn (average sale price per property was JPY883mn in FY12/19; 5.1x the JPY172mn
level of FY12/13). The company is now diversifying into renovating compact hotels (size is between capsule hotels andbusiness hotels) to be an early mover in capturing the boom in inbound tourism to Japan. B-Lot is also making progress in
expanding the scale of its projects, recording in FY12/19 its highest transaction value for a single project as it sold in bulk four
properties to one customer for about JPY8.0bn. It mainly operates in major metropolitan areas, including the Kanto region(Tokyo and the surrounding area; 63% of properties sold in FY12/19), Hokkaido (8%), Kyushu (13%), and Kansai (17%).
◤ Real Estate Consulting and Management segments are stable earners, generating 5.7% and 10.6% of revenue in FY12/19,

with OPM of 39.8% and 25.2%, respectively. They share the Investment and Development segment’s customer base. For one
building B-Lot handles multiple transactions over many years. Many customers are repeaters and refer new customers. The
company offers investors multiple services for each property in addition to brokering, including asset management, property
management, and leasing management. Rental revenue from real estate for sale and from longer-term holdings of real estate
for lease in the Investment and Development segment is booked under the Management segment.

Trends and outlook◤ In FY12/20, the company reported revenue of JPY26.5bn (+5.4% YoY), operating profit of JPY1.7bn (-56.9% YoY), recurring

profit of JPY1.0bn (-70.7% YoY), and net income attributable to owners of the parent of JPY344mn (-85.8% YoY). The impactof the COVID-19 pandemic meant that even though the company was profitable, valuation losses in some properties(primarily hotels) caused the company’s profit to decline YoY for the first time since its listing. The larger declines in recurring
profit and net income compared to operating profit reflect increases in interest expenses (+JPY255mn YoY) and commission
expenses, including arrangement fees for financial institutions associated with the acquisition of trust beneficiary rights(+JPY85mn YoY).

◤ For FY12/21, the company forecasts revenue of JPY21.7bn (-18.1% YoY), operating profit of JPY2.0bn (+18.1% YoY), recurring

profit of JPY1.3bn (+27.8% YoY), and net income attributable to owners of the parent of JPY870mn (+152.9% YoY). The
company has not decided on a dividend forecast.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp◤ Based on the policies and strategies set out in the medium-term management plan (announced on November 30, 2020), thecompany will work to reform its earnings structure by FY12/23, the final year of the plan. The company intends to steadily
accumulate profits while observing economic trends in a with-pandemic or post-pandemic world and expanding stableearnings. Further, with the number of group companies gradually increasing, the company is diversifying its businesses. It
plans to take the current situation as an opportunity to take greater advantage of group synergies, widen business
opportunities, and maximize profit.
◤ On November 30, 2020, the company unveiled its new medium-term management plan covering the three-year period from

FY12/21 through FY12/23. Under the plan, the company is targeting FY12/23 consolidated revenue of JPY29.7bn, operating
profit of JPY4.5bn, recurring profit of JPY3.6bn, and net income attributable to owners of the parent of JPY2.4bn. This

compares with its current two-year plan covering FY12/19–FY12/20, under which it targeted FY12/20 consolidated revenue of
JPY30.0bn, operating profit of JPY4.6bn, recurring profit of JPY4.1bn, net income attributable to owners of the parent of
JPY2.8bn.

Strengths and weaknesses
Shared Research thinks that the company’s strengths are its three founders’ different areas of expertise and networks; flexibility asa small, skillful team with a balance between focus and diversification; and having Makoto Miyauchi, the eldest son of Orix seniorchairman Yoshihiko Miyauchi, as president. We think its weaknesses are that the company has not experienced a property
downturn since its founding; a lack of experience in large projects; and relatively low retained earnings (see Strengths andweaknesses).

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Key financial data
Income statement(JPYmn)
Revenue
YoY
Gross profit
YoY
Gross profit margin
Operating profit
YoY
Operating profit margin
Recurring profit
YoY
Recurring profit margin
Net income
YoY
Net marginPer-share data (split-adjusted; JPY)
Shares issued (year-end; '000)
EPS
EPS (fully diluted)
Dividend per share
Book value per share
Balance sheet (JPYmn)
Cash and cash equivalents
Real estate for sale in process
Total current assets
Tangible fixed assets
Investments and other assets
Intangible fixed assets
Total assets
Short-term debt
Total current liabilities
Long-term debt
Total fixed liabilities
Total liabilities
Net assets
Cash flow statement (JPYmn)
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Financial ratios
Total interest-bearing debt
ROA (NI-based)
ROE
Equity ratio

FY12/11
ParentFY12/12
Parent494
1,338
170.9%
327
24.4%
85
6.3%
6
78
- 1,229.7%
1.2%
5.8%
4
42
944.6%
0.8%
3.1%

FY12/13
Parent

2,231
66.7%
617
88.6%
27.7%
218
157.0%
9.8%
183
133.4%
8.2%
104
149.8%
4.7%

FY12/14
Parent

3,709
66.3%
937
51.9%
25.3%
378
73.8%
10.2%
295
61.7%
8.0%
177
69.2%
4.8%

FY12/15
Cons.

6,951
87.4%
1,556
66.1%
22.4%
800
111.5%
11.5%
655
122.1%
9.4%
401
126.8%
5.8%

FY12/16Cons.

11,627
67.3%
2,621
68.4%
22.5%
1,175
46.9%
10.1%
874
33.4%
7.5%
588
46.9%
5.1%

FY12/17Cons.

13,097
12.6%
4,397
67.8%
33.6%
2,366
101.3%
18.1%
1,999
128.6%
15.3%
1,251
112.6%
9.5%

FY12/18Cons.

20,268
54.7%
5,797
31.8%
28.6%
3,307
39.8%
16.3%
2,833
41.7%
14.0%
1,961
56.8%
9.7%

FY12/19
Cons.

25,131
24.0%
6,981
20.4%
27.8%
3,986
20.5%
15.9%
3,525
24.4%
14.0%
2,429
23.9%
9.7%

FY12/20Cons.

26,481
5.4%
4,734-32.2%
17.9%
1,719-56.9%
6.5%
1,033-70.7%
3.9%
344-85.8%
1.3%

2,628
0.9
17.9

5,940
7.8
25.6

6,660
17.2
47.9

13,134
20.3
17.2
74.4

15,518
28.2
26.4
156.6

16,004
37.6
37.1
8.5
183.4

16,040
81.4
80.3
19.5
260.3

16,427
125.8
124.5
25.0
378.4

16,476
153.0
152.3
30.0
510.4

16,582
21.6
15.0
499.8

281
94

320
556
921
60
21
159
1,160
62
180
681
721
900
260

567
399
2,303
56
25
158
2,543
737
1,007
1,050
1,086
2,093
449

1,009
2,807
5,014
51
45
157
5,268
2,749
3,086
1,167
1,205
4,291
978

2,107
6,070
8,343
822
151
659
9,985
1,296
1,836
5,607
5,717
7,553
2,431

2,467
10,323
14,105832
835
813
16,626
4,289
4,979
8,708
8,828
13,806
2,819

5,030
6,643
16,761
596
897
825
19,110
8,017
9,138
5,777
5,963
15,101
4,009

6,476
7,653
21,726
580
1,070
924
24,2694,456
6,058
11,98012,185
18,243
6,026

7,160
17,31629,882
1,058
1,677
916
33,556
9,091
11,093
14,215
14,30825,401
8,154

12,611
13,897
41,476
1,075
2,407
968
45,961
11,644
13,86623,96824,05637,923
8,038

-

-278
-225
722

-859
-23
1,129

-1,802-220
2,463-1,681-1,241
4,019-4,436
-922
5,717

2,533
-861
719

-1,229-190
2,631-4,057-2,074
6,470-7,122432
11,847

2.7%
5.0%
33.5%

743
10.9%
23.6%
22.4%

1,787
5.6%
32.3%
16.4%

3,916
4.5%
25.3%
18.6%

6,903
5.3%
23.5%
24.3%

12,997
4.4%
22.4%
17.0%

13,794
7.0%
36.6%
21.0%

16,436
9.0%
39.3%
24.6%

23,307
8.4%
34.4%
24.3%

35,612
0.9%
4.3%
17.5%

FY12/21Est.
21,700-18.1%

2,030
18.1%
9.4%
1,320
27.8%
6.1%
870
152.9%
4.0%

54.2
TBD

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company conducted a 2-for-1stock split on April 1, 2020. Values for EPS and EPS (fully diluted) are calculated assuming the stock split was conducted at thestart of FY12/20. The company conducted a 2-for-1stock split on January 17, 2018. Values for EPS and EPS (fully diluted) are calculated assuming the stock split was
conducted at the start of FY12/17. The company conducted a 3-for-1stock split on April 16, 2015. Values for EPS and EPS (fully diluted) are calculated assuming the stock
split was conducted at the start of FY12/15.

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LAST UPDATE: 2021.03.15(JPYmn)Consolidated revenue
YoY

Real Estate Investment and Development
YoY% of consolidated revenue
No. of properties soldYoY
<By type of property>
Residential

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp

FY12/12
Parent1,338

FY12/13
Parent2,231

FY12/14
Parent3,709

FY12/15
Cons.
6,951

FY12/16Cons.
11,627

FY12/17Cons.
13,097

FY12/18Cons.
20,268

FY12/19
Cons.
25,131

FY12/20Cons.
26,481

170.9%
1,069
-

66.7%
1,897
77.4%

66.3%
3,237
70.6%

87.4%
6,137
89.6%

67.3%
9,977
62.6%

12.6%
10,981
10.1%

54.7%
17,20856.7%

24.0%
21,18523.1%

5.4%
22,668
7.0%

79.9%
14
-

85.0%
11
-21.4%

87.3%
22
100.0%

88.3%
13-40.9%

85.1%
16
23.1%

83.7%
21
31.3%

84.3%
26
23.8%

83.6%
24
-7.7%

85.3%
25
4.2%

na

8

18

7

8

11

14

14

17

% of properties sold
Offices and stores% of properties soldLand for detached houses

na
na
na
na

72.7%
3
27.3%
-

81.8%
4
18.2%
-

53.8%
4
30.8%
1

50.0%
5
31.3%
2

52.4%
5
23.8%
3

53.8%
7
26.9%
2

58.3%
5
20.8%
2

68.0%
5
20.0%
3

% of properties soldHotels% of properties sold
Other

na
na
na
na

-

-

7.7%
1
7.7%
-

12.5%
1
6.3%
-

14.3%
2
9.5%
-

7.7%
3
11.5%
-

8.3%
2
8.3%
1

12.0%
-

% of properties sold
<By region>
Kanto% of properties sold

na

-

-

-

-

-

-

4.2%

-

na
na

9
81.8%

na
na

8
61.5%

9
56.3%

15
71.4%

11
42.3%

15
62.5%

13
52.0%

Hokkaido% of properties soldKyushu% of properties soldKansai

na
na
na
na
na

2
18.2%
-

na
na
na
na
na

3
23.1%
1
7.7%
1

4
25.0%
1
6.3%
2

3
14.3%
3
14.3%
-

9
34.6%
5
19.2%
1

2
8.3%
3
12.5%
4

1
4.0%
6
24.0%
2

% of properties soldChubu
% of properties sold

na
na
na

-

na
na
na

7.7%
-

12.5%
-

-

3.8%
-

16.7%
-

8.0%
3
12.0%

Revenue per property sold
YoY

76
-

172

147

472

624

523

662

883

907

125.8%-14.7%

220.9%

32.1%-16.1%

26.6%

33.4%

2.7%

192
-

146
-24.1%

197
35.1%

171
-13.1%

862
403.2%

1,305
51.4%

1,190
-8.8%

1,453
22.1%

1,269
-12.7%% of consolidated revenue
No. of brokerage deals
YoY<By region>

14.4%
25
-

6.5%
28
12.0%

5.3%
20
-28.6%

2.5%
29
45.0%

7.4%
31
6.9%

9.9%
29
-6.5%

5.8%
27
-6.9%

5.7%
19
-29.6%

4.8%
28
47.4%

Kanto
% of brokerage deals
Hokkaido% of brokerage deals
Kyushu% of brokerage deals

na
na
na
na
na
na

19
67.9%
7
25.0%
-

7
35.0%
8
40.0%
3
15.0%

15
51.7%
8
27.6%
4
13.8%

19
61.3%
7
22.6%
4
12.9%

18
62.1%
5
17.2%
2
6.9%

12
44.4%
5
18.5%
4
14.8%

14
73.7%
2
10.5%
0
0.0%

12
42.9%
2
7.1%
5
17.9%

Kansai% of brokerage deals
Chubu% of brokerage deals

na
na
na
na

2
7.1%
-

2
10.0%
-

2
6.9%
-

1
3.2%
-

4
13.8%
-

6
22.2%
-

3
15.8%
-

7
25.0%
1
3.6%

na
na
8
77
5.7%
20

5
-32.2%
188
144.9%
8.4%
31

10
89.2%
275
46.5%
7.4%
36

6
-40.1%
642
133.2%
9.2%
40

28
370.7%
882
37.3%
7.5%
48

45
61.8%
839
-4.9%
6.4%
59

44
-2.1%
2,022
141.0%
9.9%
68

76
73.5%
2,696
33.3%
10.6%
82

1
3.6%
45
-40.7%
2,639
-2.1%
9.9%
101

-

55.0%

16.1%

11.1%

20.0%

22.9%

15.3%

20.6%

23.2%

Kanto
% of properties managed
Hokkaido% of properties managed
Kyushu% of properties managed

na
na
na
na
na
na

14
45.2%
9
29.0%
8
25.8%

15
41.7%
12
33.3%
9
25.0%

17
42.5%
14
35.0%
9
22.5%

20
41.7%
18
37.5%
9
18.8%

26
44.1%
23
39.0%
8
13.6%

28
41.2%
23
33.8%
14
20.6%

35
42.7%
27
32.9%
15
22.1%

42
41.6%
30
29.7%
21
20.8%

Kansai% of properties managed

na
na

-

-

-

1
3.2%

2
6.9%

3
4.4%

5
6.1%

5
5.0%

Real Estate Consulting
YoY

Tohoku% of brokerage deals
Average consulting revenue per deal
YoY

Real Estate Management

YoY% of consolidated revenue
No. of properties managed
YoY<By region>

Chubu% of properties managed
Adjustments

85
120
-

218
311
157.9%

378
465
49.6%

800
840
80.8%

-94
1,175
989
17.8%

-28
2,366
2,316
134.1%

-152
3,307
3,040
31.2%

-203
3,986
3,897
28.2%

3
3.0%
-95
1,719
1,465
-62.4%

YoY% of consolidated operating profit
OPM

61.8%
11.3%
71
36.5%
37.0%

75.0%
16.4%
58
-18.9%
13.9%
39.5%

73.5%
14.4%
79
36.8%
12.5%
40.0%

71.1%
13.7%
58
-26.5%
4.9%
33.8%

55.2%
9.9%
346
496.9%
19.3%
40.1%

73.1%
21.1%
408
17.9%
12.9%
31.3%

72.0%
17.7%
283
-30.7%
6.7%
23.8%

75.6%
18.4%
578
104.3%
11.2%
39.8%

51.7%
6.5%
455
-21.3%
16.0%
35.9%

YoY
% of consolidated operating profit

3
1.7%

46
1319.8%
11.0%

89
94.0%
14.0%

284
219.9%
24.0%

458
61.6%
25.6%

443
-3.3%
14.0%

902
103.5%
21.3%

679-24.7%
13.2%

916
34.8%
32.3%

4.2%
-110

24.3%
-196

32.2%
-254

44.2%
-381

52.0%
-619

52.8%
-802

44.6%
-917

25.2%
-1,16834.7%-1,117

Consolidated operating profit
Real Estate Investment and Development
YoY% of consolidated operating profit
OPM

Real Estate Consulting

Real Estate Management

OPM
Adjustments

Source: Shared Research based on company data
Note: Segment revenues include intersegment revenues and transfers. Figures may differ from company materials due to differences in rounding methods.

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LAST UPDATE: 2021.03.15(JPYmn)Number of properties acquired
YoY<By type of property>
Residential% of total properties acquired
Offices and stores% of total properties acquired
Land for development% of total properties acquired
Other% of total properties acquired<By region>
Kanto% of total properties acquired
Hokkaido% of total properties acquired
Kyushu% of total properties acquired
Kansai% of total properties acquired
Chubu% of total properties acquired(JPYmn)Inventories for sale (year-end)
YoY
Number of properties
YoY<By use>Land (including land for development)
YoY% of total number of properties in inventory
Offices and stores
YoY% of total number of properties in inventory
Residential
YoY% of total number of properties in inventory
Hotel, accomodation related
YoY% of total number of properties in inventory
Nursing care facilities
YoY% of total number of properties in inventory
Nursing care facilities
YoY% of total number of properties in inventory
Value of inventories per property
YoY

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp

FY12/12
Parent11-

FY12/13
Parent20
81.8%

FY12/14
Parent18-10.0%

FY12/15
Cons.
19
5.6%

FY12/16
Cons.
23
21.1%

FY12/17
Cons.
22
-4.3%

FY12/18
Cons.
24
9.1%

FY12/19
Cons.
28
16.7%

FY12/20
Cons.
30
7.1%

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

9
47.4%
4
21.1%
4
21.1%
2
10.5%

8
34.8%
5
21.7%
10
43.5%
-

11
50.0%
4
18.2%
4
18.2%
3.0
13.6%

11
45.8%
5
20.8%
4
16.7%
4.0
16.7%

14
50.0%
4
14.3%
7
25.0%
1.0
3.6%

20
66.7%
9
30.0%
1
3.3%
0.0%

na
na
na
na
na
na
na
na
na
na
FY12/12
Parent
577
na
-

na
na
na
na
na
na
na
na
na
na
FY12/13
Parent1,691
193.1%
16
-

na
na
na
na
na
na
na
na
na
na
FY12/14
Parent3,403
101.3%
12-25.0%

11
57.9%
5
26.3%
1
5.3%
2
10.5%
FY12/15
Cons.
6,070
78.3%
18
50.0%

13
56.5%
1
4.3%
6
26.1%
3
13.0%
FY12/16
Cons.
11,393
87.7%
25
38.9%

8
36.4%
7
31.8%
4
18.2%
3
13.6%
FY12/17Cons.
11,358
-0.3%
27
8.0%

13
54.2%
2
8.3%
5
20.8%
4
16.7%
FY12/18Cons.
14,500
27.7%
25
-7.4%

17
60.7%
2
7.1%
4
14.3%
2
7.1%
3
10.7%
FY12/19Cons.
19,903
37.3%
28
12.0%

14
46.7%
1
3.3%
3
10.0%
9
30.0%
3
10.0%
FY12/20Cons.
26,930
35.3%
33
17.9%

na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
-

na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
106
-

3
25.0%
2
16.7%
6
50.0%
1
8.3%
284
168.4%

6
100.0%
33.3%
2
0.0%
11.1%
8
33.3%
44.4%
1
0.0%
5.6%
1
5.6%
337
18.9%

12
100.0%
48.0%
3
50.0%
12.0%
8
0.0%
32.0%
1
0.0%
4.0%
1
0.0%
4.0%
456
35.1%

12
0.0%
44.4%
2
-33.3%
7.4%
9
12.5%
33.3%
3
200.0%
11.1%
1
0.0%
3.7%
421
-7.7%

9
-25.0%
36.0%
2
0.0%
8.0%
7
-22.2%
28.0%
3
0.0%
12.0%
1
0.0%
4.0%
3
12.0%
580
37.9%

11
22.2%
39.3%
1
-50.0%
3.6%
8
14.3%
28.6%
5
66.7%
17.9%
1
0.0%
3.6%
2
-33.3%
7.1%
711
22.6%

7
-36.4%
21.2%
5
400.0%
15.2%
11
37.5%
33.3%
7
40.0%
21.2%
1
100.0%
3.0%
2
0.0%
6.1%
816
14.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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Recent updates
Highlights
On March 15, 2021, B-Lot Co., Ltd., announced the share buyback using the Off-Auction Own Share Repurchase Trading System(ToSTNeT-3) of the Tokyo Stock Exchange.

Buyback method▷

The purchase price is set at the March 15, 2021 closing price of JPY691 (including closing special quote). The company will use
ToSTNeT-3 to repurchase shares at 8:45 a.m. on March 16, 2021. The purchase order is limited to the specified trading time.

Details of share buyback▷

Type of shares to be acquired: Common stock in B-Lot▷

Maximum total value of shares to be acquired: JPY103,650,000▷

Maximum number of shares to be acquired: 150,000 (0.93% of outstanding shares)

On the same day, the company announced that it would issue share subscription rights (paid-in stock option).

▷

At a meeting of its Board of Directors held on March 15, 2021, B-Lot resolved to issue its ninth series of share subscription▷

If all of the share subscription rights are exercised, there will be dilution of up to 1.4% of the 16,582,400 shares outstanding as

rights to directors and employees of the company and employees of its subsidiaries.

of March 15, 2021. However, the share subscription rights are conditional on the company achieving its profit objectives, andthe company believes that achieving these objectives will contribute to improving corporate and shareholder value, which will
also benefit existing shareholders. For this reason, the company considers the dilution impact to be within a reasonable range.

Conditions of exercise of share subscription rights▷▷

50% of the rights are exercisable if net income is at least JPY1,490mn in FY12/22.
50% of the rights are exercisable if net income is at least JPY2,440mn in FY12/23.

Terms of issue of share subscription rights▷

Number of stock options: 2,406 units▷

Payment date for amount paid in exchange for stock options: April 9, 2021

▷
▷
▷
▷

Payment amount in exchange for stock options: JPY990 per unit

Application date: March 30, 2021
Allocation date: April 1, 2021
People to be allotted stock options and number of such people: Directors and employees of the company and employees of
the company’s subsidiaries (138 people and 2,406 units)

On February 15, 2021, the company announced earnings results for full-year FY12/20; see the results section for details.

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On the same day, the company announced an absorption-type merger (simplified and short-form merger) with a consolidated
subsidiary.

▷▷▷

At a meeting of the Board of Directors held on February 15, 2021, the company decided to undertake a merger withconsolidated subsidiary Life Stage Co., Ltd., to take effect on April 1, 2021.
The objectives of the merger are to yield more effective synergies in terms of sales capabilities with Life Stage’s network in the
Kansai area and the newly built condominium sales agency business, and to rationalize management of the group.
The merger will take place by absorption; the company will be the surviving entity and Life Stage will be dissolved. The
company owns all shares in Life Stage, and there will be no issuance of new shares, capital increase, or cash payment on themerger.

On January 19, 2021, Shared Research updated the report following interviews with the company.

On November 30, 2020, the company announced revisions to its full-year forecast for FY12/20 and released its new medium-term
management plan.

Revised forecast for full-year consolidated results for FY12/20▷

Revenue:

JPY27.7bn (versus previous forecast of JPY30.0bn)▷

Operating profit:

JPY1.7bn (JPY5.0bn)

Recurring profit:

JPY990mn (JPY4.2bn)

Net income*:

JPY278mn (JPY2.8bn)

Earnings per share:

JPY17.44 (JPY178.22)

Dividends per share:

JPY15 (no estimate previously)

▷
▷
▷
▷

*Net income attributable to owners of the parent

Reasons for revisions to FY12/20 forecast▷

Explaining the downward revision to its estimates for full-year earnings, the company said its profit margins had failed to meet
expectations owing to a slump in economic activity. The downward revision also reflected extraordinary losses, including
valuation losses on some hotels and other properties carried under “real estate for sale” following a conservative revaluation ofcertain properties to reflect their diminished earnings potential in the wake of the COVID-19 pandemic, and also losses booked▷

in connection with the halt of certain hotel development projects, as detailed in a separate announcement made the same day.
The company plans to pay a dividend of JPY15 per share. Reflecting the downward revisions to its outlook for earnings, this isdown from the dividend paid in FY12/19.

Medium-term management plan (FY12/21–FY12/23)
Key strategies▷▷

Expand stable revenue base: The company aims to expand its stable revenue base through the acquisition of high-quality
properties that will add to the stable income stream the group receives from leasing. It will also work to expand sources ofasset management fees and other stable income derived from B-Lot REIT Investment Corporation and private REITs.
Diversify and deepen relationships with client companies: The company strives to deepen relationship with high net worthclients in Japan and overseas and also broaden its client base via B-Lot REIT Investment Corporation and other means.

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Secure stable sources of financing: The company aims for the continuation of efforts to strengthen its ties with a wide range offinancial institutions, thereby building up the level of trust in its relationships and establishing secure sources of finances.
Expand investments into new types of real estate: The company works to leverage its expertise in real estate revitalization anddevelopment by moving into new areas within the real estate market and investing in new types of real estate.

Numerical targets(JPYmn) FY12/20 estimates

FY12/21 targets% change

FY12/22 targets% change

FY12/23 targets% change

Revenue

26,69821,700-18.7%

24,50012.9%

29,70021.2%

Operating profit

1,690

2,030

20.1%

3,080

51.7%

4,480

45.5%

Recurring profit

990

1,320

33.2%

2,240

69.7%

3,640

62.5%

Net income*

278

870

212.2%

1,490

71.3%

2,440

63.8%

*Net income attributable to owners of the parent

On the same day, the company announced the booking of valuation losses on real estate for sale and losses in connection withthe cancellation of contracts.
Regarding certain properties carried under “real estate for sale” and “real estate for sale in process,” the company decided tobook losses in Q4 FY12/20 following a conservative revaluation of certain properties to better reflect their diminished earnings
potential affected by prolonged impact of the COVID-19 pandemic.

▷▷

Valuation losses on real estate for sale (cost of revenue): The company was forced to lower its selling price below its acquisition
cost for some hotels and other properties carried under “real estate for sale.” This resulted in valuation losses on real estate forsale of JPY908mn being booked under the cost of revenue.
With regard to the extraordinary losses booked in connection with the cancellation of contracts, which will total JPY537mn, thecompany decided to cancel certain hotel development projects and terminate related property sales contracts that it hadentered into prior to the pandemic owing to the dramatic changes in the market environment in the wake of the pandemic.

The losses are incorporated in the company’s revised full-year forecast for FY12/20 announced on November 30, 2020.

On the same day, the company announced that it had completed the formation the private REIT by B-Lot REIT Investment
Corporation and was officially beginning management of the REIT, which now has assets of over JPY13.0bn.

▷

As previously announced on May 27, 2020, B-Lot has been working to put together a private REIT since its acquisition of anasset management company and an investment corporation. As indicated in its press release on November 30, 2020, B-Lot
REIT Investment Corporation has now completed the formation of the REIT and officially begun asset management operations
effective November 30, 2020, having finalized the purchase of its first property, the B-Lot Esaka Building (located in Suita,
Osaka Prefecture). B-Lot Investment Corporation will be able to draw upon extensive expertise of the group, sponsor of the
REIT, in the field of real estate to guide investments made by the REIT, most of which will be in office and commercial buildings
and residential complexes. At the same time, it will pursue investments mainly in areas where its group operates with an aim tocontributing to investing in various new types of real estate and to the revitalization of rural areas, thereby helping create a▷comprehensive, diversified REIT.
Future plans on this front call for B-Lot, as the sponsor, to work together with equity investors in the REIT (including Misawa
Homes Co., Ltd., SHINNIHON Corporation, A.D. Works Corporation, Kyoei Security Service Co., Ltd., Japan Living Warranty Inc.,
Fujii Building Co., Ltd., and Pineland Co., Ltd.) to foster organic growth from existing portfolio properties while at the sametime working to increase external growth opportunities by maximizing its pipeline of new deals. Through these efforts, the

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company aims to build up a real estate portfolio valued at over JPY50.0bn over several years and then look for the right timing
to list the REIT on the Tokyo Stock Exchange.

On the same day, the company announced that it had decided to sell the property for sale.

▷▷

B-Lot decided to sell the property for sale owned by the silent partnership that was managed by its consolidated subsidiary BL
Esaka Property LLC.
The property sale has been included in the company’s revised full-year forecast for FY12/20 announced on November 30,
2020.

Overview of property
Property nameLocationType

B-Lot Esaka Building

Suita, Osaka Prefecture

Office/retail building▷▷

Floorspace (sqm)Land area based on
public records (sqm)

33,316.53

3,929.31

The property will be sold to B-Lot REIT Investment Corporation at a price of JPY13.0bn (excluding national and local taxes).
The selling price of the property is equal to more than 10% of the company’s consolidated revenue reported in the previous
fiscal year (FY12/19), and the gain on the sale is equal to more than 30% of FY12/19 consolidated recurring profit and net
income attributable to owners of the parent.

On the same day, the company announced the acquisition of a property for sale, as well as the financing related to the property
acquisition.

▷

B-Lot resolved to acquire a property for sale, as well as the financing related to the property acquisition on November 30,▷

The impact of the acquisition on the company’s FY12/20 earnings is negligible.

2020.

Overview of property
LocationType

Meguro Ward, Tokyo

Residential complex▷▷

Floorspace (sqm)
5,751.49

Land area based on
public records (sqm)
3,381.85

The company said the name of the property acquired cannot be disclosed owing to a confidential clause in the sales contract,
but indicated that it had no capital, personal, or business relations to report between B-Lot and the seller.
With regard to the financing of the property acquisition, the company reported that it used a combination of its own funds andoutside borrowings, securing a three-year loan of JPY2.6bn from Rakuten Bank effective November 30, 2020.

For previous releases and developments, please refer to the News and topics section.

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Trends and outlook
Quarterly trends and results
FY12/18

Cumulative

FY12/19

FY12/20

FY12/20(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

% of Est.

FY Est.

Revenue

2,752

4,999

6,814

20,268

5,886

7,376

9,669

25,131

1,816

4,603

8,926

26,481

99.2%

26,698

YoY

36.2%

-5.1%

8.8%

54.7%

113.9%

47.5%

41.9%

24.0%

-69.2%-37.6%

-7.7%

5.4%

Gross profit

1,031

1,668

2,577

5,797

2,239

2,795

3,544

6,981

994

1,739

2,983

4,734

YoY

44.2%

-0.1%

17.6%

31.8%

117.1%

67.5%

37.5%

20.4%

-55.6%-37.8%-15.8%-32.2%

Gross profit margin

37.5%

33.4%

37.8%

28.6%

38.0%

37.9%

36.6%

27.8%

54.7%

37.8%

33.4%

17.9%

557

1,094

1,749

2,490

711

1,409

2,166

2,995

884

1,520

2,232

3,014

YoY

0.3%

4.2%

13.5%

22.6%

27.5%

28.7%

23.8%

20.3%

24.3%

7.9%

3.0%

0.6%

SG&A ratio

20.3%

21.9%

25.7%

12.3%

12.1%

19.1%

22.4%

11.9%

48.7%

33.0%

25.0%

11.4%

SG&A expenses

Operating profit

6.2%

474

574

828

3,307

1,528

1,386

1,378

3,986

110

219

751

1,719

YoY

197.0%

-7.4%

27.5%

39.8%

222.4%

141.6%

66.4%

20.5%

-92.8%-84.2%-45.5%-56.9%

Operating profit margin

17.2%

11.5%

12.1%

16.3%

26.0%

18.8%

14.2%

15.9%

6.1%

4.8%

8.4%

6.5%

374

354

474

2,833

1,438

1,211

1,044

3,525

-115

-175

189

1,033

YoY

385.7%-19.8%

27.3%

41.7%

284.6%

242.1%

120.4%

24.4%

-

-

-81.9%-70.7%

Recurring profit margin

13.6%

7.1%

7.0%

14.0%

24.4%

16.4%

10.8%

14.0%

-

-

2.1%

3.9%

263

221

303

1,961

1,023

854

726

2,429

-135

-186

79

344

320.2%-27.1%

15.3%

56.8%

289.4%

285.8%

139.4%

23.9%

-

-

-89.1%-85.8%-88.6%

9.5%

4.4%

4.4%

9.7%

17.4%

11.6%

7.5%

9.7%

-

-

0.9%

1.3%

1.0%

Recurring profit

Net income
YoY
Net margin

FY12/18

Quarterly

FY12/19(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2,752

2,247

1,815

13,454

5,886

1,489

2,294

15,461

1,816

2,788

4,323

17,555
13.5%

YoY

36.2%

-30.8%

82.8%

96.9%

113.9%-33.7%

26.4%

14.9%

-69.2%

87.2%

88.5%

Gross profit

1,031

637

909

3,220

2,239

556

749

3,437

994

745

1,244

1,751

YoY

44.2%

-33.3%

74.4%

45.9%

117.1%-12.7%-17.6%

6.7%-55.6%

34.1%

66.1%

-49.1%

Gross profit margin

37.5%

28.3%

50.1%

23.9%

38.0%

37.3%

32.6%

22.2%

54.7%

26.7%

28.8%

10.0%

557

537

655

741

711

698

757

829

884

636

712

782

YoY

0.3%

8.6%

33.3%

51.2%

27.5%

30.0%

15.6%

11.9%

24.3%

-8.8%

-6.0%

-5.7%

SG&A ratio

20.3%

23.9%

36.1%

5.5%

12.1%

46.9%

33.0%

5.4%

48.7%

22.8%

16.5%

4.5%

Operating profit

474

100

254

2,479

1,528

-142

-8

2,608

110

109

532

968

YoY

197.0%-78.3%

753.0%

44.4%

222.4%--

5.2%-92.8%---62.9%

Operating profit margin

17.2%

4.4%

14.0%

18.4%

26.0%

-

-

16.9%

6.1%

3.9%

12.3%

5.5%

374

-20

120

2,359

1,438

-227

-167

2,481

-115

-60

364

844

YoY

385.7%

-

-

45.0%

284.6%

-

-

5.2%

-

-

-

-66.0%

Recurring profit margin

13.6%

-

6.6%

17.5%

24.4%

-

-

16.0%

-

-

8.4%

4.8%

263

-41

82

1,657

1,023

-168

-129

1,703

-135

-51

265

265

320.2%

-

-

67.8%

289.4%

-

-

2.8%

-

-

-

-84.4%

9.5%

-

4.5%

12.3%

17.4%

-

-

11.0%

-

-

6.1%

1.5%

Recurring profit

Net income
YoY
Net margin

1,690-57.6%
6.3%

104.3%

990-71.9%
3.7%

123.7%

278

FY12/20

Revenue

SG&A expenses

101.7%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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Segments (cumulative)(JPYmn)FY12/18

FY12/19

FY12/20

FY12/20

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

% of Est.

FY Est.

2,752

4,999

6,814

20,268

5,886

7,376

9,669

25,131

1,816

4,603

8,926

26,481

99.2%

26,698

YoY

36.2%

-5.1%

8.8%

54.7%

113.9%

47.5%

41.9%

24.0%

-69.2%-37.6%

-7.7%

5.4%

Real Estate Investment and Development

2,128

3,958

4,728

17,208

4,612

5,254

6,608

21,185

797

2,915

6,308

22,668

Consolidated revenue

YoY

46.8%

-5.2%

1.6%

56.7%

116.7%

32.7%

39.8%

23.1%

-82.7%-44.5%

-4.5%

7.0%

% of consolidated revenue

77.3%

79.2%

69.4%

84.9%

78.3%

71.2%

68.3%

84.3%

43.9%

63.3%

70.7%

85.6%

Real Estate Consulting

456

634

881

1,038

542

691

1,030

1,250

558

674

871

1,257

YoY

21.9%

-1.2%

-8.1%

-18.8%

18.9%

9.1%

17.0%

20.4%

3.0%

-2.6%

-15.5%

0.6%% of consolidated revenue

16.6%

12.7%

12.9%

5.1%

9.2%

9.4%

10.7%

5.0%

30.7%

14.6%

9.8%

4.7%

168

408

1,205

2,022

732

1,431

2,031

2,696

461

1,014

1,748

2,555

-14.9%-10.3%

84.8%

141.0%

335.0%

250.7%

68.5%

33.3%

-37.1%-29.1%-14.0%

-5.2%

6.1%

8.2%

17.7%

10.0%

12.4%

19.4%

21.0%

10.7%

25.4%

22.0%

19.6%

9.6%

474

574

828

3,307

1,528

1,386

1,378

3,986

110

219

751

1,719

197.0%

-7.4%

27.5%

39.8%

222.4%

141.6%

66.4%

20.5%

-92.8%-84.2%-45.5%-56.9%

Real Estate Management
YoY% of consolidated revenue

Consolidated operating profit
YoY

Real Estate Investment and Development

339

543

632

3,040

1,011

992

1,086

3,897

-64

192

739

1,465

YoY

157.1%-11.6%

4.9%

31.2%

198.1%

82.9%

71.7%

28.2%

-

-80.7%-31.9%-62.4%% of consolidated operating profit

49.4%

53.7%

39.6%

72.0%

55.4%

51.3%

49.5%

75.6%

-15.4%

24.7%

47.1%

51.7%

OPM

15.9%

13.7%

13.4%

17.7%

21.9%

18.9%

16.4%

18.4%

-8.0%

6.6%

11.7%

6.5%

245

194

229

283

534

477

580

578

336

264

266

455

YoY

42.0%

-12.7%-28.4%-30.7%

118.0%

145.7%

153.1%

104.3%-37.1%-44.7%-54.1%-21.3%% of consolidated operating profit

35.7%

19.2%

14.4%

6.7%

29.2%

24.6%

26.4%

11.2%

81.0%

34.0%

17.0%

16.0%

OPM

53.7%

30.6%

26.0%

27.3%

98.5%

69.0%

56.3%

46.3%

60.1%

39.1%

30.6%

36.2%

103

274

734

902

281

467

527

679

142

321

564

916

6.9%

25.9%

118.1%

103.5%

173.6%

70.1%-28.2%-24.7%-49.4%-31.3%

7.0%

34.8%

Real Estate Consulting

Real Estate Management
YoY% of consolidated operating profit

15.0%

27.1%

46.0%

21.3%

15.4%

24.1%

24.1%

13.2%

34.3%

41.3%

36.0%

32.3%

OPM

61.0%

67.3%

60.9%

44.6%

38.4%

32.6%

26.0%

25.2%

30.9%

31.6%

32.3%

35.9%

Adjustments

-213

-437

-768

-917

-298

-550

-815

-1,168

-304

-557

-818

-1,117

Segments (quarterly)(JPYmn)FY12/18

FY12/19

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2,247

1,815

13,454

5,886

1,489

2,294

15,461

1,816

2,788

4,323

17,555

YoY

36.2%-30.8%

82.8%

96.9%

113.9%-33.7%

26.4%

14.9%

-69.2%

87.2%

88.5%

13.5%

Real Estate Investment and Development

2,128

1,830

770

12,480

4,612

642

1,354

14,578

797

2,119

3,393

16,360

YoY

46.8%-32.8%

61.2%

97.2%

116.7%-64.9%

75.8%

16.8%

-82.7%

230.0%

150.6%

12.2%% of consolidated revenue

77.3%

81.4%

42.4%

92.8%

78.3%

43.1%

59.0%

94.3%

43.9%

76.0%

78.5%

93.2%

456

178

247

157

542

149

339

219

558

115

197

387

YoY

21.9%

-33.5%-22.0%-50.8%

18.9%-15.9%

37.1%

39.5%

3.0%

-22.8%-42.0%

76.4%% of consolidated revenue

16.6%

7.9%

13.6%

1.2%

9.2%

10.0%

14.8%

1.4%

30.7%

4.1%

4.6%

2.2%

168

240

797

816

732

698

601

665

461

553

733

807

-14.9%-6.7%

303.8%

337.8%

335.0%

191.4%-24.7%-18.6%-37.1%-20.7%

22.1%

21.5%

6.1%

10.7%

43.9%

6.1%

12.4%

46.9%

26.2%

4.3%

25.4%

19.9%

17.0%

4.6%

474

100

254

2,479

1,528

-142

-8

2,608

110

109

532

968

YoY

197.0%-78.3%

753.0%

44.4%

222.4%--

5.2%-92.8%---62.9%

Operating profit margin

17.2%

4.4%

14.0%

18.4%

26.0%

-9.6%

-0.4%

16.9%

6.1%

3.9%

12.3%

5.5%

339

204

90

2,407

1,011

-19

93

2,811

-64

256

547

726

YoY

157.1%-57.8%-

40.5%

198.1%

-

4.2%

16.8%

-

-

486.5%-74.2%% of consolidated operating profit

49.4%

62.7%

15.3%

91.6%

55.4%

-

36.3%

94.9%

-

70.6%

69.0%

-

OPM

15.9%

11.1%

11.6%

19.3%

21.9%

-2.9%

6.9%

19.3%

-8.0%

12.1%

16.1%

4.4%

Real Estate Consulting

Real Estate Management
YoY% of consolidated revenue

Consolidated operating profit

Real Estate Investment and Development

Real Estate Consulting

245

-51

35

54

534

-57

103

-2

336

-72

2

189

YoY

42.0%

-

-64.1%-39.0%

118.0%-

194.7%--37.1%--97.7%-% of consolidated operating profit

35.7%

-

6.0%

2.0%

29.2%

-

40.1%

-0.1%

81.0%

-

0.3%

-

OPM

53.7%

-28.6%

14.1%

34.3%

98.5%

-38.1%

30.4%

-0.9%

60.1%

-62.5%

1.2%

48.9%

Real Estate Management

1,690

101.7%-57.6%

FY12/202,752

Consolidated revenue

6.2%

103

172

460

168

281

186

61

152

142

178

244

352

YoY

6.9%

40.9%

287.8%

57.3%

173.6%

8.2%-86.8%-9.3%-49.4%-4.0%

302.3%

131.5%% of consolidated operating profit

15.0%

52.9%

78.7%

6.4%

15.4%

-

23.6%

5.1%

34.3%

-

30.7%

-

OPM

61.0%

71.7%

57.7%

20.5%

38.4%

26.6%

10.1%

22.9%

30.9%

32.2%

33.2%

43.6%

Adjustments

-213

-225

-330

-150

-298

-252

-265

-353

-304

-253

-261

-299

Source: Shared Research based on company data
Note: Segment revenues are revenues from external transactions. Figures may differ from company materials due to differences in rounding methods.

Full-year FY12/20 results (out February 15, 2020)
Summary▷

In full-year FY12/20, the company reported revenue of JPY26.5bn (+5.4% YoY), operating profit of JPY1.7bn (-56.9% YoY),
recurring profit of JPY1.0bn (-70.7% YoY), and net income attributable to owners of the parent of JPY344mn (-85.8% YoY). The
impact of the COVID-19 pandemic meant that even though the company was profitable, valuation losses in some properties(primarily hotels) caused the company’s profit to decline YoY for the first time since its listing. The larger declines in recurring
profit and net income compared to operating profit reflect increases in interest expenses (+JPY255mn YoY) and commission
expenses, including arrangement fees for financial institutions associated with the acquisition of trust beneficiary rights(+JPY85mn YoY).

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Progress versus plan: Full-year revenue, operating profit, and recurring profit ended approximately in line with the downward
revisions to the company forecast announced on November 30, 2020. Net income attributable to owners of the parent
finished 23.7% above forecast.
Revenue up 5.4% YoY: The company sold the B-Lot Esaka building, the largest property since its founding in the Real Estate
Investment and Development segment, to B-Lot REIT Investment Corporation, which is sponsored by the company. The
company also continued to sell small and medium-sized properties, for which demand remained strong. It commenced
operation of private REITs in November 2020. By segment, revenue was up 7.0% in Real Estate Investment and Development,
up 0.6% in Real Estate Consulting (revenue from external transactions), and down 5.2% in Real Estate Management (revenue▷▷▷

from external transactions).
In terms of purchases, the company plans to purchase properties that generate rent income, such as residential properties andoffice/retail buildings by obtaining loans from a wide range of financial institutions. It will continue to commercialize real estate
while securing stable earnings.
The number of inventoried real estate properties for sale was 33 (compared with 28 at end-FY12/19).
Operating profit down 56.9% YoY: Operating profit was down 62.4% YoY in Real Estate Investment and Development, as thecompany was unable to secure the expected profit margin due to stagnation in economic activity brought about by the
COVID-19 pandemic, and booked valuation losses on some properties (mainly hotels that the company owns as real estate forsale) in anticipation of post-pandemic conditions. Operating profit was down 21.3% YoY in Real Estate Consulting despiterobust performance in brokerage of investment real estate and consulting projects, because consulting services for overseas
high net worth individuals by B-Lot Singapore Pte. Ltd. declined due the impact of the pandemic. Operating profit was up
34.8% YoY in Real Estate Management despite a decline in revenue, as a result of extended property management contracts▷

and increased rental income-generating real estate for sale.
The company’s outlook on the external environment: In the real estate industry in which the company operates, investors
remain willing to invest as monetary easing measures contribute to an ongoing supply of funds although they have become
more selective about the properties they invest in as a result of the COVID-19 pandemic. Residential properties have hardly
been affected by the pandemic. Although there are concerns about the effect of teleworking on office/retail buildings, theimpact on occupancy rates and rent levels has been relatively minor. On the other hand, demand for hotels has deteriorated
significantly due to restrictions on the movement of people around the world. The impact of stimulus measures in Japan, suchas the Go To Travel campaign, and a recovery in global demand remains to be seen.

Quarterly revenue
Real Estate Investment and Development(JPYmn)Real Estate Consulting

Real Estate Management

20,00017,55518,00015,461

16,00013,45414,00012,00010,000
8,000

6,835

5,654

6,000

12,480

3,508

4,000
2,000

684

0

330

Q1

3,248

Q2

1,781

5,143

1,449

1,257

Q3

2,021

Q4

Q1

FY12/16

3,249
2,725

Q2

993
478

Q3

FY12/17

6,329

Q4

2,752

2,247

2,128

1,830

Q1

Q2

1,815
770

Q3

FY12/18

4,323
4,612

Q4

16,36014,578

5,886

Q1

1,489
642

Q2

2,294

1,816

1,354

Q3

FY12/19

Q4

797

Q1

2,788
2,119

Q2

3,393

Q3

Q4

FY12/20

Source: Shared Research based on company data

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Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)3,000

Real Estate Consulting

27.4%

2,479

500
0

1,716

16.8%

18.4% 1,528

17.2%

12.8%
9.3% 8.7% 9.0%

10.9%

367

180

428

-2

Q1

Q2

109

288

187

326

155

304

64

277

144

Q4

Q1

Q2

Q3

507
505

7.9%
160

460 3.0%

1,713

30

132

482

-11

Q1

Q2

Q3

100

254

339

4.4%
204

90

-9.3%

Q3

Q1

Q2

Q3

12.3%

2,811

2,407
474

20%

16.9%

14.0%

14.2%

110

93

1,011
-19
-142

-500
-1,000

30%

26.0%

25.1%

2,000
1,000

OPM (right axis)

2,608

2,500
1,500

Real Estate Management

-8
-0.4%

6.1%

-64

532
109
3.9%
547
256

968

10%

5.5%
726

0%

-9.6%

FY12/15Q4FY12/16

FY12/17Q4Q4FY12/18

Q1

Q2

Q3

FY12/19

Q4

Q1

Q2

Q3

-10%

Q4

FY12/20

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷

Segment revenue was JPY22.7bn (+7.0% YoY), and segment profit was JPY1.5bn (-62.4% YoY).
The company sold 25 properties (24 in FY12/19), including 17 residential properties (14), five office/retail buildings (five),three land lots (two), and no hotels (two). By region, 13 were in Kanto (15), one in Hokkaido (two), six in Kyushu (three), two
in Kansai (four), and three in Chubu (none). In November 2020, the company sold the B-Lot Esaka building, the largest
property since its founding in the Real Estate Investment and Development segment, to B-Lot REIT Investment Corporation,
which is sponsored by the company. The company also continued to sell small and medium-sized properties, for which▷

demand remained strong.
The company purchased 30 properties (28 in FY12/19), including 20 residential properties (13), nine office/retail buildings(four), one land lot (including land lot for development) (eight), and no hotels (three). By region, 14 were in Kanto (17), one
in Hokkaido (two), three in Kyushu (four), nine in Kansai (two), and three in Chubu (three). By obtaining loans from a wide
range of financial institutions, the company plans to purchase properties that generate rent income, such as residential▷▷

properties and office/retail buildings. It will continue to commercialize real estate while securing stable earnings.
While the number of properties outlined above does not include real estate for sale owned by consolidated subsidiaries Life
Stage and Viento Creation, the company’s inventory includes two condominiums, one capsule hotel, and one land lot fordevelopment.
Meanwhile, profit was down YoY as the company was unable to secure the expected profit margin due to stagnation ineconomic activity brought about by the pandemic, and recorded valuation losses on some properties (mainly hotels that thecompany owns as real estate for sale) in anticipation of post-pandemic conditions.

Real Estate Consulting segment▷▷▷

Segment revenue (revenue from external transactions) was JPY1.3bn (+0.6% YoY), and segment profit was JPY455mn (-21.3%
YoY).
The company mainly won projects in Kanto, completing 28 deals (19 in FY12/19). Of these 28 completed deals, 12 were in
Kanto (14), two in Hokkaido (two), five in Kyushu (none), seven in Kansai (three), one in Chubu (none), and one in Tohoku(none).
Despite robust performance in brokerage of investment real estate and consulting projects, segment revenue and profit
declined YoY. The number of consulting services for overseas high net worth individuals by B-Lot Singapore Pte. Ltd. declined
due the impact of the pandemic.

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Real Estate Management segment▷▷▷

Segment revenue (revenue from external transactions) was JPY2.6bn (-5.2% YoY), and segment profit was JPY916mn (+34.8%
YoY).
The number of client-owned properties under property management rose to 101 (82 at end-FY12/19). By region, thecompany was managing 42 properties in Kanto (35), 30 in Hokkaido (27), 21 in Kyushu (15), five in Kansai (five), and three in
Chubu (none).
Segment revenue fell but profit rose. Rental income from accommodation facilities declined and golf courses managed by T&K
were temporarily closed due to the impact of the COVID-19 pandemic. However, the number of properties undermanagement grew and rental income-generating real estate for sale increased.

For details on previous quarterly and annual results, please refer to the Historical financial statements section.

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Full-year company forecast(JPYmn)
Revenue
YoY
Gross profit
YoY
Gross profit margin
SG&A expenses
YoY
Operating profit
YoY
Operating profit margin
Recurring profit
YoY
Recurring profit margin
Net income
YoY

1H
7,376
47.5%
2,795
67.5%
37.9%
1,409
28.7%
1,386
141.6%
18.8%
1,211
242.1%
16.4%
854
285.8%

FY12/192H
17,755
16.3%
4,186
1.4%
23.6%
1,586
13.7%
2,600
-4.9%
14.6%
2,314
-6.6%
13.0%
1,574
-9.5%

FY
25,131
24.0%
6,981
20.4%
27.8%
2,995
20.3%
3,986
20.5%
15.9%
3,525
24.4%
14.0%
2,429
23.9%

1H
4,603
-37.6%
1,739-37.8%
37.8%
1,520
7.9%
219
-84.2%
4.8%
-175
-3.8%
-186
-

FY12/202H
21,87823.2%
2,995-28.5%
13.7%
1,494
-5.8%
1,500
-42.3%
6.9%
1,208-47.8%
5.5%
530-66.3%

FY
26,481
5.4%
4,734-32.2%
17.9%
3,014
0.6%
1,719
-56.9%
6.5%
1,033-70.7%
3.9%
344-85.8%

FY12/21FY Est.
21,700-18.1%

2,030
18.1%
9.4%
1,320
27.8%
6.1%
870
152.9%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

FY12/21 company forecast▷

The company projects full-year FY12/21 revenue of JPY21.7bn (-18.1% YoY), operating profit of JPY2.0bn (+18.1% YoY),▷

The company has not decided on a dividend forecast.

recurring profit of JPY1.3bn (+27.8% YoY), and net income attributable to owners of the parent of JPY870mn (+152.9% YoY).

Company assumptions about the external environment
The company expects that there will be normalization and recovery with respect to the COVID-19 pandemic, as a result of various
policies and the development and dissemination of vaccines. However, with the number of new infections once again increasingaround the world, the company thinks the situation will remain uncertain as the process of trial and error in the pursuit ofcontrolling infection and sustaining economic activity continues.

Company initiatives▷

The company has aimed for many years to create businesses that add value to society in the spheres of real estate and real▷

Based on the policies and strategies set out in the medium-term management plan (announced on November 30, 2020; see▷▷estate finance, and to achieve profits and sustainable long-term growth as a company fulfilling societal needs.

below), the company will work to reform its earnings structure by FY12/23, the final year of the plan.
The company intends to steadily accumulate profits while observing economic trends in a with-pandemic or post-pandemic
world and expanding stable earnings.
With the number of group companies gradually increasing, the company is diversifying its businesses. It plans to take thecurrent situation as an opportunity to take greater advantage of group synergies, widen business opportunities, and maximize
profit.

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Medium-term outlook
New medium-term management plan (FY12/21–FY12/23)
On November 30, 2020, the company unveiled its new medium-term management plan covering the three-year period from
FY12/21 through FY12/23.

▷▷

In FY12/23, the final year of the new medium-term management plan, B-Lot targets revenue of JPY29.7bn (111.2% of thecompany’s FY12/20 forecast), recurring profit of JPY3.6bn (3.6x that of the FY12/20 forecast), and net income attributable toowners of the parent of JPY2.4bn (8.6x that of the FY12/20 forecast).
B-Lot aims to achieve long-term stable growth by reforming the earnings structure even if it means a period of plateauing
profits. Up until now, the company has been highly reliant on the earnings of the Real Estate Investment and Development
segment such that delays in sales and other factors could significantly impact performance. Going forward, B-Lot plans tobolster the earnings base through stable rental income to achieve earnings in FY12/23 exceeding the forecast for FY12/20.

Numerical targets(JPYmn) FY12/20 estimates

FY12/21 targets% change

FY12/22 targets% change

FY12/23 targets% change

Revenue

26,69821,700-18.7%

24,50012.9%

29,70021.2%

Operating profit

1,690

2,030

20.1%

3,080

51.7%

4,480

45.5%

Recurring profit

990

1,320

33.2%

2,240

69.7%

3,640

62.5%

Net income*

278

870

212.2%

1,490

71.3%

2,440

63.8%

*Net income attributable to owners of the parent
Source: Shared Research based on company data

Basic policy▷

Since its founding, the group has created businesses that add value to society in the fields of real estate and real estate finance.

▷

Since its founding, the group’s core values (action guidelines) have been to conduct business professionally and to enjoy work.

It aims to achieve profits as a company fulfilling societal needs along with long-term continuous growth.

Under the company’s definition, being professional involves striving to make accurate decisions quickly and with insight andexpertise, acquiring specialized knowledge, collecting information, and improving oneself. So that its employees can fully

▷

▷

▷

enjoy their work, the group has actively promoted businesses that allow room for creativity and flexibility.
Although the employee headcount has increased since the company’s founding, it will continue to contribute to society byemphasizing partnership and teamwork both inside and outside the company, pursuing profits in compliance with social
norms, and pursuing continuous long-term growth.
In FY12/20, the company revised its forecast downward due to the impact of the COVID-19 pandemic. On a positive note, it islaying the groundwork for the future, such as through the launch of company-sponsored B-Lot REIT Investment Corporation’s
private REIT (see “FY12/20 company forecast” above).
B-Lot formulated the medium-term management plan amid changes in economic trends occurring in the COVID-affectedworld with the intention of remaining a group that continues to fulfills societal needs 100 years in the future.

Key strategies▷

Expand stable revenue base: The company aims to expand its stable revenue base through the acquisition of high-quality
properties that will add to the stable income stream the group receives from leasing. It will also work to expand sources ofasset management fees and other stable income derived from B-Lot REIT Investment Corporation and private REITs.


Aim for a CAGR of 20% in the Real Estate Consulting and Real Estate Management businesses: In FY12/19, the Real
Estate Investment and Development business accounted for 64% of gross profit, with only 16% and 19% comingfrom the more stable Real Estate Consulting and Real Estate Management businesses, respectively. In FY12/23, the

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company plans to reduce this dependence on the Real Estate Investment and Development business so that thesegment will account for 50% of gross profit, while increasing the amount accounted for by the Real EstateConsulting business to 22%, and that accounted for by the Real Estate Management business to 28%.

▷



Aim to achieve AUM of JPY50.0bn for B-Lot REIT Investment Corporation, and list on the Tokyo Stock Exchange.

Diversify and deepen relationships with client companies: The company strives to deepen relationships with high-net-worthclients in Japan and overseas and also broaden its client base via B-Lot REIT Investment Corporation and other means.
In existing businesses, dig deeper into client needs, expanding the types of real estate assets, increasing the types ofconsulting services for high-net-worth individuals, and expanding the scale of existing businesses. Promote thesystemization of finance through REITs.

▷

Establish relationships with more partners and gain time with an emphasis on co-prosperity.

Secure stable sources of financing: The company aims for the continuation of efforts to strengthen its ties with a wide range offinancial institutions, thereby building up the level of trust in its relationships and establishing secure sources of finances.


Aim for a shareholders’ equity ratio of over 25%. In FY12/20, heavy borrowing caused the shareholders’ equity ratio
to fall below 20% and the company aims for recovery in the metric. Concerning the cancelled public offering, thecompany said it will implement a public offering when the timing is right, but will be unlikely to do so in the near▷

future.
Expand investments into new types of real estate: The company works to leverage its expertise in real estate revitalization anddevelopment by moving into new areas within the real estate market and investing in new types of real estate.


Revitalize a golf course business: The company acquired a golf course in Tsuruga, Fukui Prefecture, and is working torevitalize the business (non-consolidated).

Promote regional revitalization through hotels: Torifito Hakata Gion opened in September 2020. In November 2020,
it showed steady growth, achieving 123% of the budget target.

Energy and SDGs: The company supports SDGs through its ownership of two properties with a sum of over of
30,000sqm of solar panel installation area.

As the company diversifies, it plans to strengthen management and cultivate next-generation leaders. It will nurture
young leaders by entrusting the responsibility for certain areas to them and encouraging them to achieve growth.

Company view on the real estate market
While maintaining a degree of caution, B-Lot is basically positive about Japan’s real estate market due to steady fund inflows.
While lending for investment in rental apartment buildings is becoming increasingly tight, lending to the high-net-worth andultrahigh-net-worth individuals remains robust, contributing to extreme polarization in the market as quality real estate prices
further rise. In 2019, the company witnessed the market change, including the emergence of a gap in performance between
companies that are trusted by financial institutions and business partners and companies that are not. B-Lot believes changes
bring new opportunities, and thinks it important to go back to the basics at times of such changes. Specifically, the company isadvancing its business with a focus on the following two points:▷▷

Working on each project with integrity and sincerity
Commit to results as professionals

B-Lot not only aims to expand its existing businesses, but to create new businesses that can give rise to and combine with otherbusinesses and grow these businesses as new pillars by rigorously enforcing compliance and taking advantage of the favorable
business environment which merits honesty and fairness.

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External environment
In FY2018, real estate transaction value at domestic listed companies totaled JPY3.6tn (-27.4% YoY), with the transaction value
down an especially sharp 41.4% YoY in 2H FY2018. In FY2019 (April 2019–March 2020), transaction value was JPY4.5tn (+24.5%
YoY). Large transactions increased in 2H, supporting the double-digit YoY growth.
However, real estate demand in Japan remains robust among real estate equity underwriters, REITs, domestic and overseas
institutional investors, affluent overseas buyers, and individuals in Japan seeking to make the most of revised inheritance tax laws.
In addition to abundant funds, another characteristic particular to Japanese real estate market is low interest rates. Yield spreads
are wider than other markets. Banks now have healthy balance sheets, and are showing tendencies of narrowing their lending tocertain key borrowers. Substantial demand for capital comes from M&A and real estate purchases. Banks have tightened lending
to salaried worker investors who acquired real estate in the JPY100–200mn price range mainly financed by bank loans after
revelations of improper lending, but real estate lending by banks as a whole has continued to expand.
The company thinks the domestic real estate market may shrink gradually as the population declines, but it is still large and someglobally diversified investment funds are flowing into the market. There are some alternative investment funds in the market,
which have stabilized. While such investment is unlikely to double, neither will they halve in value, so fund inflows should
support the real estate market. Several indicators appear to be near their peak, supporting the view that the market is near its top
from a cyclical perspective, but it has not yet peaked. Many investors benefited from certain investments following the global
financial crisis, and they are waiting for a collapse in prices. If prices fall, funds should once again flow into the market.

B-Lot prepared to survive a property price crash
According to B-Lot, when hiring it emphasizes both individual skills and teamwork. The aim is to build long-term relationships
with customers, industry players, and shareholders. The company emphasizes sustainable growth based on meeting the needs ofcustomers and society. In order to maximize limited management resources, the company emphasizes internal and external
teamwork. B-Lot does not prioritize short-term profits, and often conducts joint projects with industry peers. B-Lot thinks that asustainable company has autonomous employees who can independently plan and generate ideas. In December 2014, B-Lot
listed on the TSE Mothers with 24 employees, and has subsequently worked to grow its workforce, hiring new graduates in April
2016 and non-Japanese employees wishing to work in Japan in April 2017. In February 2018, the company transferred to TSE First
Section. The parent company has a small, skilled team of 61 employees, and on a group-company basis including acquiredcompanies, there are 194 employees (as of end-December 2019). With the increase in the number of employees accompanying
acquisitions, the company is also working to expand its business areas.

Financial strategy
B-Lot is growth-oriented and uses higher leverage than its peers (the net debt/equity ratio was 1.98 in FY12/19; average for 23
competitors with similar revenue was 1.30). Most of the company’s liquid assets are real estate for sale. Meanwhile, liabilities aremainly fixed, such as long-term loans and corporate bonds. B-Lot thinks that financial institutions rate highly its successful trackrecord in property revitalization and ability to repeat those successes. Still, financial institutions are sensitive to changes in themacro economy and Japanese real estate prices. The company aims to take a long-term view for borrowing plans for real estate
for sale, and incorporates possible price downturns. In such a situation, B-Lot said it would hold the real estate for sale on its
books. The company’s fundraising plans also position it to have sufficient cash on hand for a certain period. The company thinksthat even if its revenue and profits drop, as long as it is not required to repay long-term borrowings in advance when property
prices deteriorate, it will remain viable. While B-Lot has a proactive financial strategy, the company said it had a cautious stance inlight of lessons from the market downturns following the collapse of the bubble economy and the global financial crisis.
At end-FY12/19, interest-bearing debt stood at JPY23.3bn. The company secured a syndicated loan in FY12/19 of JPY4.3bn (1.5xFY12/18), allowing it to respond flexibly to large-scale new investments without the need for collateral. In addition to thesyndicated loan, the company borrowed a total of JPY4.5bn (balance at end-December 2019) in unsecured working capital, andalso secured JPY2.0bn from Shimane Bank in January 2020. The company aims to make effective use of these funds for real estatepurchases and real estate revitalization projects.

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Increased retained earnings have contributed to a steady expansion in shareholders’ equity (see figure below), and the company
has achieved ongoing revenue growth through an expansion in its inventory of real estate for sale. It appears B-Lot is benefitingfrom a virtuous cycle in which shareholders’ equity gains are followed the next year by an expansion in the inventory of real estate
for sale, and a corresponding increase in revenue.
Shareholders’ equity and inventory of real estate for sale

(JPYmn)Shareholders' equity

12,000(JPYmn)25,000Real estate for sale and real estate for sale in process

19,903

10,00020,0008,000

14,5006,000

11,392

11,3588,141

15,000

5,974
10,000

4,000

2,000

4,008

6,069
3,403

0

2,430

5,000

2,818

977

FY12/14
FY12/15
Source: Shared Research based on company data

FY12/16

FY12/17

FY12/18

FY12/190

Key measures
Further cultivate expertise by advancing initiatives
Strengthen domestic business▷▷

Focus also on regional cities and resort areas with growing population and increasing number of inbound tourists
Build expertise in utilizing a diverse talent pool

Investment and development▷▷

Secure fixed assets in the medium to long term and develop new products
Invest in and enter business alliances with growth companies

Establish a new earnings structure
Expand overseas▷▷

Promote inbound investment and expand a client base of affluent investors
Participate in overseas investment and expand network

IT strategy▷▷

Improve operational efficiency and plan and develop smart products
Expand sales channels by utilizing SNS and recruit investors

Acquisitions
The company intends to actively consider acquisitions, aiming to use acquisitions to pursue its basic strategies of securing
talented workers and diversifying the company’s businesses, as well as to increase synergies between businesses while
simultaneously expanding one-stop services within the group. In April 2016, B-Lot purchased Life Stage, whose main business ismarketing newly built condominiums to families, for JPY880mn, and made it a subsidiary. In January 2017, the company
purchased Viento Creation, an owner and operator of capsule hotels, for JPY588mn, and made it a subsidiary. In April 2018, the

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company purchased shares in golf course and sports facility operator T&K Co., Ltd., making it a subsidiary. In this respect, thecompany is trying its hand in a new business territory, with the aim of boosting the value of its golf courses by providing newvalues to golfers in Japan and overseas. Since many SMEs in Japan are struggling with the issue of succession, the company
intends to make full use of its experience and knowledge to resolve related issues and pursue acquisitions to expand its business.

Business expansion
Transfer to the First Section of the Tokyo Stock Exchange
In December 2014, B-Lot listed on the Tokyo Stock Exchange Mothers market. In November 2017, the company applied for atransfer to the TSE First Section with the aim of improving its social standing and trustworthiness and further increasing corporate
value. A transfer to the TSE First Section went ahead in February 2018.

Global expansion
As the company works to diversify its business portfolio, it aims to deepen cross-border collaboration. While bringing overseas
investors to Japan, B-Lot would also like to participate in overseas real estate investment, revitalization, development, andfinancing. Singapore, where the company established a subsidiary, could be a hub to invest in Southeast Asian countries. Clientsalready include English-speaking investors, and the company has hired Taiwanese staff as it plans to target Chinese speakers as
well.

Expansion into new business areas
B-Lot is involved in accommodation facilities (see below) and nursing care facilities, and is commercializing real estate in new
areas such as warehouses and logistics facilities and apartments for private short-term lodging. B-Lot is a pioneer in revitalizationand development projects by responding early to market needs. For example, B-Lot was an early mover in repurposing offices
into hotels and using redevelopment methods to bring in child care centers, and was able to quickly roll out those initiatives atmultiple locations before other companies. It wants to be an early mover in other new fields. One example of this, detailed below,
is the ossuary real estate revitalization business.

Yokohama Shoen: an ossuary real estate revitalization business▷

In May 2019, the company purchased 50% of the shares in Yokohama Fuji Reibyo, which operates an ossuary and funeral▷

Leveraging its real estate revitalization expertise, the company plans to conduct a thorough overhaul of the aging facility, makebusiness, and changed the name to Yokohama Shoen, which became an equity-method affiliate.

it earthquake resistant, and utilize empty space in the main hall to expand the ossuary. It aims to reopen the facility following
renovations in summer 2020. Kengo Kuma, who designed the New National Stadium for the 2020 Olympic Games in Tokyo,
designed the renovated facility. In total, three buildings on the site are being renovated, with the ossuary being expanded anda glass-enclosed café being built for customers and local residents. Meal preparation, including for Buddhist memorial services,
are supervised by Chef Tsutomu Ochiai, famous for his Italian cuisine, and Japanese cuisine chef Masahiro Kasahara. The▷

company aims to create added value and make the facility a next-generation funeral home and ossuary.
The facility currently has 3,250 indoor locker-type ossuaries, which the company plans to expand by 10,000 over the next few
years. In addition to revenue from selling the ossuaries (offerings for eitai kuyo [permanent ritual care]: JPY1.8mn for standard
and JPY3mn for high-end), the company will also receive stable, long-term management fees (JPY6,000 yearly for standard and
JPY10,000 for high-end; applies to those receiving eitai kuyo service). The property is conveniently located in an urban area,
five minutes’ walk from Kishine Koen station on the Yokohama Municipal Subway’s Blue Line and also close to central Tokyo.

Coordination of inbound investment
In September 2011, the company entered a business alliance with JRAMC (Seoul), which manages real estate funds in South
Korea. JRAMC structures private REITs in South Korea, investing in office buildings and commercial facilities, with total AUM ofroughly KRW1.5tn (roughly JPY94bn) at the time of the agreement. When JRAMC decided to enter the Japanese market, it chose

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B-Lot to advise on investee selection. From July 2015, the contract was changed to be between JRAMC and an asset management
subsidiary of B-Lot, so the group books advisory fees for every project.

Joint investment in fund with Misawa Homes
In September 2016, a fund the company invested in together with Misawa Homes started operating. (Property size: roughly
JPY1.0bn; stake: Misawa Homes 89.8%, B-Lot 10.2%.) The company’s subsidiary, B-Lot Asset Management, put together a realestate fund backed by two relatively new rental condominium buildings in Osaka. In March 2017, the fund made an additionalpurchase of a new rental condominium building in Osaka (Luxe Tennoji). In addition to dividend revenue based on investment
performance (returns), the company receives asset management and other fees.
B-Lot said that it would like to purchase properties worth around JPY10bn, using similar schemes with its investment partners tocreate other funds.

B-Lot Crowd Funding, a real-estate crowdfunding venture
The company has forged a business alliance agreement with SBI Securities Co., Ltd. regarding collaboration in operations such asreal estate crowdfunding.

▷

As a pioneer in the comprehensive online brokerage business, SBI Securities leads the field in the number of accounts, assets▷

In the real estate business, small-lot investment in income property has grown in recent years after the revision of the Act onunder management, and trading value.

Specified Joint Real Estate Ventures in December 2017, which was intended to stimulate investment in growth businesses suchas regional revitalization and tourism. In this context, the company and SBI Securities agreed to collaborate in the real estate
investment business by combining the B-Lot Group’s know-how on diverse income properties around the country with SBI▷▷

Securities’ networks with a broad customer base and regional financial institutions.
As the first step, B-Lot plans to set up small-lot investment units for quality, stable income properties owned by the group, andform a real estate investment market that offers a relatively safe vehicle for asset formation to high net worth individuals andinvestors in collaboration with SBI Securities.
The company plans to launch the business after obtaining a specified joint real estate venture business license.

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Reference: Current medium-term management plan (FY12/19–FY12/20)
The company has developed a medium-term management plan for the following two years (FY12/19–FY12/20), which itannounced at the time of the FY12/18 earnings announcement. The plan targets at the time of its creation and the company’s
current estimates for FY12/20 are as follows:▷▷

Medium-term management plan targets for FY12/20 (at the time of its announcement): Revenue of JPY30.0bn (+14.1% YoY),
operating profit of JPY4.6bn (+21.8% YoY), recurring profit of JPY4.1bn (+22.6% YoY), net income attributable to owners of theparent of JPY2.8bn (+20.6% YoY)
The company’s current FY12/20 forecast calls for revenue of JPY30.0bn (+19.4% YoY), operating profit of JPY5.0bn (+24.9%
YoY), recurring profit of JPY4.2bn (+18.7% YoY), and net income attributable to owners of the parent of JPY2.8bn (+17.1%
YoY). The current FY12/20 estimates for revenue (JPY30.0bn) and net income (JPY2.8bn) are in line with the previously
announced medium-term plan targets.

Medium-term management plan targets (FY12/19–FY12/20), actual earnings, and current estimates(JPYmn)

Revenue
YoY
Operating profit
YoY
Operating profit margin
Recurring profit
YoY
Recurring profit margin
Net income
YoY
Net margin

FY12/18

FY12/19FY Act.

Est.

Act.

20,268
54.7%
3,307
39.8%
16.3%
2,833
41.7%
14.0%
1,961
56.8%
9.7%

26,300
29.8%
3,738
13.0%
14.2%
3,360
18.6%
12.8%
2,357
20.2%
9.0%

25,131
24.0%
3,986
20.5%
15.9%
3,525
24.4%
14.0%
2,429
23.9%
9.7%

FY12/20
MTP
Current
Est.
Est.
30,00030,000
14.1%
19.4%
4,552
4,979
21.8%
24.9%
15.2%
16.6%
4,121
4,186
22.6%
18.7%
13.7%
14.0%
2,843
2,843
20.6%
17.1%
9.5%
9.5%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Basic policy▷

Maintain long-held business indicator of 20% or higher net income growth as earnings target (the company’s current estimate
for net income in FY12/20 is unchanged from the initial medium-term plan target, and since growth in FY12/19 exceeded the
medium-term plan target, the current estimate for net income growth in FY12/20 is below 20%, at 17.1%)▷

Based on the management concept of “pursuing profits in conformity with societal standards and long-term, continued▷

In 2018, changed listing from Mothers Section to First Section of the Tokyo Stock Exchange▷▷

growth,” achieved a ninth consecutive year of higher revenue and profits since FY12/10

As a company on the First Section of the Tokyo Stock Exchange, B-Lot will continue to pursue its long-held business indicator(20% or higher net income growth)Year-end dividend for FY12/18 of JPY50 (20% payout ratio) resulted from a JPY30.5 YoY increase (after consideration of stock
split). B-Lot plans to pay a FY12/19 DPS of JPY60 (+JPY10 YoY) based on a 20% payout ratio. The company will continue to takeefforts to achieve earnings targets so that it can return profits to shareholders. The company’s policy is to determine dividends▷▷

each year based on performance.
In the Real Estate Investment and Development segment, a core business of the company group, the year-end balance ofproperties for sale in FY12/19 reached record highs (see FY12/19 results) as the company assembles assets for the future
Enhancement of shareholders’ equity is also an important issue for long-term, continued growth. The company aims to
manifest capital-raising efforts and boost profits to meet the targets above

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Net income CAGR of over 20%
The company’s most important key performance indicator (KPI) is net income. B-Lot thinks that it needs to grow profit at a CAGR
of roughly 20% to be seen as a growth company on the TSE Mothers. The company also aims to expand its sales bases in key
cities in Japan and diversify assets handled, as well as expand overseas in the medium term, collaborating with its Singapore
subsidiary. It looks to continue proactive acquisitions, following the recent establishment of subsidiaries, the acquisition of Life
Stage, which markets condominiums to families and operates in different areas with different methods, as well as the acquisitionof capsule hotel owner Viento Creation. According to President Miyauchi, the ideal segmental earnings breakdown in themedium term would be Real Estate Investment and Development 50%, Real Estate Consulting 25%, and Real Estate Management
25%. This would provide a balanced earnings structure with Investment driving growth and stable earnings from Consulting andManagement. As growth contributes to an expansion in earnings, the company believes to achieve net income CAGR of 20%, itwill need to increase headcount and unit transaction prices.
Number of (consolidated) employees, revenue, and net income(JPYmn)

Revenue

35,000(JPYmn)Net income

3,500

30,00030,000

194

3,000
2,843

25,131

25,0002,429

201

20,26820,000

1,961

2,500
2,000

149
134

15,00011,627
10,0005,000
0Number of
employees(consolidated)

1,500

13,097
1,251

35

5

8

11

16

FY12/09

FY12/10

FY12/11

FY12/12

18

1,000

6,951

24
3,709

588

401

500

177
FY12/13

FY12/14

FY12/15

FY12/16

FY12/17

FY12/18

FY12/19 FY12/20 Est.

0

Source: Shared Research based on company data

Hotel development
The company is focusing on developing hotels including stylish hotels, capsule hotels, and budget hotels (without restaurants or
banquet halls) due to its own judgment and in light of market needs.
B-Lot generally outsources management of completed hotels to a management company. After the occupancy rate stabilizes, thecompany sells the hotel based on the hotel’s track record. Subsidiary B-Lot Asset Management sets up funds and contracts asset
management operations for Asian investors. Rather than a one-time transaction of simply selling a property, the group is involved
with a property over the long term, providing post-sales services including asset management and property management.

▷▷

The company entered hotel development ahead of the inbound tourism boom, opening two renovated accommodation
facilities in 2015: First Cabin Tsukiji (Chuo-ku, Tokyo: one-minute walk from Tsukiji Station) and a hostel, Imano Tokyo Hostel(Shinjuku, Tokyo: a four-minute walk from Shinjuku and Shinjuku-sanchome stations).
In December 2016, the company completed a condo hotel* called “the kamui niseko” (Niseko, Hokkaido).

*Condo hotel: An owner purchases a room that can be rented to guests as a hotel room when the owner is not using it. The owner and real estate
management company share the revenue from hotel charges.

▷

In March 2017, B-Lot completed its first hotel development project in Tokyo, a capsule hotel called “nine hours Shinjuku
North.” The company entered into an operating contract with nine hours for the third through eighth floors of the capsulehotel. From the opening day on March 22, 2017, through July 31, the average occupancy rate for the 206 capsule rooms wasover 83.5%, with over 17,000 guests.

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On September 1, 2017, the company opened the second in the Imano series, Imano Tokyo Ginza Hostel (Ginza, Tokyo) incollaboration with ABaccommo Co., Ltd., and in October 2017 opened the third, Imano Kyoto Kiyomizu Hostel in the
Higashiyama area of Kyoto.
In December 2017, the company renovated two capsule hotels owned by subsidiary Viento Creation Co., Ltd. One wasreopened under the brand name °C Ebisu (Shibuya, Tokyo; one minute by walk from Ebisu station). The property underwent

substantial renovations including the installation of a new sauna, and it has seen consistently strong occupancy ratios since its
reopening. The property was sold in November 2019. Another renovated hotel was °C Gotanda (Shinagawa, Tokyo; threeminutes by walk from Gotanda station), which reopened in April 2018. The hotel remains in operation under the company’s▷ownership. Both hotels are being managed by nine hours.
Also in April 2018, the company opened budget hotels Tissage Hotel Naha (Naha, Okinawa) and Hotel Torifito Otaru Canal(Otaru, Hokkaido; the fourth property opened in collaboration with AB Accommo). After the sale of Hotel Torifito Otaru Canalto an investment company in February 2019, the company is working with AB Accommo to support the investor in asset▷▷▷

management over the long term.
In August 2018, Nesthotel Kyoto Shijokarasuma opened. In March 2019, the fifth project under the company’s collaboration
with AB Accommo, Imano Osaka Shinsaibasi Hostel in Kitahorie, Osaka opened.
Further, the sixth project with AB Accommo, Hotel Torifito Hakata Reisenmachi in Fukuoka (tentative name) is set to becompleted in July 2020, with operations scheduled to commence in September the same year, and the seventh Hotel Torifito
Kanazawa (tentative name) in June 2021.
In December 2019, B-Lot acquired Randor Residential Hotel Sapporo Suites. The hotel is one of the company’s “stay that feels
like home” residential hotels, and features in-room kitchens and multiple beds. The hotel is a seven-minute walk from Susukino
Station and is suitable for families, groups, and those planning medium- to long-term stays. Construction was completed in▷

May 2019, and the hotel opened in June of the same year. Occupancy rate at the time of acquisition stood at about 80%.
The company acquired three hostels operated by Wise Owl in November–December 2019. The hostels (WISE OWL HOSTELSSHIBUYA, WISE OWL HOSTELS SAPPORO, and WISE OWL HOSTELS KYOTO) target mainly overseas visitors and areentertainment hostels focused on the theme of “food and travel.” The Shibuya hostel has 98 beds and was opened in April
2017; the Kyoto hostel has 138 beds and is expected to be opened in March 2020; and the Sapporo hostel has 146 beds and isscheduled to be opened in June 2020. According to the company, the average occupancy rate at the Shibuya hostel is about
90%.

Hotel revitalization and development projects (both completed and under development)

Source: Shared Research based on company materials

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Acquisition of Viento Creation
On January 31, 2017, the company purchased Viento Creation, an owner and operator of capsule hotels, for JPY588mn, andmade it a subsidiary (see Group companies section for details). The aim was to acquire two capsule hotels within a three-minute
walk of major stations on the Yamanote Line (one is in Ebisu, Shibuya Ward and the other is in Higashi-Gotanda, Shinagawa Ward)and personnel with experience working in the hotel industry. B-Lot is conducting major renovations at the capsule hotels in
preparation for reopening. The company plans to redevelop properties as capsule hotels under the °C brand (pronounced“doe-shi”) that incorporate saunas. The first such property, °C Ebisu, opened on December 16, 2017, and the second, °C

Gotanda, was opened in 2018. As noted earlier, °C Ebisu maintained strong occupancy rates after reopening and was sold in
November 2019.

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Business
Business description
Overview
B-lot is a mid-sized real estate company with three core businesses: real estate investment, consulting, and management. In its
key Real Estate Investment and Development business, the company aims to take on some risk and drive growth. Real EstateConsulting and Real Estate Management, meanwhile, are stable earners. The company handles various types of real estate, andtransactions range between JPY100mn and JPY3bn. Its properties are mainly in major cities, but it also handles properties
nationwide. The Kanto area is covered by the head office, while branches have a track record in other major metropolitan areas in
the Hokkaido, Kyushu, and Kansai regions. Clients include high net worth individuals, their asset management companies, realestate companies, and funds.
In FY12/19, the breakdown of earnings by segment was: Investment and Development 83.6% of revenue, 75.6% of operating
profit; Consulting 5.7% of revenue, 11.2% of operating profit; and Management 10.6% of revenue and 13.2% of operating profit.
OPM was 18.4%, 39.8%, and 25.2% respectively. B-Lot aims to diversify its building types and regions in the Real Estate
Investment and Development segment. Breakdown by building type: residential 14 (58% of properties sold), office/retailbuildings five (21%), detached lots two (8%), hotels two (8%), and others one (4%). Breakdown by region: Kanto 15 (63% ofproperties sold), Hokkaido two (8%), Kyushu three (13%), and Kansai four (17%). The average sales price per property sold in
the Real Estate Investment and Development segment was JPY883mn, up sharply from JPY76mn in FY12/12. In the Consulting
segment, the company has won around 20–30 deals per annum, plus 440 sales contracts from Life Stage (consolidated subsidiaryfrom FY12/16). In the Management segment, management contracts rose from 20 in FY12/12 to 82 in FY12/19.
Segment revenue and operating profit (FY12/19: excluding adjustments)
2,696
11%
679
1,453
13%
6%
578
11%

FY12/19
Revenue
25,131

21,185
83%

3,897
76%

Outer: Revenue
Inner: Operating profit(JPYmn)Real Estate Consulting

Real Estate Investment and Development
Real Estate Management
Source: Shared Research based on company data

Revenue, operating profit, recurring profit, and OPM
Operating profit

Revenue(JPYmn)Recurring profit

35,000

OPM (right axis)
20%

18.1%
16.3%

30,00020,0009.8%

15,000

10.2%

11.5%

6.3%

16%

10.1%

6

2,231
218 183

FY12/11

FY12/12FY12/13494

3,709
378 295
FY12/14800 655
FY12/1512%

20,26810%

13,097

8%
6%

6,951
1,338
85 78

14%

25,131

11,627

10,0000

18%

30,00025,000

5,000

15.9%

16.6%

1,175 874

2,366
1,999

3,307

FY12/16

FY12/17

FY12/18

2,833

3,986
3,525
FY12/19

4,979

4,186

FY12/20 Est.

4%
2%
0%

Source: Shared Research based on company data

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Characteristics
Based on accumulated real estate investment and management expertise, B-lot’s segments operate in line with overall corporate
goals. For each project individual divisions collaborate, each contributing idea based on specialized knowledge, and thecompany selects those ideas that could maximize a property’s value. Customers are mainly high net worth individuals, their asset
management companies, and general companies. The company focuses on smaller properties, a relatively niche area, and theaverage sales price per property sold was JPY883mn in FY12/19. Still, such properties* account for the vast majority of real estate,offering a wealth of opportunities. According to the company, smaller properties are often overlooked compared to large
properties targeting large corporations, which already have settlement processes. However, in the niche area where B-Lot
operates, customers can suddenly change their mind, and dealing with such situations requires real estate expertise, people skills,
a network, and a speedy response.
*Office stock in Tokyo’s 23 wards is roughly split between small and medium-sized properties (floor space of 300–5,000 tsubo [992–16,529sqm]) andlarge properties (over 5,000 tsubo [over 16,529sqm]). In terms of rentable area (floor space), small and medium-sized properties accounted for 47%(6.07mn tsubo [roughly 20.1mn sqm]) versus 53% (6.89mn tsubo [roughly 22.8mn sqm]) for large properties. By number of buildings, small andmedium-sized office buildings accounted for the vast majority or 92% (8,538 buildings) versus 8% (755 large buildings). Source: Xymax Real Estate
Institute, Office Stock Pyramid 2019

The company acts as a kind of control center, and outsources virtually all labor-intensive processes such as construction,
operation, and management. For each building there are two transactions, a purchase and a sale, so the company needs to createa network and work with real estate brokers of all sizes. B-Lot aims to have multiple transactions with real estate brokers.
The company may sell one property to numerous customers over the lifespan of a property, during which it provides asset
management, property management, and leasing management services. The company also continues its relationships withcustomers from which it buys properties, introducing new investment properties. It has a high ratio of repeat customers.
Building long-term relationships with customers through the Investment and Development business
Revitalize hotelfor differentiation

Inbound tourists
Overseas network- Affluent individual clients- Partnering professionals-Sales partners

Real estate revitalization IV
for next generation

Develop building

Real estate revitalization III

Optimize use

Real estate revitalization II

Solve compliance issues

Real estate revitalization I

Improve profitability
Expenses

Repeatedtransactions- Pricing based on Future NOI- Propose best disposal method

Real estate

NOI*

Purchase
price

Estimate
future valueCompetitors

Estimate
present value

Brokerage and consulting
Contract property
managment and leasing

Source: Shared Research based on company materials*NOI (Net Operating Income): net profit only considering revenue (rent) less actually incurred expenses (management fees, property taxes etc.)

Expansion leveraging creditworthiness and fundraising ability following stock market listing
B-Lot was established in October 2008, early in the global financial crisis, by President Makoto Miyauchi, who has knowledge andexperience in structured finance from working in a bank and securities firm and at the management level of a real estate company
listed on TSE1; Deputy President Shinichi Hasegawa, who helped establish and was a director of the same listed real estatecompany; and Deputy President Masahiro Mochizuki. At the time of the company’s founding, the company focused on real estate
brokerage and rental management, before branching out into real estate investment in its third year. In 2011, it established abranch in Hokkaido, offering clients diversification for their portfolios via real estate in Sapporo. As a result, even when the realestate market chilled following the Great East Japan Earthquake of 2011, the company was able to generate a profit. In 2013 it
expanded into the Kyushu area, establishing a branch in Fukuoka through a transfer of employees and bases from an industry
peer.

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In December 2014, the company listed on the Tokyo Mothers market, the quickest real estate company to list after being
established in the wake of in the global financial crisis (six years and two months after founding). B-Lot transferred to the TSE First
Section in February 2018. The company used its creditworthiness and fundraising ability following its listing to support its growth
driver, the Investment and Development segment, and has grown thanks to stable earnings sources, Consulting andManagement.
In 2015 the company established an asset management company (B-Lot Asset Management) and a Singapore subsidiary (B-Lot
Singapore). In April 2016, the company purchased Life Stage, whose main business is marketing newly built condominiums topeople with families, for JPY880mn, and made it a subsidiary.
In January 2017, B-Lot purchased Viento Creation, an owner and operator of capsule hotels, for JPY588mn, and made it asubsidiary. In April 2018, the company purchased shares in golf course and sports facility operator T&K Co., Ltd., making it asubsidiary. In May 2018, it established a subsidiary called B-Lot Capital Link to engage in human resources and M&A businesses.
B-Lot had a small team of skilled professionals at the time of its establishment; as of end-December 2019, including acquiredcompanies, the group had 194 employees.
In September 2016, a fund the company invested in jointly with Misawa Homes started operating. (Property size: roughly
JPY1.0bn, investment share: Misawa Homes 89.8%, B-Lot 10.2%.) The company’s subsidiary, B-Lot Asset Management, put
together a real estate fund backed by two relatively new rental condominium buildings in Osaka. In March 2017, the fund boughta newly built rental condominium building in Osaka (Luxe Tennoji).

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Business model
Real Estate Investment and Development segment
This segment comprises real estate revitalization and real estate development. In the revitalization business, the company
purchases troubled properties (typically single buildings) selling below value due to low profitability or issues with compliance.
Using its planning and development capabilities and revitalization expertise, the company fixes the issues, boosting asset value
and profitability, and sells it to high net worth individuals, their asset management companies, real estate and non-real estatecompanies, and funds. In the real estate development business, the company purchases land for development, upon which it
constructs a building and sells to this customer base. The business offers end-to-end services from real estate planning anddevelopment through management and operation. It typically takes one-and-a-half to two years from revitalization anddevelopment to sales.

Properties with profitability issues
For low-margin properties, B-Lot improves rent levels and occupancy rates, repurposes properties, attracts tenants, andrefurbishes. Alternatively, the company may develop or review long-term repair plans to improve profitability.
In some cases, the company redevelops a property through major renovations or rebuilding. In such cases it first conducts
detailed market research, drafts an appropriate architectural blueprint, and manages the construction project.
Revitalization of properties with profitability issues
Before renovation

Renovated

Occupancy

Occupancy

12.8%

100.0%(At time of sale)<Revitalization of an office building into a compact hotel>
BeforeBeforeAfter (planned)

After (planned)

Source: Shared Research based on company materials

Properties with compliance issues
For properties with compliance issues, B-Lot conducts the necessary capex, coordinates to realign property rights and match
opinions between the relevant parties, or liaises with public authorities. In addition, B-Lot takes appropriate action regarding
issues such as owner-associated bad debts related to the property, or cases where property information must be kept
confidential.

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Revitalization of property with compliance issues
Jointly with investors acquire an existing apartment built in a popular area
but is only connected to a third party's land (not connected to a road,according to Building Standards Law). Revitalize the property to enable
reconstruction.

Targeted property
Adjacent property
Municipal road (Clause 2, Article 42)
Land required for reconstruction

Targeted
property

Development of condominium from land

BeforeAfter (planned)

Source: Shared Research based on company materials

The Real Estate Investment and Development segment accounts for around 85% of revenue (FY12/12–FY12/19 average) and thesegment profit margin in FY12/12–FY12/18 was at 10–21%. In recent years, revitalization and new development projects eachaccounted for about half of all projects (of the 28 items in inventory of real estate for sale at the start of FY12/20, 11 were land fordevelopment, with inventory of real estate for sale for the year at a slightly elevated level). The company sold 24 properties andacquired 28 in FY12/19. The acquired properties break down into 13 residential properties, four office/retail buildings, one landlot, seven land lots for development, three hotels, and no properties in the others category. The others category (previously
acquired) included two solar power generation facilities and one logistics facility, which were firsts for the company. The
inventories are diversified regionally and by type of property. Many of the company’s customers own several buildings,
particularly in Tokyo. Some are repeat customers who also aim to diversify their portfolios by owning properties in Hokkaido andFukuoka, and when prices go up in one area they sell and purchase somewhere else. A
According to B-Lot, high net worth individuals tend to prefer recently built properties, but there are not as many new properties,
so it focuses on developing new buildings on its own. Currently, properties under development are mainly hotels favored byoverseas investors (dormitory-type accommodation) and budget hotels (without banquet halls or restaurants). The cycle fromdevelopment through sale depends on the size of a property, but on average is one-and-a-half to two years.
The company’s forte is selling real estate to businesses. It said that its network helps it collect useful information from otheroperators. B-Lot holds a weekly investment conference attended by all of its executive directors and nearly all salespeople. This
enables swift decision-making regarding investment projects. (For urgent projects decisions are sometimes made after
exchanging information via email as long as it is compliant board rules.)

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Projects with profitability or compliance issues that will require a long time until sale are typically taken to sales brokers once they
are ready for sale. However, B-Lot participates from the initial planning stages and helps resolve outstanding issues such as thoseregarding property rights. In some cases, the company’s planning comes first, such as when turning an office building into a
compact hotel (smaller than a business hotel, but larger than a capsule hotel). The company said that it can usually sell suchproperties for a high price, so it can afford to pay more to obtain them. In many cases, individual operators use the company’sorganization and brand power to develop projects. B-Lot said that recently, operating companies and individual operators are
increasingly bringing in projects.
Real Estate Investment and Development segment revenue and operating profit(JPYmn)Real Estate Investment and Development revenue
YoY% of consolidated revenue
No. of properties soldYoY
<By type of property>
Residential% % of total properties sold
Offices and stores% % of total properties soldLand for detached houses% % of total properties soldHotels% % of total properties soldOther
% % of total properties sold
<By region>
Kanto% % of total properties soldHokkaido% % of total properties soldKyushu% % of total properties soldKansai% % of total properties soldRevenue per property sold
YoY

Real Estate Investment and Development operating profit

YoY% of consolidated operating profit
Operating profit margin

FY12/12
ParentFY12/13
ParentFY12/14
ParentFY12/15Cons.

FY12/16Cons.

FY12/17Cons.

FY12/18Cons.

FY12/19
Cons.

1,069
79.9%
14
-

1,897
77.4%
85.0%
11
-21.4%

3,237
70.6%
87.3%
22
100.0%

6,137
89.6%
88.3%
13
-40.9%

9,977
62.6%
85.1%
16
23.1%

10,981
10.1%
83.7%
21
31.3%

17,208
56.7%
84.3%
26
23.8%

21,185
23.1%
83.6%
24
-7.7%

na
na
na
na
na
na
na
na
na
na

8
72.7%
3
27.3%
-

18
81.8%
4
18.2%
-

7
53.8%
4
30.8%
1
7.7%
1
7.7%
-

8
50.0%
5
31.3%
2
12.5%
1
6.3%
-

11
52.4%
5
23.8%
3
14.3%
2
9.5%
-

14
53.8%
7
26.9%
2
7.7%
3
11.5%
-

14
58.3%
5
20.8%
2
8.3%
2
8.3%
1
4.2%

na
na
na
na
na
na
na
na
76
120
61.8%
11.3%

9
81.8%
2
18.2%
172
125.8%
311
157.9%
75.0%
16.4%

na
na
na
na
na
na
na
na
147
-14.7%
465
49.6%
73.5%
14.4%

8
61.5%
3
23.1%
1
7.7%
1
7.7%
472
220.9%
840
80.8%
71.1%
13.7%

9
56.3%
4
25.0%
1
6.3%
2
12.5%
624
32.1%
989
17.8%
55.2%
9.9%

15
71.4%
3
14.3%
3
14.3%
523
-16.1%
2,316
134.1%
73.1%
21.1%

11
42.3%
9
34.6%
5
19.2%
1
3.8%
662
26.6%
3,040
31.2%
72.0%
17.7%

15
62.5%
2
8.3%
3
12.5%
4
16.7%
883
33.4%
3,897
28.2%
75.6%
18.4%

Source: Shared Research based on company materials
Note: Figures may differ from company materials due to differences in rounding methods.

Real Estate Investment and Development segment purchases(JPYmn)Number of properties acquired
YoY<By type of property>
Residential% of total properties acquired
Offices and stores% of total properties acquired
Land for development% of total properties acquired
Other% of total properties acquired<By region>
Kanto% of total properties acquired
Hokkaido% of total properties acquired
Kyushu% of total properties acquired
Kansai% of total properties acquired
Chubu% of total properties acquired

FY12/12
Parent11-

FY12/13
Parent20
81.8%

FY12/14
Parent18-10.0%

FY12/15
Cons.
19
5.6%

FY12/16
Cons.
23
21.1%

FY12/17
Cons.
22
-4.3%

FY12/18
Cons.
24
9.1%

FY12/19
Cons.
28
16.7%

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

9
47.4%
4
21.1%
4
21.1%
2
10.5%

8
34.8%
5
21.7%
10
43.5%
-

11
50.0%
4
18.2%
4
18.2%
3.0
13.6%

11
45.8%
5
20.8%
4
16.7%
4.0
16.7%

13
46.4%
4
14.3%
7
25.0%
4.0
14.3%

na
na
na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na
na
na

11
57.9%
5
26.3%
1
5.3%
2
10.5%
-

13
56.5%
1
4.3%
6
26.1%
3
13.0%
-

8
36.4%
7
31.8%
4
18.2%
3
13.6%
-

13
54.2%
2
8.3%
5
20.8%
4
16.7%
-

17
60.7%
2
7.1%
4
14.3%
2
7.1%
3
10.7%

Source: Shared Research based on company materials

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Real Estate Investment and Development segment inventory of real estate for sale
(JPYmn)Inventories for sale (year-end)
YoY
Number of properties
YoY<By use>Land (including land for development)
YoY% of total number of properties in inventory
Offices and stores
YoY% of total number of properties in inventory
Residential
YoY% of total number of properties in inventory
Hotel, accomodation related
YoY% of total number of properties in inventory
Nursing care facilities
YoY% of total number of properties in inventory
Nursing care facilities
YoY% of total number of properties in inventory
Value of inventories per property
YoY

FY12/12
Parent577
na-

FY12/13
Parent1,691
193.1%
16-

FY12/14
Parent3,403
101.3%
12-25.0%

FY12/15
Cons.
6,070
78.3%
18
50.0%

FY12/16
Cons.
11,393
87.7%
25
38.9%

FY12/17Cons.
11,358
-0.3%
27
8.0%

FY12/18Cons.
14,500
27.7%
25
-7.4%

FY12/19Cons.
19,903
37.3%
28
12.0%

na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
-

na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
106
-

3
25.0%
2
16.7%
6
50.0%
1
8.3%
284
168.4%

6
100.0%
33.3%
2
0.0%
11.1%
8
33.3%
44.4%
1
0.0%
5.6%
1
5.6%
337
18.9%

12
100.0%
48.0%
3
50.0%
12.0%
8
0.0%
32.0%
1
0.0%
4.0%
1
0.0%
4.0%
456
35.1%

12
0.0%
44.4%
2
-33.3%
7.4%
9
12.5%
33.3%
3
200.0%
11.1%
1
0.0%
3.7%
421
-7.7%

9
-25.0%
36.0%
2
0.0%
8.0%
7
-22.2%
28.0%
3
0.0%
12.0%
1
0.0%
4.0%
3
12.0%
580
37.9%

11
22.2%
39.3%
1
-50.0%
3.6%
8
14.3%
28.6%
5
66.7%
17.9%
1
0.0%
3.6%
2
-33.3%
7.1%
711
22.6%

Source: Shared Research based on company materials
Note: Figures may differ from company materials due to differences in rounding methods.

Real Estate Consulting segment
In this segment, the company uses its Type II Financial Instruments Business registration to provide brokerage and consulting
services, such as trust beneficiary interest brokerage, property sale brokerage, rental property brokerage, proposals for property
exchanges and effective land use, and rent revision services. B-Lot says it is able to obtain accurate information regarding
properties for sale to swiftly evaluate properties and provide consultant-style brokerage services that meet the needs of thoseselling or buying real estate. According to the company, brokerage services (based on sales contracts) and consulting services areroughly half and half. Real estate sellers and buyers are high net worth individuals or their asset companies, real estate companies,
and real estate funds. The company said it had many repeat customers. This segment accounted for 7% of revenue (FY12/12–
FY12/19 average), and OPM was 24–40% (FY12/12– FY12/19). The segment’s composition of overall revenue had continued togrow, from 2.5% in FY12/15 to 7.4% in FY12/16 and to 9.9% in FY12/17, but contracted to 5.7% in FY12/19.
The number of brokerage deals has been increasing, including purchases of investment real estate by high net worth individuals
or their AM companies, and properties sold in collaboration with specialists that have close ties with B-Lot accompanying thedisposal of bad debts. For high net worth individuals, the company obtains information from buyers, sellers, and its own network,and brokers real estate valued at several hundred million yen or more, to provide stable long-term revenue streams to investors in
the Tokyo and Osaka regions.
The database on real estate for sale accumulated in this segment is used in the Investment and Development segment for
creating procurement networks and in sales and marketing activities.

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Real Estate Consulting segment revenue and operating profit(JPYmn)Real Estate Consulting revenue
YoY% of consolidated revenue
No. of brokerage deals
YoY<By region>
Kanto% % of total brokerage deals
Hokkaido% % of total brokerage deals
Kyushu% % of total brokerage deals
Kansai% % of total brokerage deals
Real Estate Consulting operating profit
YoY% of consolidated operating profit
Operating profit margin

FY12/12
Parent
192
14.4%
25
-

FY12/13
Parent146-24.1%
6.5%
28
12.0%

FY12/14
Parent
197
35.1%
5.3%
20
-28.6%

FY12/15Cons.
171-13.1%
2.5%
29
45.0%

FY12/16Cons.
862
403.2%
7.4%
31
6.9%

FY12/17
Cons.
1,305
51.4%
9.9%
29
-6.5%

FY12/18
Cons.
1,190
-8.8%
5.8%
27
-6.9%

FY12/19
Cons.
1,453
22.1%
5.7%
27
0.0%

na
na
na
na
na
na
na
na
71
36.5%
37.0%

19
67.9%
7
25.0%
2
7.1%
58
-18.9%
13.9%
39.5%

7
35.0%
8
40.0%
3
15.0%
2
10.0%
79
36.8%
12.5%
40.0%

15
51.7%
8
27.6%
4
13.8%
2
6.9%
58
-26.5%
4.9%
33.8%

19
61.3%
7
22.6%
4
12.9%
1
3.2%
346
496.9%
19.3%
40.1%

18
62.1%
5
17.2%
2
6.9%
4
13.8%
408
17.9%
12.9%
31.3%

12
44.4%
5
18.5%
4
14.8%
6
22.2%
283
-30.7%
6.7%
23.8%

12
63.2%
5
26.3%
4
21.1%
6
31.6%
578
104.3%
11.2%
39.8%

Source: Shared Research based on company materials
Note: Figures may differ from company materials due to differences in rounding methods.

Real Estate Management segment
In this segment, the company provides operation and management services for properties owned by its customers, as well as
investment advisory services, the main business of subsidiary B-Lot Asset Management. As the property manager for both its
customers’ and its own properties, B-Lot aims to maximize cash flows from the properties and improve asset value. At the sametime, the company provides value-added services to tenants.

▷

The company manages 82 buildings. In FY12/19, the segment accounted for 10.6% of revenue and OPM was 25.2%.

When customers invest in property via real estate funds, B-Lot provides asset management support. It gains an understanding ofinvestors’ asset management needs and develops an investment strategy to meet these needs. It assists in the choice ofinvestment properties, management/operating strategy during the investment period, and all other processes until the asset is
sold.

Real estate securitization
The company also securitizes medium-sized properties that are typically hard to securitize. B-Lot provides customers benefits
from securitization such as fundraising without relying on loans and off-balance-sheet property financing, which improves its
financial health. It also provides a variety of support in line with its customers’ business strategies.

Asset management
B-Lot provides comprehensive real estate management services to Japanese and overseas institutional investors. The company
puts together funds that meet investors’ diverse needs (where investors can invest in property). As an asset manager, thecompany uses its experience to broker business properties for sale and rent, appraise and manage properties, as well as its
specialized knowledge in asset finance and network to provide asset management services. The company purchases properties
on behalf of investors and generates gains over periods of three to five years, as well as capital gains when the property is sold.

Property management
The company maximizes cash flow and enhances asset value on behalf of the condominium or building owner, while providing
value-added services to tenants.

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Number of buildings under management
82

80

Kanto

Hokkaido

KansaiKyushu

59

60
50
40

20
10
0

0
12/08

1
1
12/09

1
1
12/10

3
13

12/11

12/12

15

3
14

2
8

27

23

23

26

28

12/17

12/18

18

16

12

9

2
11

10

9

8

16

13

48
1
9

43

36

31

30

5

68

70

14

15

17

20

12/13

12/14

12/15

12/16

35

12/19

Source: Shared Research based on company materials
Note: Only includes buildings that the company manages

Leasing management
The company develops and implements leasing plans so that properties can reach full occupancy as quickly as possible. Whencustomers are considering real estate purchases, the company helps assess rents and create renovation plans.

Building maintenance and construction management
Prioritizing the protection of asset value, the company helps manage construction costs and choose building maintenancecompanies.

Accounts services
The company’s dedicated accounting team provides payment management services. If a tenant is in arrears B-Lot notifies thetenant. For problematic tenants, the company requests legal help from a specialist. In addition to payment management, thecompany provides bulk expense remittance services and makes monthly reporting easy to understand.

Real estate rental
B-Lot rents out real estate through long-term ownership of income-generating properties. The company owns the following
properties that it rents out:▷

Keiun Building (Chiyoda, Tokyo): land, 142.04sqm, building 429.8sqm, built in 1987▷

Two condo hotel blocks, Okinawa▷

Bay East (rental condominiums, Yokohama): land, 1,110.37sqm, building 4,144.25sqm, built in February 1992

Real Estate Management segment revenue and operating profit(JPYmn)Real Estate Management revenue
YoY% of consolidated revenue
No. of properties managed
YoY<By region>
Kanto% % of total properties managed
Hokkaido% % of total properties managed
Kyushu% % of total properties managed
Kansai, other% % of total properties managed
Real Estate Management operating profit
YoY% of consolidated operating profit
Operating profit margin

FY12/12
Parent
77
5.7%
20
-

FY12/13
Parent188
144.9%
8.4%
31
55.0%

FY12/14
Parent
275
46.5%
7.4%
36
16.1%

FY12/15Cons.
642133.2%
9.2%
40
11.1%

FY12/16
Cons.
882
37.3%
7.5%
48
20.0%

FY12/17
Cons.
839
-4.9%
6.4%
59
22.9%

FY12/18Cons.
2,022
141.0%
9.9%
68
15.3%

FY12/19
Cons.
2,696
33.3%
10.6%
68
0.0%

na
na
na
na
na
na
na
na
3
1.7%
4.2%

14
45.2%
9
29.0%
8
25.8%
46
1319.8%
11.0%
24.3%

15
41.7%
12
33.3%
9
25.0%
89
94.0%
14.0%
32.2%

17
42.5%
14
35.0%
9
22.5%
284
219.9%
24.0%
44.2%

20
41.7%
18
37.5%
9
18.8%
1
2.1%
458
61.6%
25.6%
52.0%

26
44.1%
23
39.0%
8
13.6%
2
3.4%
443
-3.3%
14.0%
52.8%

28
41.2%
23
33.8%
14
20.6%
3
4.4%
902
103.5%
21.3%
44.6%

28
41.2%
23
33.8%
14
20.6%
3
4.4%
679
-24.7%
13.2%
25.2%

Source: Shared Research based on company materials
Note: Figures may differ from company materials due to differences in rounding methods.

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Group companies
The group consists of B-Lot, B-Lot Singapore Pte. Ltd., B-Lot Asset Management Co., Ltd., Life Stage Co., Ltd., Viento Creation Co.,
Ltd., T&K Co., Ltd., and B-Lot Capital Link Co., Ltd.

B-Lot Singapore
B-Lot Singapore was established to offer asset management to Asian investors. To facilitate foreign investment in Japan, thecompany uses B-Lot’s unique consulting capabilities to collect real estate information and offer one-stop services coveringpurchasing, management, and sales. This enables the company to provide the precise asset management demanded by Asianinvestors.
B-Lot Singapore business model
B-Lot Singapore Pte. Ltd.

B-Lot groupServices by Singaporean subsidiary★ Coordinate investments in real estate in Japan- Provide guidance on the Japanese market- Propose fundraising methods- Enable prompt negotiation- Provide follow-up

7 hours 40 min
from Japan to Singapore

6 hours and 50 min
from Singapore to Japan

Services by offices in Japan★ Support management- Search real estate information that matches investment needs- Accompany property inspection and support communication in English- Provide leasing and property management services- Refer clients to partners such as professionals★ Asset management (B-Lot Asset Management)- Support originating funds

Source: Shared Research based on company materials

B-Lot Asset Management
B-Lot Asset Management provides comprehensive real estate investment services such as fund management, to institutional
investors in Japan and overseas. The company puts together funds that meet the diverse needs of investors (schemes to invest inreal estate). As an asset manager, the company uses its experience to broker business properties for sale and rent, appraise andmanage properties, as well as its specialized knowledge in asset finance and network to provide asset management services.
B-Lot Asset Management business model

Property acquisition- Examine properties to manage- Negotiate with property owner andmake purchase (property sourcing)- Due diligence- Arrange management structure- Solicit equity investment- Procure loans (debt)- Estimate property valuation- Prepare necessary documents

Management (3-5 years)- Execute asset management strategy- Improve property value(raise rents and occupancy, renovate property)- Supervise property manager andbuilding management company- Manage property portfolio
plan and manage funding- Close the book and distribute dividends- Report management results to investors

Property disposal- Plan exit strategy(property sale, refinancing)- Estimate property valuation- Negotiate with property owner- Prepare necessary documents- Final settlement of fundincluding loan repayment

Source: Shared Research based on company materials

Life Stage
Large developers outsource to this subsidiary marketing of newly built condominiums to people with families. Life Stage has aunique business model that leverages customer feedback into product and sales planning. The purchase of Life Stage enabled
B-Lot to fulfill its ambition to enter the Kansai region and extend the overall group’s business territories through synergies with its
existing businesses.

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Life Stage business model
Market research① Upon request from developer, conduct market
research on development target location

Proposal of productand sales plans② Analyze data; make sales plan and proposal

Contract outsourced
sales
Sales activities

Brokerage③ Employees at showroom promote sales④ Broker sales of condominium
based on home relocation needs

Contract and transfer
Submit report on sales
results
Negotiate for next
project⓹ Complete sales activity and report results to developer⓺ Possible high contract ratio enables
contracting sales in the next project

Source: Shared Research based on company materials

Viento Creation
This company owns and operates capsule hotels. On January 31, 2017, B-Lot purchased Viento Creation and made it a subsidiary.
The aim was to acquire the capsule hotels within a three-minute walk of major stations on the Yamanote Line (one is in Ebisu,
Shibuya Ward and one is in Higashi-Gotanda, Shinagawa Ward) and obtain personnel with experience working in the hotelindustry. The company recently reopened two capsule hotels on which it completed major renovations. Of these two, B-Lot soldoff the hotel located in Ebisu, Shibuya.

T&K
Acquired and made a subsidiary in April 2018. This group company provides a wide variety of services based on its extensive
experience in golf-related pursuits and wide-ranging knowledge including the operation of golf courses under contract, design
and renovation planning, and golf tournament proposals. The Tokyo Metropolitan Government has commissioned the company
to manage the Wakasu Golf Links facility.

B-Lot Capital Link
Established as a wholly owned subsidiary in May 2018 to carry out M&A and human resources businesses. Business succession
consulting and planning and M&A advisory are main areas.

Competition
Real estate spans a wide range of activities including revitalization (liquidation), development, rental, management, and fundconsulting. B-Lot provides a wide range of services in these areas. Its customers are high net worth individuals in Japan andoverseas, their management companies, real estate and non-real estate companies, and funds. The company specializes in highly
liquid small and medium-sized properties, which are quite common and many competitors handle properties of this size.
However, despite a few competitors in land acquisition, each company has particular services and property acquisition policies aswell as varying sources of exclusive real estate information (typically real estate brokers). B-Lot differentiates such as through therevitalization of compact hotels, and its overseas network via its Singapore subsidiary means that it can provide support foroverseas investment into Japan.
Using the creditworthiness and fundraising ability gained by listing on the TSE Mothers market in December 2014 and then on
the TSE First Section in February 2018, the company has been using higher levels of leverage than its competitors to accelerate

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growth (the net debt/equity ratio was 1.98 in FY12/19; average for its 23 competitors with similar revenue was 1.30). Over thefive years through FY12/19, revenue grew at a CAGR of 46.6% and operating profit expanded at a CAGR of 60.2%.
Comparison with main competitors
Ticker

3244
2337
4321
8923
8934
8940
3299
2975
3457
8914

Company
Samty
IchigoKenedix
Tosei
Sun Frontier Fudousan
Intellex
Mugen EstateStar Mica
HOUSEDO
Arealink

3452 B-Lot
3250
3475
3454
8929
3294
3277
3236
8925
8927
3241
3237
8918

A.D. Works
Good Com AssetFirst Brothers
Aoyama Zaisan Networks
e'grand
Sansei Landic
Properst
ArdeproMeiho EnterpriseWill
Intrance
Land

FY

RevenueOP(JPYmn)(JPYmn)

11/19
02/19
12/19
11/19
03/19
05/19
12/19
11/19
06/19
12/19

85,552
83,54070,32660,72753,291
36,981
36,97732,16431,54629,333

15,39526,27915,931
12,69013,305
1,672
3,157
3,627
3,156
3,030

12/19

25,131

03/19
10/19
11/19
12/19
03/19
12/19
05/19
07/19
07/19
12/19
03/19
02/19
Average

24,861
23,376
19,83819,061
18,18018,02018,002
15,953
10,638
6,260
2,752
2,244
31,511OPM

ROA

ROE Equity Net D/E

Main businesses

ratio

ratio

(% of revenue)

32.5%
30.9%
57.0%
36.0%
50.3%
29.0%
32.9%
24.3%
27.8%
49.5%

1.22
1.53
0.04
0.99
0.39
1.77
1.35
2.74
0.96
-0.02

3,986 15.9%

12.2% 34.4% 24.3%

1.98

2,116
1,755
3,462
1,603
904
1,860
1,378
-662
448
658
375
771
5,082

5.9% 6.0%
11.9% 16.9%
5.0% 14.3%
10.8% 31.1%
4.1% 7.4%
9.8% 12.3%
4.1% 23.0%-6.9% -67.5%
2.7% 3.3%
8.0% 16.0%
6.6% 1.9%
9.0% 8.7%
6.7% 9.5%

0.59
0.34
2.19
-0.44
1.03
0.36
4.30
6.28
1.12
1.37
-0.11
-0.02
1.30

Real estate (development and revitalization) (87), Rental (8)Value-added (revitalization) (93), Clean energy (4), Asset management (3)Real Estate Investment (73), Asset Management (15)
Revitalization (51), Development (24), Rental (10), Consulting (6), Management (8), Hotel (2)Renovation (85), Property management (5)Renovation and sale of pre-owned condominiums (77)
Buying and selling (revitalization) (92), Rental and other (8)Renovated condominium (90), Investment (7), Advisory services (3)House leaseback (44), Real estate buying and selling (29), Renovation (10)Property management (87), Property revitalization & liquidation (13)Real estate investment and development (83), Real estate consulting (6), Real estate
management (11)Income property sales (88), recurring-fee business (12)Sales to individuals (30), Sales to real estate companies (67), Property management (3)Investment banking (100)Property consulting (29), Real estate transaction (71)
Renovation of pre-owned houses (99)Real estate sales (90), Construction (10)Development of properties for rental (55), Renovation (42)
Revitalization of real estate (92), real estate rental revenue and other (8)Real estate sales (76), Leasing (21), Contracting (2)Property development and sales (44), Renovation (29), Real estate marketing (20)
Principal (development) investment (76), Solutions (17)Renewable energy-related investments (52), Real estate sales (39)(RP-based)

18.0%
31.5%
22.7%
20.9%
25.0%
4.5%
8.5%
11.3%
10.0%
10.3%
8.5%
7.5%
17.5%
8.4%
5.0%
10.3%
7.7%
-4.1%
4.2%
10.5%
13.6%
34.4%
13.1%

6.9% 14.7%
7.5% 16.3%
8.8% 11.2%
8.0% 15.3%
12.6% 16.8%
4.0% 8.0%
3.7% 7.6%
4.2% 11.4%
8.5% 19.2%
7.4% -10.0%

38.2%
46.2%
25.4%
40.6%
37.6%
51.3%
15.6%
11.0%
36.3%
32.3%
59.4%
83.7%
37.9%

Source: Shared Research based on company data

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Strengths and weaknesses
Strengths◤ Three founders’ different areas of expertise and networks, and resulting synergies: President Miyauchi’s forte is inreal estate finance, from his work in structured finance during his career in a bank and securities firm. Deputy President

Hasegawa’s expertise is in consulting for high net worth individuals and customer development, and Deputy President
Mochizuki is skilled in property revitalization (acquisitions and sales). The three founders previously worked together
managing a real estate company that listed on the TSE First Section. In addition to a high level of expertise and people skills,
the trust gained by the company listing on TSE Mothers in December 2014 has led to rapid growth in the number of
introductions to high net worth individuals from private bankers and from other wealthy individuals. There are many repeat
customers. Backed by six years of continued revenue and its track record in real estate revitalization, the company usedprivate placement bonds and commitment line syndicated loans to boost leverage above level of its peers to grow (the net
debt/equity ratio was 1.98 in FY12/19; average for 23 competitors with similar revenue was 1.30). Over the five years throughFY12/19, revenue grew at a CAGR of 46.6% and operating profit expanded at a CAGR of 60.2%.
◤ Boutique operation that leverages the flexibility of a small, talented team and balances specialization anddiversification: B-Lot focuses on small and medium-sized properties (valued between JPY100mn and JPY3bn; average sales
price per property was JPY883mn in FY12/19) that are larger companies don’t want to handle. The company leverages its
information network that spans large cities across Japan and Singapore and operates as a boutique firm with a small, talented
team (61 employees at the parent company). Real estate companies that focus on small and medium-sized properties tend toconcentrate on the Tokyo metropolitan region, where there are many properties. In contrast, B-Lot has not limited its
presence to Kanto, but has diversified across a wide area with offices in Hokkaido, Kyushu, Kansai, and Singapore. Of the 24
properties the Investment and Development segment sold in FY12/19, 15 (63%) were in Kanto, two (8%) in Hokkaido, three(13%) in Kyushu, and four (17%) in Kansai. Diversification enables B-Lot to mitigate the risk of regional price fluctuations andincreases opportunities. Also, the company handles various types of properties, including office buildings, condominiums,
and hotels. In recent years, the company further diversified into renovating compact hotels, seeing an opportunity to be an
early mover in capturing surging inbound tourist demand.

◤ President Makoto Miyauchi is son of Orix’s senior chairman: President Makoto Miyauchi is the son of prominent

business leader Yoshihiko Miyauchi, the senior chairman of Orix. The younger Miyauchi says he has received much training
and advice from his father, as well as personal connections. B-Lot does not have direct business with Yoshihiko Miyauchi orOrix, but the company’s president has followed in his father’s footsteps in terms of an entrepreneurial spirit.

Weaknesses◤ No experience of property price downturns since the company’s founding: B-Lot was established in October 2008, atthe start of the global financial crisis. Subsequently there has been a boom in the real estate market, so the company has notexperienced a property slump. The company’s leverage is high compared to competitors of a similar size (its net D/E ratio was
1.98 in FY12/19, versus an average of 1.30 for 23 competitors around the same time.) The company has not yet proved its
resilience to a market slump.
◤ Lack of experience in major projects: B-Lot focuses on transactions between JPY100mn and JPY3bn in its Real Estate

Investment and Development business. The average sale price of buildings sold in FY12/19 was just JPY883mn. The

company’s president, Makoto Miyauchi, was involved in arranging numerous large deals in his previous career at a bank andsecurities firm, but the company as a whole has no such experience. To grow over the long term, the company will need a
track record of large projects. That said, B-Lot seems to be making progress in increasing the scale of its transactions, having
successfully sold in bulk four properties to one customer in FY12/19 for about JPY8.0bn.
◤ Lack of retained earnings: B-Lot has a shareholders’ equity ratio of 24.3%, the third lowest compared to a similar sized peergroup of 23 companies, which have an average ratio of 37.9%. The company’s net D/E ratio, which is 1.5 times the average, isa reflection of the high valuation that banks place on the company’s real estate for sale, but the balance sheet is not strong.

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Market and value chain
Japanese real estate transactions
Market size
After peaking in fiscal 2014, the domestic real estate transaction value at listed Japanese firms declined in fiscal 2015 before
recovering in fiscal 2017. The value of real estate transactions in fiscal 2017 was JPY5.0tn (+21.1% YoY). However, the transaction
value in fiscal 2018 declined 27.4% YoY to JPY3.6tn, with the 2H FY2018 decline (-41.4% YoY) particularly sharp. In 1H FY2019(April–September), the real estate transaction value reached JPY1.7tn, with the YoY decline narrowing to 2.0%.
Against a backdrop of reduced property supply, soaring construction costs, and a labor shortage, real estate prices are rising*(and the cap rate** declining due to higher prices), entrenching property distribution in a cyclical structure within a real estate
sector that includes J-REITs, real estate companies, and overseas firms. Meanwhile, widening yield spreads*** accompanying
declining interest rates saw the real estate funds market expand to JPY37.8tn (+10.5% YoY) in the first half of 2019. In addition to
growth in J-REIT, private placement funds specializing in Japanese real estate are also growing. Banks have tightened lending tosalaried worker investors who acquired real estate in the JPY100–200mn price range mainly financed by bank loans after
revelations of improper lending by Suruga Bank, but real estate lending by banks as a whole has continued to expand.
*Rising property prices: Prices of newly built condominiums in the Tokyo metropolitan area rose from JPY58.9mn/unit in 2018 to JPY60.0mn (+1.9%) in2019 (January–November) (source: Real Estate Economic Institute). Prices for pre-owned condominiums rose 1.2% YoY from JPY36.4mn/70sqm in 2018
to JPY36.8mn/70sqm in 2019 (January–October) (source: Tokyo Kantei).
**Cap rate: Short for capitalization rate. Yield used when determining property prices from net earnings generated by a property. Net operating income÷ cap rate = property price.
***Yield spread: Gap between cap rate and 10-year government bond yield.

Real estate transactions by listed companies and number of transactions(JPYbn)1H transactions

7,000

1,340

5,000

859

846

0

4,123

4,349

2,628

2,408

2,233

2,390

1,859
1,731

1,818

677

810

FY03

FY04

1,890
FY05

1,959
FY06

1,665

802

2,240

1,112

1,057
FY07

FY08

2,646

2,659
2,055
1,198

1,723

1,200

1,115
4,976

1,000

862

4,108

4,090

673

513

502

1,124
1,014

4,600

810
676

1,400

1,259
5,289

3,208

2,000
1,000

1,241

5,448

4,000
3,000

Number of transactions (right axis)

1,199

1,155

6,000

2H transactions

800

3,610

3,140

3,155

2,000

2,557

600

1,850

400

1,811

983

553

857

739

847

FY09

FY10

FY11

FY12

1,954

2,149

2,090

FY13

FY14

FY15

1,551

1,821

1,760

1,724

FY16

FY17

FY18

FY19

200
0

Source: Shared Research based on Urban Research Institute Corporation, Real Estate Topics

Construction cost per sqm by type of structure(JPY'000/sqm)

Steel fiber reinforced concrete

400

Steel

Reinforced concrete

318

308

300

265
229

200

183

186
136

100

2007

219

206

154

238

226
206

169

158

163

276

258
223
194

159

158

254

240

204

204

197

176

164

294

262
228

197

Wooden

265

263

214

214

280
229

156

157

157

157

158

160

163

165

166

167

168

170

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
Jan–Sep

Source: Shared Research based on MLIT data

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New and pre-owned condominium in Tokyo metropolitan, sold and contracted
Pre-owned condos (units contracted)
Price of pre-owned condos (per 70sqm; right axis)

New subdivided condos (units sold)Price of new condos (per unit; right axis)
120,000
110,000
100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,0000(JPYmn)70
27,09028,03948.72

29,37847.92

28,49828,744

29.00

31.28

74,46361,02143,733

2006

2007

2008

25.06

24.80

25.20

85,42984,148

2004

2005

45.10
31,18346.85
30,347

45.79

45.28

28,871

31,39736,432

54.70

59.31

59.80

58.86

28.63

27.91

36,37644,53544,49945,60256,47628.51
44,913

2009

2010

2011

2012

2013

2014

60
50

33,798

29.79

65
55

50.45

29.65

28.24

55.54

34,77637,32937,217

34.76

35.77

36.38

40,44935,77235,89837,132

31,238

2015

2016

2017

2018

2019

37,189

37.09

45
40
35
30

30.70

25
20

Source: Shared Research based on information from Tokyo Kantei, Real Estate Information Network for East Japan, and Real Estate Economic Institute*The value of newly build condominiums (annual average) is calculated as a simple average form monthly data

Real estate fund market
Private placement fund specialized in Japan

J-REIT(JPYtn)Private placement fund (global; assets under management in Japan)

40
35
30
25
20
15
10
5
0

21.1
16.3

6.1

25.0

25.2

24.5

24.6

25.4

25.2

25.9

3.4

4.0

3.7

3.1

1.9

2.9

2.5

2.8

4.3

3.5
6.7

24.5

10.0
6.8

13.7

7.4

13.6

7.4

14.0

7.5

13.8

7.6

14.9

7.8

14.7

7.8

14.7

8.0

14.8

8.3

26.8

26.5

2.3

2.2

15.8

8.7

15.3

9.0

27.1
1.7

27.3
1.2

27.4
1.1

27.7

28.6

28.8

1.6

1.7

1.7

15.0

14.9

14.4

13.4

10.4

11.2

11.9

12.6

13.5

13.1

13.5

14.0

30.3

31.1

32.0

32.5

1.4

1.5

2.0

13.8

14.2

14.3

14.0

14.8

15.5

16.2

16.5

1.7

34.2
2.2

35.6
2.6

14.7

15.1

17.3

17.9

37.8
2.4

16.8

18.6

6/07 12/07 6/08 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12 12/12 6/13 12/13 6/14 12/14 6/15 12/15 6/16 12/16 6/17 12/17 6/18 12/18 6/19

Source: Shared Research based on Sumitomo Mitsui Trust Research Institute data

Interest rates (%)
Housing loans (Flat 35; over 21-year; fixed-rate)（%）

Bank loans

10-year JGB

3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
Oct-03Oct-04

Oct-05

Oct-06

Oct-07

Oct-08

Oct-09Oct-10

Oct-11

Oct-12Oct-13Oct-14Oct-15Oct-16Oct-17Oct-18Oct-19Source: Shared Research based on Japan Housing Finance Agency, Bank of Japan, and Ministry of Finance data

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Expected yields on one-room investment condominiums in Tokyo
Condominiums (Jonan area, Tokyo; for families)

Offices (A-class in Marunouchi and Otemachi areas, Tokyo)

7%
6.0% 6.0%

6%5.8% 5.7%

5.3%

5.6% 5.5% 5.5%

5.4% 5.3%

5.1% 5.0%

4.7% 4.8%

5%4%4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2%
3.5% 3.5%

3%

3.8%

4.0% 4.0%

4.8% 4.7%

3.8% 3.7%

4.5% 4.5% 4.4%

3.5% 3.5% 3.4%

4.3% 4.2%

3.3% 3.2% 3.2%

4.1% 4.1% 4.1% 4.0%

3.0% 3.0% 3.0% 3.0%

2%

Source: Shared Research based on Japan Real Estate Institute data
Note: Within 10 minutes’ walk of nearest station, built within past five years, average exclusive-use floor space per 25–30sqm, one-room condos with a total of around 50
units
Note: Jonan refers to an area in southern Tokyo, and Joto refers to an area in eastern Tokyo.

J-REIT transactions(JPYbn)Transaction value

3,000

543

2,500

Number of transactions (right axis)

425

394

2,000
1,500

217

500
0

2003

161
1,506.4

1,342.2

84
562.3

208

2,184.4

1,000

1,007.9

809.4

57
246.6

2004

2005

2006

600

506

503

2007

2008

2009

202

804.2

2011

2012

2010

400
300

247

1,595.8 1,597.1

710.8

391

367

2,286.5

83
529.7

500

434

2013

2014

2015

1,769.2

1,339.4

2016

2017

200

1,778.0

100
0

2018

Source: Shared Research based on ARES data

Bank loans outstanding to property sector(JPYtn)Outstanding loans for the real estate industry

Outstanding loans for the real estate industry, % of total loans (right axis)

120

17%

100
80

15.4%
14.8%
14.3%

14.4%

14.3%

14.2%

60
40

15.7%

15.9%

76.8

76.0

76.1

77.1

14.0%

78.2

14.0%

80.1

15%

14.3%

84.2

89.8

95.1

99.8

102.0

14%
13%

20
0

16%

12%
2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
Sep

11%

Source: Shared Research based on Bank of Japan, loans by sector
Note: Outstanding loans are total for domestic banks (three accounts total), Shinkin banks, and other financial institutions

Office building rents
According to the Office Rent Index jointly published by Sanko Estate and NLI Research Institute, the average rent for a Class B*
building in central Tokyo in Q3 2019 (July–September) was around JPY6,976/sqm (+7.8% YoY, +2.0% QoQ). Rents have been
climbing since bottoming out in Q3 2012 (July–September). The vacancy rate for Class B buildings in central Tokyo was 0.7%
(dropping below 1%). The downtrend since Q2 2011 continues, against a backdrop of the end of large increases of newly
constructed office building supply.

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Class B office rent and vacancy rates in Tokyo(JPY/sqm)

Rent

9,000

(Vacancy)

Vacancy (right axis)

9.0%

8,000

8.0%

7,000

7.0%

6,000

6.0%

5,000

5.0%

4,000

4.0%

3,000

3.0%

2,000

2.0%

1,000

1.0%

0

0.0%

(JPY/sqm)

17Q1

17Q2

17Q3

17Q4

18Q1

18Q2

18Q3

18Q4

19Q1

19Q2

19Q3

Rent

5,972

5,861

6,299

5,997

6,063

6,271

6,470

6,482

6,447

6,839

6,976

Vacancy rate

2.0%

1.6%

1.4%

1.1%

1.0%

0.9%

0.8%

0.7%

0.6%

0.7%

0.7%

Source: Shared Research based on Sanko Estate Co. and NLI Research InstituteNote: rents are contracted rent and exclude Common Area Maintenance fee*Class B building: Buildings with a leased area of 660sqm or more that do not fall under the Class A category (Class A: total floor space of over
33,000sqm, leased area of 990sqm or more, no more than 15 years old), including buildings that have the appropriate floor space and leased area, but
exceed the maximum age of 15 years to be considered a class A building

Supply of large offices (10,000sqm or larger) in 23 wards of Tokyo(mn sqm)

Supply (mn sqm)

2.5

44

41 40

2.0

50
42

36
29 30

1.5

0.0

1.83
1.141.18
1.001.081.04
0.83

40

28
21

0.5

45
37

32

1.0

((bu

Supply (units; right axis)

46 47

15 14 16

19

28

26

1.21

29

35

1.54
1.19

0.77

30

26 26

25
21

19

2.16

1.25
0.91
0.72
0.36

1.19
0.99
0.92
0.74

31

32

1.75

1.17
0.860.85
0.65

16

19

22 21

25

21

19

20
1.72 12 11

1.41
1.090.97
0.99
0.87
0.69
0.58

9

15
10

0.570.50 1.32 5

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23

0

Source: Shared Research based on Mori Building Co., Ltd. “Survey of Large-Scale Office Building Supply in Tokyo’s 23 Wards 2018” data
Note: Data for 2018–2022 are forecasts.

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HotelsIn 2019, there were 31.9mn overseas tourist arrivals in Japan (+2.2% YoY). Although affected by a succession of natural disasters
which discouraged some tourists from visiting Japan, arrivals were up YoY by the end of 2019 to mark a record high. Hoteloccupancy rates have been on an uptrend since bottoming in 2011 as the number of overseas tourists to Japan has increased.
Number of international visitors to Japan (mn) and hotel occupancy rates (%)
Foreign travelers visiting Japan (mn)Occupancy (Osaka; right axis)

70

Occupancy (Tokyo right axis)

Occupancy (nationwide; right axis)
Occupancy (Aichi; right axis)

100%
95%

60
50

80.6%

40

10
0

84.2%
83.2%

78.6%
72.7%

30
20

80.0%

82.7%

70.9%
69.6%

65.0%
68.3%

60.1%
62.3%

74.1%

73.9%

67.7% 72.1%
67.0%
69.5%
67.3%

8.61

6.21

8.35

10.36

13.41

2010

2011

2012

2013

2014

90%

84.8%
84.5%
87.8% 83.3%
85.1%
85.2%
86.3%
80.7%
79.0%
78.7%
77.7%
76.6%
74.2%

19.73
2015

74.4%

24.04
2016

75.3%

75.5%

28.69

31.19

85%
80%
60.00
31.88

75%
70%
65%

40.00

60%
55%

2017

2018

2019

2020
Government
plan

2030
Government
plan

50%

Source: Shared Research based on Japan Tourism Agency’s Foreign Tourists in Japan Statistics, and Ministry of Land, Infrastructure, Transport and Tourism,
Accommodation Travel Survey

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Historical performance and financial statements
Historical financial statements
Cumulative Q3 FY12/20 results (out November 13, 2020)
Summary▷

In cumulative Q3 FY12/20, the company reported revenue of JPY8.9bn (-7.7% YoY), operating profit of JPY751mn (-45.5%
YoY), recurring profit of JPY189mn (-81.9% YoY), and net income attributable to owners of the parent of JPY79mn (-89.1%
YoY). The larger declines in recurring profit and net income compared to operating profit reflect increases in interest expenses(+JPY205mn YoY) and commission expenses, including arrangement fees for financial institutions associated with the

▷
▷
▷
▷
▷

▷

▷
▷

acquisition of trust beneficiary rights (+JPY73mn YoY).
In terms of the sale of properties in the Real Estate Investment and Development business in Q3, the company was successful inthe sale of various small and medium-sized properties and the number of properties sold significantly grew YoY.
In terms of purchases, the company followed a strict selection process, centering on rent-generating properties, with aparticular focus on residential properties.
The number of inventoried real estate properties for sale was 34 (compared with 37 at end-Q3 FY12/19).
As part of new initiatives, the company has been preparing for the forming of private REITs by B-Lot REIT Investment
Corporation (formerly Medical Asset Investment Corporation), which the company acquired in May 2020.
Progress versus plan: Cumulative Q3 FY12/20 revenue reached 29.8% of the full-year forecast (current as of November 13,
2020; cumulative Q3 FY12/19 revenue reached 38.5% of full-year FY12/19 results), operating profit 15.1% (34.6%), recurring
profit 4.5% (29.6%), and net income 2.8% (29.9%). The company is targeting large-property sales in 2H.
Revenue down 7.7% YoY: Revenue was down 4.5% YoY in Real Estate Investment and Development, down 15.5% YoY in Real
Estate Consulting (revenue from external transactions), and down 14.0% YoY in Real Estate Management (revenue fromexternal transactions).
Operating profit down 45.5% YoY: Operating profit was down 31.9% YoY in Real Estate Investment and Development, down
54.1% YoY in Real Estate Consulting, and up 7.0% YoY in Real Estate Management.
The company’s outlook on the external environment: In the real estate industry in which the company operates, investors
remain willing to invest as monetary easing measures contribute to an ongoing supply of funds although they have become
more selective about the properties they invest in as a result of the COVID-19 pandemic. Residential properties have hardly
been affected by the pandemic. Although there are concerns about the effect of teleworking on office/retail buildings, theimpact on occupancy rates and rent levels has been relatively minor. On the other hand, demand for hotels has deteriorated
significantly due to restrictions on the movement of people around the world. The impact of stimulus measures in Japan, such▷as the Go To Travel campaign, and a recovery in global demand remains to be seen.
The company made no changes to its FY12/20 earnings forecast.

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Quarterly revenue
Real Estate Consulting

Real Estate Investment and Development(JPYmn)Real Estate Management
15,461

16,00013,45414,00012,00010,000
8,000

6,835
5,654

6,000

12,480

3,508

4,000

3,249
1,781

2,000

684

0

330

3,248

Q1

5,143

Q2

Q3

2,021
1,449

1,257

Q4

6,329
993

2,725

Q1

478

Q2

FY12/16

Q3

2,752

2,247

2,128

1,830

Q1

Q2

Q4

FY12/17

1,815

14,578

5,886

4,323
1,489

4,612

770

Q3

Q4

642

Q1

Q2

FY12/18

2,294

2,788

1,816

1,354

Q3

Q4

3,393

2,119

797

Q1

Q2

FY12/19Q3Q4

FY12/20

Source: Shared Research based on company data

Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)

2,479

2,500

500
0

1,716

16.8%
14.2%

12.8%
10.9%

367
428

9.3% 8.7% 9.0%

180
-2

109

288
304

187
64

326
277

155
144

507
505

7.9%
160
132

17.2%

18.4% 1,528

1,713

30
482

474

339

-11

100

254

204

90

Q1

-9.3%
Q2
Q3

110

93

1,011

4.4%

12.3%

2,811

2,407
460 3.0%

20%

16.9%

14.0%

-19
-142

-500
-1,000

30%

26.0%

25.1%

2,000
1,000

OPM (right axis)

2,608

27.4%

3,000

1,500

Real Estate Management

Real Estate Consulting

-8

-0.4%

6.1%

-64

10%

532
109

3.9%

256

547

0%

-9.6%
Q4

Q1

FY12/15

Q2

Q3

Q4

FY12/16

Q1

Q2

Q3

FY12/17

Q4

Q1

Q2

Q3

FY12/18

Q4

Q1

Q2

Q3

FY12/19

Q4

Q1

Q2

Q3

Q4

-10%

FY12/20

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷▷

Segment revenue was JPY6.3bn (-4.5% YoY), and segment profit was JPY739mn (-31.9% YoY).
The company sold 19 properties (eight in cumulative Q3 FY12/19), including 15 residential properties (five), two office/retailbuildings (one), two land lots (one), and no hotels (one). Sales of small and medium-sized properties have held up well andthe number of properties sold grew significantly YoY.
The company purchased 25 properties (21 in cumulative Q3 FY12/19), including 16 residential properties (nine), eight
office/retail buildings (three), one land lot (including land lot for development) (eight), and no hotels (one). By region, 12
were in Kanto (13), one in Hokkaido (one), three in Kyushu (three), six in Kansai (one), and three in Chubu (three). The
company continued with carefully selected purchases nationwide, with a focus on properties that generate rent income, such▷as residential properties.
The number of inventoried real estate properties for sale at end-Q3 FY12/10 was 34 (37 at end-Q3 FY12/19). While thenumber of properties outlined above does not include real estate for sale owned by consolidated subsidiaries, the company’s
inventory includes one office/retail building, two condominiums, one capsule hotel, and one land lot for development.

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY871mn (-15.5% YoY), and segment profit was JPY266mn(-54.1% YoY).

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The company mainly won projects in Kanto, completing 17 deals (14 in cumulative Q3 FY12/19). Of these 17 completed deals,▷

Segment revenue and profit declined YoY. The number of consulting services for overseas high net worth individuals by B-Lot

seven were in Kanto (10), one in Hokkaido (two), five in Kyushu (none), and four in Kansai (two).

Singapore Pte. Ltd. declined due the impact of the COVID-19 pandemic.

Real Estate Management segment▷▷▷

Segment revenue was JPY1.7bn (-14.0% YoY), and segment profit was JPY564mn (+7.0% YoY).
The number of client-owned properties under property management rose to 99 (80 at end-Q3 FY12/19). By region, thecompany was managing 43 properties in Kanto (37), 31 in Hokkaido (23), 20 in Kyushu (15), and five in Kansai (five).
Segment revenue fell but profit rose. Rental income from accommodation facilities declined and golf courses managed by T&K
were temporarily closed due to the impact of the COVID-19 pandemic. However, the number of properties undermanagement grew and rental income-generating real estate for sale increased.

1H FY12/20 results (out August 14, 2020)
Summary▷

In 1H FY12/20, the company reported revenue of JPY4.6bn (-37.6% YoY), operating profit of JPY219mn (-84.2% YoY), a
recurring loss of JPY175mn (recurring profit of JPY1.2bn in 1H FY12/19), and a net loss attributable to owners of the parent of
JPY186mn (net income of JPY854mn in 1H FY12/19). The company booked a recurring loss and a net loss attributable toowners of the parent due to a JPY98mn YoY increase in commissions paid, including arrangement fees for financial institutions
associated with the acquisition of trust beneficiary rights, as well as a JPY229mn YoY increase in non-operating expenses due tofactors such as a JPY121mn YoY rise in interest payments as a result of the company taking on additional interest-bearing debt.

▷

With rental income in mind, the company focused mainly on sales of small to medium-sized properties in the Real Estate▷

In terms of purchases, an area where inquiries are increasing, the company followed a strict selection process, centering on

▷

▷

▷

▷

▷

Investment and Development business in 1H FY12/20 (the company is targeting large-property sales in 2H).

rent-generating properties, with a focus in particular on residential and office building properties.
The number of inventoried real estate properties for sale and the value on inventoried properties both reached record highs in
1H, with the former rising by 14 from the end of FY12/19 to 42, and the latter increasing by JPY17.8bn from the same point to
JPY37.7bn.
As part of new initiatives, the company planned to expand the asset management business as a stable source of earnings in
May 2020, acquired all shares of LC Partners, Inc. (now B-Lot Asset Management Co., Ltd.), and has been preparing for theforming of private REITs and the management of private funds (details follow).
Progress versus plan: 1H FY12/20 revenue reached 15.3% of the full-year forecast (1H FY12/19 revenue reached 29.3% of
full-year FY12/19 results), operating profit 4.4% (34.8%), recurring profit N/A (34.4%), and net income attributable to ownersof the parent N/A (35.2%). The company is targeting large-property sales in 2H.
Revenue down 37.6% YoY: Revenue was down 44.5% YoY in Real Estate Investment and Development, down 2.6% YoY in Real
Estate Consulting (revenue from external transactions), and down 29.1% YoY in Real Estate Management (revenue fromexternal transactions).
Operating profit down 84.2% YoY: Operating profit was down 80.7% YoY in Real Estate Investment and Development, down
44.7% YoY in Real Estate Consulting, and down 31.3% YoY in Real Estate Management.

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The company’s outlook on the external environment: Conditions in the real estate industry in which the company operates
remain solid, as investors remain willing to invest thanks to funding costs remaining low as monetary easing measurescontribute to an ongoing supply of funds.
The company made no changes to its FY12/20 earnings forecast. As mentioned, while progress of 1H revenue and profit was
subdued, B-Lot plans to sell large properties in 2H. The company thinks that its core businesses will offset the negative impact
from the COVID-19 pandemic (details later), and aims to meet its full year targets. Moving ahead, it plans to cut fixed costs
after obtaining enough assets, focus on value-added and revitalization projects, and expand sources of stable future earnings
through REITs.

Quarterly revenue
Real Estate Investment and Development(JPYmn)Real Estate Management

Real Estate Consulting

15,461

16,00013,45414,00012,00010,000
8,000

6,835
5,654

6,000

12,480

3,508

4,000

3,249
1,781

2,000

684

0

330

3,248

Q1

5,143

1,449

1,257

Q2

Q3

Q4

6,329

2,021

993

2,725

Q1

478

Q2

FY12/16

Q3

Q4

2,752

2,247

2,128

1,830

Q1

Q2

FY12/17

1,815

14,578

5,886

1,489

4,612

770

Q3

Q4

642

Q1

Q2

FY12/18

2,294

2,788

1,816

1,354

2,119

797

Q3

Q4

Q1

Q2

FY12/19Q3Q4

FY12/20

Source: Shared Research based on company data

Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)Real Estate Consulting

2,479

2,500

500
0

1,716

16.8%
14.2%

12.8%

367
428

9.3% 8.7% 9.0%

10.9%
180
-2

109

288
304

187
64

326
277

155
144

507
505

7.9%
160
132

17.2%

18.4% 1,528

2,811

2,407
460 3.0%

1,713

30
482

474

339

-11

100

254

204

90

Q1

-9.3%
Q2
Q3

110

93

1,011

4.4%

20%

16.9%

14.0%

-19
-142

-500
-1,000

30%

26.0%

25.1%

2,000
1,000

OPM (right axis)

2,608

27.4%

3,000

1,500

Real Estate Management

-8

-0.4%

6.1%

-64

10%
109

3.9%

256

0%

-9.6%
Q4

Q1

FY12/15

Q2

Q3

Q4

FY12/16

Q1

Q2

Q3

FY12/17

Q4

Q1

Q2

Q3

FY12/18

Q4

Q1

Q2

Q3

FY12/19

Q4

Q1

Q2

Q3

-10%

Q4

FY12/20

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷

Segment revenue was JPY2.9bn (-44.5% YoY) and segment profit was JPY192mn (-80.7% YoY).
The company sold eight properties (four in 1H FY12/19): six residential properties (two), one office/retail building (one), one
land lot (none), and one hotel (none). With rental income in mind, the company focused mainly on sales of small to
medium-sized properties in the Real Estate Investment and Development business in 1H FY12/20 (the company is targeting▷large property sales in 2H).
The company purchased 21 properties (12 in 1H FY12/19): 13 residential properties (four), seven office/retail buildings (three),and one land lot (including land lot for development) (five). By region, 11 were in Kanto (eight), one in Hokkaido (none),49/73

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three in Kyushu (none), three in Kansai (one), and three in Chubu (three). Including an office/retail building in Suita, Osaka,
which (at over JPY10.0bn) is the largest acquisition since the company was established, the company moved aggressively topurchase carefully selected rent-generating properties, with a focus on residential and office building properties. The company
also opened its Nagoya branch in June 2020. It promoted the further expansion of its operating base by pushing into the
Chubu region. The balance of real estate for sale and real estate for sale in process was JPY37.7bn (an increase of JPY17.8bn▷▷

from end-FY12/19).
The lineup of properties for sale going forward includes office/retail buildings in Ebisu, Gakugeidaigaku, Ginza, and Ogikubo(all in Tokyo), and condominiums in Hiroo (Tokyo), Kamakura (Kanagawa), Sapporo (Hokkaido), and Kozu, Chuo-ku (Osaka).
The Nagoya branch has four projects underway. The company intends to step up its activities, primarily in condominiums.
While the number of properties outlined above does not include real estate for sale owned by Life Stage Co., Ltd. and Viento
Creation Co., Ltd., the company’s inventory includes six condominiums, one capsule hotel, and one land lot for development.

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY674mn (-2.6% YoY). Segment profit was JPY264mn (-44.7%▷

The company mainly brokered transactions and won consulting projects in the Kanto area, completing eight deals (11 in 1H

▷

YoY).

FY12/19). Of the eight completed deals, four were in Kanto (eight), one in Hokkaido (one), three in Kyushu (none), and nonein Kansai (two).
Sales and segment profit declined YoY. Despite strong contract sales of condominiums by Life Stage, the number of properties
under management by B-Lot Singapore Pte. Ltd. declined.

Real Estate Management segment▷▷▷

Segment revenue was JPY1.0bn (-29.1% YoY). Segment profit was JPY321mn (-31.3% YoY).
The number of client-owned properties under property management rose to 96 (77 in 1H FY12/19). By region, the company
was managing 41 properties in Kanto (35), 31 in Hokkaido (24), 19 in Kyushu (15), and five in Kansai (three).
Despite the steady increase in property management contracts, both segment revenue and profit fell YoY due to lower
revenue at T&K Co., Ltd., which was acquired in April 2018 and undertakes the management of golf courses, as a result of the
spread of the COVID-19.

Impact of the COVID-19 pandemic
Real Estate Investment and Development segment▷▷▷

In terms of purchases, B-Lot saw an increase in number of projects introduced during the pandemic. It is particularly receiving
an increasing number of leads on properties that are highly likely to be for sale. As a result, the company concentrated on
properties that generate rental income, and purchased a total of 21 properties.
Property sales are being affected by travel restrictions as foreign investors are unable to come to Japan. Transactions for large
properties and hotels have declined, but small and medium-sized property sales were unaffected, with a total of eight sold.
The company changed part of the business plans for properties under development, changing the use of accommodation
facilities and deferring the development schedule for nursing care facilities. The company said it had postponed the sale ofsome properties that generate rental income.

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Real Estate Consulting segment▷▷

B-Lot brokered no transactions with foreign investors due to travel restrictions, but closed eight deals in Japan.
Contract sales of condominiums by subsidiaries were affected by a large condominium developer closing the display unit for
about two months. However, the company expects little impact on full-year results because commissions are booked when
condos are delivered and visitor numbers have been on the rise since June 2020.

Real Estate Management segment▷

There was no impact on rental income from residential properties. Some office/retail tenants entered negotiations, with theamounts covered by appropriating security deposits. Several office tenants negotiated lower rents, but the company said theimpact was negligible. Due to temporary closures, management fee revenue from hotels is declining, so the company is▷considering withdrawing from deals that were commission-only.
Management fee revenue of golf courses declined as some golf courses suspended operations. The company took advantageof the local government loan system, and said that course visitor numbers are currently recovering.

New share issue and secondary offering cancelled, but projects steadily funded by cash on hand and bankloans▷

The company announced its new share issue and secondary offering plans on February 21, 2020, and subsequently announced
the cancelation of those plans on March 2, 2020, due to the COVID-19 pandemic. The funds to be raised had been intended
to be allocated to the acquisition of for-sale real estate, acquisition of a licensed investment management business via M&A,
and investment in the company’s new cloud funding business (for details, please refer to the “News and topics” section under▷▷the “Other information” chapter).
Although these equity financing plans were cancelled, the company used cash on hand and bank loans to implement theacquisition of for-sale real estate and the acquisition of a licensed investment management business via M&A over the period
through August 14, 2020. The specifics are as follows:
Acquisition of for-sale real estate: The company made carefully selected purchases, primarily residential and office properties
that generate rental revenue, including an office/retail building in Suita, Osaka, which (for over JPY10.0bn) was the largest
acquisition since its founding. The balance of real estate for sale and real estate for sale in process was a record JPY37.7bn (up▷▷

JPY17.8bn from end-FY12/19).
Licensed investment management business via M&A: The company acquired companies registered to carry out investment
management and entrustment-based agency services businesses. It plans to start managing a REIT by the end of 2020, with theaim of growing stable revenue and enhancing its ability to sell within the group (details follow).
New crowd funding business: On February 14, 2020, the company announced that it had signed a business allianceagreement with SBI Securities Co., Ltd. regarding collaboration in operations such as real estate crowdfunding (for details,
please refer to the “News and topics” section of the “Other information” chapter). The company said it would invest businessresources in order of priority.

End-1H balance of interest-bearing debt▷

The combined total of long- and short-term interest-bearing debt at end-1H was JPY41.6bn (+JPY18.3bn versus end-FY12/19).
Cash and deposits at end-1H totaled JPY6.4bn (-JPY747mn).

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When we interviewed the company, B-Lot said that the approximately 40 financial institutions it banks with nationwide havegrown more circumspect about increasing new transactions, but that they also tend to endorse its business model andcorporate culture, and continue to support financing projects and working capital for the company.

Company purchases largest property since establishment▷

In March 2020 (Q1), B-Lot acquired the trust beneficiary right for the largest for-sale real estate since its establishment: anoffice/retail building in Suita, Osaka (for over JPY10.0bn, floor space of 10,000 tsubo [33,316.53sqm]). The building is in agood location directly connected to Esaka Station, two stops from Shin-Osaka Station on the Midosuji Line of Osaka Metro.
While this is not a new building (completed in 1975), the company explained that the property was managed by a REIT over a▷long period, and maintenance is up-to-date.
The company made the purchase in anticipation of uprun in earnings. Specifically, many of the tenants moved in around theeconomic downturn in 2009–2010, and profitability of contracts with these tenants are low. B-Lot thinks that there is room forsignificant growth in revenue and profit through a number of initiatives. Further, it is a large building with plenty of sharedspace, and exploiting this could boost revenue. The company added it hoped to review costs by renegotiating rents withtenants who had moved in when the office market was slumping.

REITs: Moves to start managing by end of 2020▷

In late May 2020, B-Lot completed its acquisition of all of the shares in LC Partners, Inc. owned by GLOME Holdings, Inc. and allof the investment units in Medical Asset Investment Corporation owned by LC Partners, making them consolidated subsidiaries.
Following the purchase, the company executed an absorption-type merger between LC Partners and wholly owned
subsidiarity B-Lot Asset Management*. LC Partners was the surviving company and B-Lot Asset Management was absorbed.
Following the merger in July 2020, the name of the surviving company was changed to B-Lot Asset Management. It normallyrequires a great deal of funds and time to obtain a REIT license, but the company was able to achieve this through an
acquisition and intends to use it effectively moving forward.

*The company established B-Lot Asset Management in February 2015 as a wholly owned subsidiary. In the asset management business, B-Lot AssetManagement has managed numerous properties under its financial instrument (advisory and agency) business license. It has also considered obtaining
an investment management license. The aim was to also be able to put together and manage private placement funds and REITs to meet demand fromhigh net worth individuals and other investors.

▷

The company has begun preparations to start managing a private placement fund and put together a REIT by the end of 2020.
The aim of managing REITs is to add stability to growth, which has been a core strategy of the company since its listing in 2008
through its debut on the TSE First Section in 2018. Another strategy toward stability was the cancelled equity financing plans(new share issue and secondary offering announced on February 21, 2020, and cancellation announced on March 2, 2020).

▷▷

The company says it definitely wants a successful equity raising in the future.
REITs that the company manages are potential buyers for its properties, and after sale the company can continue to receive
management revenue. As assets under management increase, management fees also increase.
The company’s REIT investment strategy entails diversified investment in numerous areas, leveraging the group’s relationships
at its locations nationwide to extract group synergies. The key focus of its investments will be office buildings as locations forsustainable business activities, commercial facilities that are convenient and fulfil diverse consumer needs, and residences
essential for daily living. The company added that when the market recovers, it will consider developing accommodation▷

facilities and other properties, and it aims to own and manage socially significant assets in a stable, long-term manner.
In terms of growth strategy, B-Lot intends to mobilize all group resources to invest in a flexible and aggressive manner. The
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REITs show interest to purchase. The company said it adds value by resolving issues such as legal problems with buildings, andcoordinating issues such as rights of way related to land. The company aims at stable growth by investing in major cities and▷new areas of note, such as tourist regions.
B-Lot aims to start managing a REIT by the end of FY12/20, list it in 2023, and have JPY100.0bn in assets under management in
2025. Because REITs are basically long-term investments, the company intends to boost assets under management further to
JPY200.0bn and JPY300.0bn in the long term, growing management fees for subsidiaries. The company thinks REITs are an
extremely important weapon in its arsenal to achieve stability in the very long term.

Q1 FY12/20 results (out May 15, 2020)
Overview▷

In Q1 FY12/20, the company reported revenue of JPY1.8bn (-69.2% YoY), operating profit of JPY110mn (-92.8% YoY),
recurring loss of JPY115mn (recurring profit of JPY1.4bn in Q1 FY12/19), and net loss attributable to owners of the parent of
JPY135mn (net income of JPY1.0bn in Q1 FY12/19). The company’s objective is to attain its targets on a full-year basis, and incontrast to Q1 FY12/19 there were no large property sales. However, it acquired the trust beneficiary right for the largest realestate for sale since its establishment (an office/retail building in Suita, Osaka Prefecture; over JPY10.0bn). By running its
business according to plan, namely working to obtain carefully selected properties and navigate the market by gauging
forthcoming economic activity, the company’s balance of real estate for sale and real estate for sale in process came to
JPY36.7bn (+JPY16.8bn vs. previous fiscal year-end). The company posted a recurring loss and a net loss attributable to ownersof the parent as a result of non-operating expenses increasing by JPY136mn YoY due to higher arrangement fees for financial
institutions associated with the acquisition of the aforementioned trust beneficiary rights, and a JPY45mn YoY increase in▷interest payments due to expanded interest-bearing debt.
Results versus plan: Q1 FY12/20 revenue reached 6.1% of the full-year forecast (Q1 FY12/19 revenue reached 23.4% of
full-year FY12/19 results), operating profit 2.2% (38.3%), recurring profit N/A (40.8%), and net income attributable to ownersof the parent N/A (42.1%).

▷

Revenue down 69.2% YoY: Revenue was down 82.7% YoY in Real Estate Investment and Development, up 3.0% in Real Estate▷

Operating profit down 92.8% YoY: Real Estate Investment and Development saw an operating loss of JPY64mn (operating▷▷

Consulting (revenue from external transactions), and down 37.1% in Real Estate Management.

profit of JPY1.0bn in Q1 FY12/19), and operating profit was down 37.1% YoY in Real Estate Consulting, and down 49.4% inReal Estate Management.
The company made no changes to its FY12/20 earnings forecast.
External environment: In the real estate industry, to which the company belongs, the Bank of Japan and the central banks ofvarious other countries are implementing emergency monetary easing policies, meaning that there is a sufficient supply offunds. However, financial institutions and investors have taken a more cautious position, and the company believes that it isnecessary to monitor investment trends closely.

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Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
15,461

16,00013,45414,00012,00010,000
8,000

6,835

5,654

6,000

12,480

3,508

4,000
2,000

684

3,248

0

330
Q1

Q2

3,249
1,781

5,143

2,021
1,449

1,257
Q3

Q4

2,725

Q1

Q2

FY12/16

6,329
993
478
Q3

2,752

2,247

2,128

1,830

Q1

Q2

Q4

FY12/17

1,815
770
Q3

Q4

14,578

5,886

4,612

1,489

Q1

642
Q2

FY12/18

2,294

1,816

1,354
Q3

797
Q1

Q4

FY12/19

FY12/20

Source: Shared Research based on company data

Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)3,000

Real Estate Consulting

Real Estate Management

OPM (right axis)
2,608

27.4%

2,479

25.1%

30%

26.0%

2,500
1,716

2,000
14.2%

1,500
1,000
500

9.3%

155

187

0

64

8.7%

277

144

507
9.0%
505

7.9%
160
132

18.4%

17.2%

1,528

2,811

2,407
1,713

460
482

474

3.0%
30

4.4%
100

339

-11

204

6.1%

254

Q1

Q2

Q3

Q4

Q1

FY12/16

Q2

Q3

FY12/17

Q4

Q1

Q2

Q3

-19

FY12/18

Q4

Q1

10%

110

1,011
90

-500
-1,000

20%

16.9%

14.0%

-0.4%
93

-142
-9.6%

-8

Q2

Q3

-64

Q4

FY12/19

Q1

0%
-10%

FY12/20

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷▷

Segment revenue was JPY797mn (-82.7% YoY) and segment loss was JPY64mn (segment profit of JPY1.0bn in Q1 FY12/19).
The company sold two properties (three in Q1 FY12/19): one residential property (one), one office/retail building (one), andzero hotels (one). The company sold no large properties in Q1 FY12/20.
The company purchased 10 properties (five in Q1 FY12/19): four residential properties (two), five office/retail buildings (one),and one land lot (including land lot for development) (two). By region, five were in Kanto (four), two in Kyushu (none), one in
Kansai (one), and two in Chubu (none). The company carefully selected properties and actively made acquisitions, including
an office/retail building in Suita, Osaka, which is the largest acquisition since the company was established. The balance of real▷estate for sale and real estate for sale in process was JPY36.7bn (an increase of JPY16.8bn from end-FY12/19).
While the number of properties outlined above does not include real estate for sale owned by Life Stage Co., Ltd. and Viento
Creation Co., Ltd., the company’s inventory includes eight condominiums, one capsule hotel, and one land lot fordevelopment.

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY558mn (+3.0% YoY). Segment profit was JPY336mn (-37.1%
YoY).

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The company mainly brokered transactions and won consulting projects in the Kanto area, completing four deals (six in Q1▷

Segment profit declined YoY. Despite strong contract sales of condominiums by Life Stage, the number of properties under

FY12/19). Of the four completed deals, two were in Kanto (five), one in Hokkaido (one), and one in Kyushu (none).

management by B-Lot Singapore Pte. Ltd. declined.

Real Estate Management segment▷▷▷

Segment revenue was JPY461mn (-37.1% YoY). Segment profit was JPY142mn (-49.4% YoY).
The number of client-owned properties under property management rose to 96 (74 in Q1 FY12/19). By region, the company
was managing 41 properties in Kanto (32), 28 in Hokkaido (24), 22 in Kyushu (15), and five in Kansai (three).
Both sales and profit fell YoY due to reduced revenue at T&K Co., Ltd., which was acquired in April 2018 and undertakes the
management of golf courses, as a result of the spread of the novel coronavirus disease (COVID-19).

Impact of the COVID-19 pandemic▷▷

In Q1, COVID-19 impacted rent revenue accompanying the suspension of hotel operations as well as the temporary closure ofgolf courses at consolidated subsidiaries. When we interviewed the company, management said it is coordinating withtransaction partners and associated entities to contain the monetary value of the pandemic’s impact.
Looking ahead, the company said there are risks that could hinder the sale of properties, such as investors and financial
institutions exercising greater scrutiny, or eager overseas investors being unable to come to Japan. However, during ourinterviews with the company, management said it cannot gauge when the COVID-19 pandemic will end, that it cannot
rationally estimate the monetary value of the pandemic’s impact given the amount of time remaining until fiscal year-end, and▷that it is taking steps to attain its targets, including the sale of large properties.
Procurement, as mentioned above, is going smoothly. The company says that it basically procures only properties that haverent revenue. While other players in the industry are experiencing last-minute cancellations before contracts are signed, B-Lot
has seen an increase in properties brought in thanks to its systematic implementation of measures to build trust. However, atthe current time real estate prices have not fallen all that much, and in the company’s assessment there is little likelihood of any
major decline going forward. In terms of development, the company says there have been some delays due to difficulty inprocuring kitchen and bathroom materials or the suspension of operations at construction companies.

New share issue and secondary offering cancelled, but projects steadily funded by cash on hand and bankloans▷

The company announced its new share issue and secondary offering plans on February 21, 2020, and subsequently announced
the cancelation of those plans on March 2, 2020, due to the COVID-19 pandemic. The funds to be raised had been intended
to be allocated to the acquisition of for-sale real estate, acquisition of a licensed investment management business via M&A,
and investment in the company’s new cloud funding business (for details on the new share issue and secondary offering,please refer to the “News and topics” section of the “Other information” chapter, and for details on their cancellation, please▷▷refer to the “Recent updates” chapter).
Although these equity financing plans were cancelled, the company used cash on hand and bank loans to implement theacquisition of for-sale real estate and the acquisition of a licensed investment management business via M&A over the period
through May 27, 2020. The specifics are as follows:
Acquisition of for-sale real estate: The company carefully selected properties and actively made acquisitions, including an
office/retail building in Suita, Osaka (over JPY10bn), which is the largest acquisition since the company was established. The

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balance of real estate for sale and real estate for sale in process was JPY36.7bn (an increase of JPY16.8bn from end-FY12/19).
The Suita, Osaka, office/retail building, with total floor space of 10,000 tsubo (33,317sqm), offers good prospects for rent▷

revenue, and the company is also pushing through with plans to enhance the property’s value.
Licensed investment management business via M&A: On May 27, 2020, the company announced that it completed its
acquisition of shares in LC Partners, Inc. and investment units in Medical Asset Investment Corporation, converting these twoentities into consolidated subsidiaries (please refer to the “Recent Updates” and “Important subsequent events” below for
details). By acquiring a licensed financial instruments dealer (investment management business), the company aims togenerate further group synergies by forming and managing private funds or REITs and incorporating B-Lot’s merchandise▷(properties) into their asset portfolios. Starting with private funds, the company aims for AUM of JPY50bn within three years.
New crowd funding business: On February 14, 2020, the company announced that it had signed a business allianceagreement with SBI Securities Co., Ltd. regarding collaboration in operations such as real estate crowdfunding (for details,
please refer to the “News and topics” section of the “Other information” chapter. As the first step, B-Lot plans to set up
small-lot investment units for quality, stable income properties owned by the group, and form a real estate investment market
that offers a relatively safe vehicle for asset formation to high net worth individuals and investors in collaboration with SBI
Securities. The company plans to launch the business after obtaining a specified joint real estate venture business license.

End-Q1 balance of interest-bearing debt▷

The combined total of long- and short-term interest-bearing debt at end-Q1 was JPY44.1bn (+JPY20.8bn versus end-FY12/19).
The company says that it acknowledges that its low shareholders equity ratio is an issue, but with COVID-19 casting
uncertainty over the future, it intends to increase its borrowings, primarily long-term loans. Cash and deposits at end-Q1▷

totaled JPY10.1bn (+JPY2.9bn).
When we interviewed the company, B-Lot said that the approximately 40 financial institutions it banks with nationwide havegrown more circumspect about increasing new transactions, but that they also tend to endorse its business model andcorporate culture and have made no major changes in their stance toward financing projects and working capital for thecompany.

Important subsequent events
On April 30, 2020, the Board of Directors passed a resolution to acquire all outstanding shares in LC Partners, Inc., making it asubsidiary.

Purpose of the acquisition
By acquiring a licensed financial instruments dealer (investment management business), the company aims to generate further
group synergies by forming and managing private funds or REITs and incorporating B-Lot’s merchandise (properties) into theirasset portfolios.

Shares acquired from:
GLOME Holdings, Inc.

Name, business, and size of the company acquired▷

Company name: LC Partners, Inc.

▷

Paid in capital: JPY350mn▷

Business: Real estate fund formation and management

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Acquisition date
The acquisition was completed on May 27, 2020

Number of shares acquired, market cap, and equity stake following acquisition▷

Shares acquired: 1,200 shares▷

Acquisition price (estimated)

▷
▷
▷
▷

Equity stake following acquisition: 100%

Purchase price: JPY190mn
Advisory and other fees (estimate): JPY10mn
Total (estimate): JPY200mn

Financing of the acquisition▷

Cash on hand and bank loans

Full-year FY12/19 results (out February 14, 2020)▷▷▷

For full-year FY12/19, the company reported revenue of JPY25.1bn (+24.0% YoY), operating profit of JPY4.0bn (+20.5% YoY),
recurring profit of JPY3.5bn (+24.4% YoY), and net income attributable to owners of the parent of JPY2.4bn (+23.9% YoY).
Results versus plan: FY12/19 revenue reached 95.6% of the full-year forecast, operating profit 106.6%, recurring profit 104.5%,
and net income attributable to owners of the parent 103.0%. Profits exceeded target at all levels, although revenue fell slightly
short.
Revenue up 24.0% YoY: In the mainstay Real Estate Investment and Development segment, the company steadily sold off
residential properties, office and retail buildings, and hotels. Revenue performance was strong in all segments, increasing by
23.1% YoY in Real Estate Investment and Development, 20.4% in Real Estate Consulting (revenue from external transactions),▷▷

and 33.3% in Real Estate Management.
Operating profit up 20.5% YoY: Operating profit was up 28.2% in Investment and Development and 104.3% in Consulting,but down 24.7% in Management with the sale of a high occupancy building.
Dividends: Dividend forecast for FY12/19 is JPY60 per share (+JPY10 YoY).

Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
15,461

16,00013,45414,00012,00010,000
8,000
6,000
4,000
2,000
0

6,835

5,654
2,858
2,739
Q1

3,508

2,646
376
216
Q2

1,070
791
Q3

2,391
Q4

12,480684
330Q1

FY12/15

3,248
Q2

3,249
1,781

5,143

1,449

1,257
Q3

FY12/16

2,021

Q4

Q1

2,725
Q2

6,329
993
478
Q3

FY12/17

Q4

2,752

2,247

2,128

1,830

Q1

Q2

1,815
770
Q3

FY12/18

Q4

14,578

5,886

4,612

1,489

Q1

642
Q2

2,294
1,354
Q3

Q4

FY12/19

Source: Shared Research based on company data

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Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)3,000

Real Estate Consulting

1,000
500
0

1,716

16.8%

9.3%
10.9%

367

180
109

-2

288
304

187
64

326
277

8.7%
155
144

507

9.0%
7.9%
160

505

132

26.0%

18.4%

17.2%

460

1,713
30

482

474

3.0%
339

-11

4.4%

1,011
90

-19

-0.4%
93

-9.6%

-9.3%

Q2

Q3

0%

-8

-142

Q1

Q4

Q1

FY12/15Q2Q3

FY12/16

Q4

Q1

Q2

Q3

FY12/17

Q4

Q1

Q2

Q3

20%
10%

254

100
204

30%

2,811

2,407

-500
-1,000

16.9%

1,528

14.0%

14.2%

12.8%

428

2,479

25.1%

2,500
1,500

OPM (right axis)
2,608

27.4%

2,000

Real Estate Management

Q4

FY12/18

Q1

Q2

Q3

Q4

-10%

FY12/19

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷

Segment revenue was JPY21.2bn (+23.1% YoY) and segment profit was JPY3.9bn (+28.2% YoY).
The company sold 24 properties (26 in full-year FY12/18): 14 residential properties (14), five office/retail buildings (seven),
two land lots, including land for development (two), two hotels (three), and one other (none). By region, the company sold15 properties in Kanto (11 in FY12/18), two in Hokkaido (nine), three in Kyushu (five), and four in Kansai (one). As a result of
diversifying sales methods, the company succeeded in selling four properties in one transaction, which marked record

transaction value to contribute to earnings. As well, the company completed the commercialization of capsule hotel °C Ebisu▷

owned by Viento Creation Co., Ltd. (acquired in 2017) and sold it in FY12/19, which also contributed to earnings.

The aforementioned sales include the bulk sale of four properties (a hotel in Kyoto, a warehouse/office facility in Hirakata,
Osaka, a condominium/retail store/office facility in Shinagawa, Tokyo, and a condominium in Nakano, Tokyo) for about
JPY8.0bn, which was the largest single transaction recorded by the company to date. The company’s new strategy of selling▷

properties in bulk allowed it to successfully establish a new business relationship with a major corporation.
The company purchased 28 properties (24 in FY12/18): 13 residential properties (11), four office/retail buildings (five), one
land lot (one), seven land lots for development (four), three hotels (none), and none in the others category (three). By region,
17 were in Kanto (13), two in Hokkaido (two), four in Kyushu (five), two in Kansai (four), and three in Chubu (none). While
there is some sense of oversupply in hotels, the company appears focused on concept-based differentiation, including withresidential hotels, where the company’s slogan is “stay that feels like home,” as well as with the WISE OWL HOSTELS that caterto those looking for entertainment in the city (the company’s slogan for these locations is “playing to the fullest like a wise▷owl”).
While the number of properties outlined above does not include real estate for sale owned by Life Stage Co., Ltd. and Viento
Creation Co., Ltd., the company’s inventory includes eight condominiums and one capsule hotel.

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY1.3bn (+20.4% YoY). Segment profit came in at JPY578mn▷

The company mainly brokered transactions and won consulting projects in the Kanto area, completing 19 deals (27 in(+104.3% YoY).

FY12/18). Of the 19 completed deals, 14 were in Kanto (12), two in Hokkaido (five), none in Kyushu (four), and three in Kansai(six).

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An increase in booking of contract sales by Life Stage contributed to higher revenue and operating profit. The company madeefforts to expand earnings by initiating M&A brokerage deals at the request of clients in addition to brokerage deals ofinvestment real estate and consulting projects.

Real Estate Management segment▷▷▷

Segment revenue was JPY2.7bn (+33.3% YoY). Segment profit was JPY679mn (-24.7% YoY).
The number of client-owned properties under property management rose to 82 (68 in FY12/18). By region, the company was
managing 35 properties in Kanto (28), 27 in Hokkaido (23), 15 in Kyushu (14), and five in Kansai (three).
Revenue was up 33.3% YoY on an increase in the number of properties under management and the contribution of T&K Co.,
Ltd. (acquired in April 2018), but profit was down 24.7% YoY on the sale of a high occupancy building, which led to a decline
in rental revenue.

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Income statement
Income statement(JPYmn)
Revenue
YoY
Cost of revenue
Gross profit
YoY
Gross profit margin
SG&A expenses
SG&A ratio
Operating profit
YoY
Operating profit margin
Non-operating income
Non-operating expenses
Recurring profit
YoY
Recurring profit margin
Extraordinary gains (losses)
Extraordinary gains
Extraordinary losses
Income taxes
Implied tax rate
Net income attrib. to non-controlling interests

Net income
YoY
Net margin

FY12/10 FY12/11 FY12/12 FY12/13
ParentParentParentParent
457
494
1,338
2,231
-14.2%
8.2%
170.9%
66.7%
1,011
1,614
327
617
88.6%
24.4%
27.7%
242
399
18.1%
17.9%
85
218
157.0%
6.3%
9.8%
0
35
23
6
78
183
1,545.2%-74.6% 1,229.7%
133.4%
5.1%
1.2%
5.8%
8.2%
78
42.9%
15
4
42
104
702.6%-72.9%
944.6%
149.8%
3.2%
0.8%
3.1%
4.7%

FY12/14
Parent
3,709
66.3%
2,773
937
51.9%
25.3%
558
15.1%
378
73.8%
10.2%
3
86
295
61.7%
8.0%
118
40.1%
177
69.2%
4.8%

FY12/15
Cons.
6,951
87.4%
5,395
1,556
66.1%
22.4%
756
10.9%
800
111.5%
11.5%
7
151
655
122.1%
9.4%
255
38.9%
401
126.8%
5.8%

FY12/16Cons.
11,627
67.3%
9,006
2,621
68.4%
22.5%
1,446
12.4%
1,175
46.9%
10.1%
1
302
874
33.4%
7.5%
0
0
286
32.7%
588
46.9%
5.1%

FY12/17Cons.
13,097
12.6%
8,700
4,397
67.8%
33.6%
2,032
15.5%
2,366
101.3%
18.1%
1
368
1,999
128.6%
15.3%
-199
199
549
30.5%
1,251
112.6%
9.5%

FY12/18Cons.
20,26854.7%
14,471
5,797
31.8%
28.6%
2,490
12.3%
3,307
39.8%
16.3%
6
481
2,833
41.7%
14.0%
-7
7
857
30.3%
9
1,961
56.8%
9.7%

FY12/19
Cons.
25,13124.0%
18,150
6,981
20.4%
27.8%
2,995
11.9%
3,986
20.5%
15.9%
7
468
3,525
24.4%
14.0%
1,094
31.0%
2
2,429
23.9%
9.7%

FY12/20Est.
30,000
19.4%
-

4,979
24.9%
16.6%

4,186
18.7%
14.0%

2,843
17.1%
9.5%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Revenue and operating profit
The company’s revenue has been on a continuous uptrend other than a decline in FY10/12. Over the five years to FY12/19,
revenue grew at a CAGR of 46.6%. The key segment and growth driver is the Investment and Development business, while theManagement business is a recurring revenue business that has posted ongoing leaps in profit in line with the number ofmanagement contracts. Meanwhile, the Consulting business generally posts strong growth, but profit in a single fiscal year may
decline due to fluctuations in the number of completed brokerage deals. The company has posted operating profit growth every
year since FY12/12, the earliest fiscal year for which figures are available, through FY12/19. From FY12/13 through FY12/16, theoperating profit margin remained stable at 10–12%, but in FY12/17 it rose to 18.1%. OPM remained at the high levels of 16.3%
in FY12/18 and 15.9% in FY12/19.
Profitability and financial indicators
Profit margins(JPYmn)Gross profit
Gross profit margin
Operating profit
Operating profit margin
EBITDAEBITDA margin
Net margin
Financial ratios
ROA (RP-based)
ROE
Total asset turnover
Inventory turnoverDays in inventory
Working capital
Current ratio
Quick ratio
OCF / Current liabilities
Net debt / Equity
OCF / Total liabilities
Cash conversion cycle (days)
Change in working capital

FY12/12
Parent
327
24.4%
85
6.3%
85
6.3%
3.1%

FY12/13
Parent
617
27.7%
218
9.8%
237
10.6%
4.7%

FY12/14
Parent
937
25.3%
378
10.2%
391
10.5%
4.8%

FY12/15
Cons.
1,556
22.4%
800
11.5%
868
12.5%
5.8%

FY12/16
Cons.
2,621
22.5%
1,175
10.1%
1,254
10.8%
5.1%

FY12/17
Cons.
4,397
33.6%
2,366
18.1%
2,431
18.6%
9.5%

FY12/18
Cons.
5,797
28.6%
3,307
16.3%
3,372
16.6%
9.7%

FY12/19
Cons.
6,981
27.8%
3,986
15.9%
3,986
15.9%
9.7%

10.9%
23.6%
1.9
3.6
100.3
578
512.3%
192.4%-309.6%-162.8%-30.9%
100
578

9.9%
29.4%
1.2
3.4
107.9
1,691
228.6%
185.5%-144.8%271.5%-41.0%
108
1,114

7.6%
24.8%
0.9
1.7
211.0
3,407
162.5%
52.6%-88.1%
297.4%-42.0%
211
1,716

8.6%
23.5%
0.9
1.2
300.3
6,093
454.3%
116.0%-68.3%
197.3%-22.3%
301
2,685

6.6%
22.4%
0.9
1.1
332.2
11,502283.3%
73.2%-130.2%373.5%-32.1%
334
5,410

11.2%
36.6%
0.7
1.0
355.9
11,476183.4%
107.9%
35.9%
223.0%
16.8%
359
-26

13.1%
39.3%
0.9
2.0
180.3
14,596358.7%
221.5%-16.2%
172.1%
-6.7%
182
3,120

12.2%
34.4%
0.9
1.5
153.9
19,980269.4%
88.6%-47.3%
198.1%-16.0%
155
5,384

Source: Shared Research based on company data

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Historical performance versus initial company forecasts
Results vs. Initial Est.
(JPYmn)
Revenue
Initial Est.
Results
Results vs. Initial Est.
Operating profit
Initial Est.
Results
Results vs. Initial Est.
Recurring profit
Initial Est.
Results
Results vs. Initial Est.
Net income
Initial Est.
Results
Results vs. Initial Est.

FY12/12
Parent
1,338
85
78
42
-

FY12/13
Parent
2,231
218
183
104
-

FY12/14
Parent
3,709
378
295
177
-

FY12/15
Cons.
5,401
6,951
28.7%
509
800
57.2%
430
655
52.4%
250
401
60.2%

FY12/16Cons.
11,263
11,627
3.2%
974
1,175
20.6%
735
874
19.0%
482
588
22.1%

FY12/17Cons.
16,154
13,097-18.9%
1,492
2,366
58.6%
1,175
1,999
70.1%
781
1,251
60.1%

FY12/18Cons.
20,00020,268
1.3%
2,512
3,307
31.6%
2,057
2,833
37.7%
1,414
1,961
38.7%

FY12/19Cons.
26,30025,131
-4.4%
3,738
3,986
6.6%
3,360
3,525
4.9%
2,357
2,429
3.0%

Source: Shared Research based on company data

There are only five years of earnings forecasts available to compare company forecasts and actual results. Still, profit has each year
exceeded the company’s initial forecast. The company believes the most important KPI is net income attributable to owners of
the parent.

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Balance sheet
Balance sheet(JPYmn)ASSETSCash and deposits
Marketable securities
Accounts receivable
Real estate for sale
Real estate for sale in process
Advance payments
Prepaid expenses
Other
Total current assets
Land
Buildings
Other fixed assets
Total tangible fixed assets
Software
Goodwill
Other
Total intangible fixed assets
Investment securities
Deferred tax assets
Other
Investments and other assets
Total fixed assets
Deferred assets
Total assets

FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18 FY12/19
ParentParentParent
Cons.
Cons.
Cons.
Cons.
Cons.

LIABILITIESShort-term debt
Other
Total current liabilities
Long-term debt
Other
Total fixed liabilities
Total liabilities
Capital stock
Capital surplus
Retained earnings
Treasury stock
A ccumulated other comprehensiv e income

Share subscription rights
Non-controlling interests
Net assets
Working capital
Total interest-bearing debt
Net debt

320
1
21
556

567
0
1,292
399

1,009
4
596
2,807

2,107
23
6,070

2,467
110
1,070
10,323

4,855
175
118
4,716
6,643

6,064
412
96
6,847
7,653

7,154
6
77
2,587
17,316

4
19
921
60
60
157
2
159
0
20
21
239
1,160

8
36
2,303
52
4
56
157
1
158
0
25
25
240
2,543

14
585
5,014
47
4
51
157
0
157
1
45
45
254
5,268

144
8,343
167
644
10
822
659
0
659
1
150
151
1,632
9
9,985

136
14,105
177
642
13
832
659
144
10
813
1
834
835
2,479
41
16,626

255
16,761
164
418
13
596
659
156
10
825
104
794
897
2,318
31
19,110654
21,726
9
452
118
580
659
256
9
924
109
961
1,070
2,574
35
24,2692,742
29,882
9
1,018
31
1,058
659
218
38
916
142
1,535
1,677
3,650
24
33,556

62
118
180
681
39
721
900

737
270
1,007
1,050
36
1,086
2,093

2,749
337
3,086
1,167
37
1,205
4,291

1,296
540
1,836
5,607
110
5,717
7,553

4,289
690
4,979
8,708
120
8,828
13,806

8,017
1,121
9,138
5,777
186
5,963
15,101

4,456
1,601
6,058
11,980205
12,185
18,2439,091
2,002
11,093
14,21593
14,30825,401

124
45
59
260
578
743
-423

167
88
164
449
1,691
1,787
1,220

405
326
247
978
3,407
3,916
2,907

932
853
648
-2
2,431
6,093
6,903
4,796

944
865
1,236
-223
-2
2,819
11,502
12,997
10,530

945
866
2,421
-224
0
4,009
11,476
13,794
8,939

1,024
945
4,232
-224
-3
9
42
6,026
14,596
16,436
10,372

1,034
1,044
6,255
-182
-9
0
12
8,154
19,98023,307
16,153

FY12/15
Cons.
520.0
0.7
1.2
300.3
301.0

FY12/16
Cons.
175.3
2.1
1.1
332.2
334.3

FY12/17
Cons.
115.2
3.2
1.0
355.9
359.0

FY12/18
Cons.
189.8
1.9
2.0
180.3
182.2

FY12/19
Cons.
262.4
1.4
2.4
153.9
155.3

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Cash conversion cycle
Accounts receivable turnoverDays in accounts receivable
Inventory turnoverDays in inventory
Accounts payable turnoverDays in accounts payable
Cash conversion cycle (days)

FY12/12
Parent
3,796.4
0.1
3.6
100.3
100.4

FY12/13
Parent
4,876.2
0.1
3.4
107.9
108.0

FY12/14
Parent
1,838.2
0.2
1.7
211.0
211.2

Source: Shared Research based on company data

AssetsApproximately 90% of the company’s assets are liquid, of which real estate for sale (including real estate for sale in process)accounts for roughly 60%. Cash and deposits account for around 20% of total assets (a large increase from around 15% in
FY12/16), and fixed assets account for about 10% of total assets.

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Liabilities
Liabilities account for approximately 75% of total liabilities and net assets, and interest-bearing debt accounts for around 90% of
liabilities.

Net assets
Net assets account for approximately 25% of total liabilities and net assets. As of end-FY12/19 the shareholders’ equity ratio was
24.3%.

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Cash flow statement
Cash flow statement(JPYmn)Cash flows from operating activities (1)Cash flows from investing activities (2)Free cash flow (1+2)
Cash flows from financing activities
Simple FCF (NI + A + B - C)FY12/12
Parent
-278
-225
-503
722
42

FY12/13
Parent
-859
-23
-882
1,129
-990

FY12/14
Parent-1,802-220-2,023
2,463-1,526

FY12/15Cons.
-1,681-1,241-2,922
4,019-2,217

FY12/16Cons.
-4,436-922-5,3595,717-4,742

FY12/17
Cons.
2,533
-861
1,671
719
1,326

FY12/18
Cons.
-1,229-190-1,4192,631-1,259FY12/19Cons.
-4,057-2,074-6,131
6,470
16,861

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Cash flows from operating activities
The company is expanding its business and with the exception of FY12/17, it saw cash outflows from operating activities in eachof the eight years from FY12/12 to FY12/19. In FY12/17 cash flows from operating activities were positive due to reduction ininventories and a large increase in pre-tax profit on the back of steadily increasing sales in the Real Estate Investment andDevelopment business, but the company again recorded cash outflows in FY12/18. The company saw a substantial cash outflow
in FY12/19 amid a build-up in inventory as the Real Estate Investment and Development business made a series of acquisitions.

Cash flows from investing activities
For the eight years from FY12/12 through FY12/19, cash flows from investing activities have been negative as the company haspurchased tangible and intangible fixed assets and acquired subsidiaries. In FY12/19, payments into time deposits added to cash
outflows.

Cash flows from financing activities
For the eight years from FY12/12 through FY12/19, cash flows from financing activities have been positive as the company has
continuously raised funds. However, in FY12/17 proceeds from long-term debt decreased, leading to a decrease in the overall
amount of financing.

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Other information
History
The company was established in October 2008, and all three founders had different areas of expertise and networks. President
Makoto Miyauchi had experience in real estate finance such as structured finance when he worked in a bank and securities firm.
Deputy President Shinichi Hasegawa’s expertise is in consulting for high net worth individuals and customer development, anddeputy president Masahiro Mochizuki is skilled in property revitalization (acquisitions and sales). The three founders previously
worked together managing a real estate company listed on the TSE First Section. In December 2014, the company listed on theTokyo Mothers market, just six years and two months after founding, a record high listing speed out of all real estate companies
established in the wake of in the global financial crisis. The company used its creditworthiness and fundraising ability following its
listing to support its growth driver, the Investment and Development segment, and Consulting and Management are stableearners.
In 2015, the company established an asset management company (B-Lot Asset Management) and a Singapore subsidiary (B-Lot
Singapore). In April 2016, the company purchased Life Stage, whose main business is marketing newly built condominiums to
the family demographic, for JPY880mn, and made it a subsidiary. In January 2017, B-Lot purchased Viento Creation, an owner andoperator of capsule hotels, for JPY588mn, and made it a subsidiary. In April 2018, the company purchased shares in golf courseand sports facility operator T&K Co., Ltd., making it a subsidiary. In May 2018, it established a subsidiary called B-Lot Capital Link
to engage in human resources and M&A businesses. (See Group companies.) B-Lot had a small elite team at the time of its
establishment and counted 61 employees in the parent company as of end-December 2019. Including the companies it has
acquired, the group had 194 employees at end-December 2019.
Oct 2008

B-Lot (capital: JPY50mn) established as real estate investment and consulting company

Nov 2008

Acquires Building Lots and Buildings Transaction Business License. (Lic. No. (1) 89915, Governor of Tokyo)

Feb 2009

Launches leasing management contracting businessJul 2009

Acquires Type II Financial Instruments Business registration with Kanto Local Finance Bureau (Lic. No. 2235)

Apr 2011

Opens Sapporo branch (currently Hokkaido branch) in Sapporo, Hokkaido

Jun 2011

Changes Building Lots and Buildings Transaction Business license from Governor of Tokyo license to MLIT Lic. No. (2) 8157

Jun 2012

Begins management and operation of its own buildings

Sep 2013

Opens Fukuoka branch in the city of Fukuoka, Fukuoka

Dec 2014

Lists on TSE Mothers

Feb 2015

Establishes B-Lot Asset Management

May 2015

Establishes B-Lot Singapore

Apr 2016

Makes Life Stage a subsidiaryJul 2016

Establishes Osaka branch

Jan 2017

Makes Viento Creation a subsidiaryFeb 2018

Transfers its listing to TSE1

Apr 2018

Makes T&K a subsidiary

May 2018

Establishes B-Lot Capital Link

Oct 2018

Establishes Tokyo branch in Minato, Tokyo

May 2019

Transfers and consolidates headquarters functions in Tokyo branch office

Source: Company materials

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News and topics
September 2020
On September 28, 2020, the company announced a change regarding a specified subsidiary.
B-Lot on September 28 announced its decision to issue investment units in specified subsidiary B-Lot REIT Investment
Corporation (formerly Medical Asset Investment Corporation) for allotment to third-party investors. The company accordingly
expects B-Lot REIT Investment Corporation to be converted from a subsidiary to an equity-method affiliate.

Reasons for the change▷

As noted in the company’s April 30, 2020 announcement regarding the acquisition of shares in LC Partners, Inc. andinvestment units in Medical Asset Investment Corporation (with the intention of making both companies consolidated
subsidiaries) and the May 27, 2020 announcement that the company had completed these efforts, B-Lot has been working tostrengthen its asset management business. To this end, it acquired all investment units in Medical Asset Investment▷

Corporation, and prepared for the formation of a REIT within the year.
In line with its capital policies targeting the REIT formation, management decided to raise funds through the issuance of new
investment units by B-Lot REIT Investment Corporation, allowing the company to further advance the REIT formation within theyear.

MethodB-Lot REIT Investment Corporation will issue the new investment units, resulting in a decline in the Group’s share of total
investment units.

Share of total investment units and number of investment units owned by B-Lot before and after the change▷

Investment units owned by B-Lot before the change: 2,000 (100% of which are indirectly owned)(Share of units: 100%) (100% of which are indirectly owned)▷

Investment units owned by B-Lot after the change: 2,000 (100% of which are indirectly owned)(Share of units: 39%) (39% indirectly owned)

Schedule
Date of decision: September 28, 2020
Planned payment date for the new investment units: by September 30, 2020

Outlook
The company, as a result of this transaction, expects B-Lot REIT Investment Corporation to be converted from a subsidiary to an
equity-method affiliate. Management is currently calculating the effect on FY12/20 earnings and plans to promptly announce any
related matters requiring disclosure.

May 2020
On May 27, 2020, the company announced that it completed its acquisition of shares in LC Partners, Inc. and investment units in
Medical Asset Investment Corporation (converting these two organizations into consolidated subsidiaries).

▷

As announced on April 30, 2020 (details below), the company completed its acquisition of shares in LC Partners, Inc. andinvestment units in Medical Asset Investment Corporation, converting these two organizations into consolidated subsidiaries,
on May 27 of the same year.

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When acquiring Medical Asset Investment Corporation, the company obtained all investment units in the entity, converting it
into a consolidated subsidiary. However, the company plans to recruit equity investors and remove Medical Asset Investment
Corporation from its list of consolidated subsidiaries.

April 2020
On April 30, 2020, the company announced the acquisition of shares in LC Partners, Inc. and investment units in Medical Asset
Investment Corporation (making them consolidated subsidiaries).

▷▷

On April 30, 2020, the company decided to acquire all of the shares in LC Partners, Inc. owned by GLOME Holdings, Inc. andall of the investment units in Medical Asset Investment Corporation owned by LC Partners and to make them consolidated
subsidiaries.
Note that the target companies will become specified subsidiaries of B-Lot as their capital and amount invested by thecompany are equivalent to over 10% of B-Lot’s capital.

Aim▷

The company established B-Lot Asset Management in February 2015 as a wholly owned subsidiary. In the asset managementbusiness, B-Lot Asset Management has managed numerous properties under its financial instrument (advisory and agency)
business license. It has also considered obtaining an investment management license. The aim was to also be able to put

▷

▷
▷
▷

together and manage private placement funds and REITs to meet demand from high net worth individuals and other investors.
LC Partners has an investment management license and operates asset management and investment businesses. B-Lot agreed
with parent company GLOME Holdings to acquire all of its shares in LC Partners and all of its units in the investment
corporation.
Leveraging the licensing, staff, expertise, and other components of the business platform necessary to REIT management
acquired in this deal, the company plans to implement further business growth.
The company is evaluating the impact on FY12/20 consolidated results, and will promptly inform the market of any material
information.
The company plans to execute an absorption-type merger promptly after the share transfer to streamline management. LC
Partners will be the surviving company and B-Lot Asset Management will be dissolved. Following the merger, the name of thesurviving company will be changed to B-Lot Asset Management.

Details
LC Partners, Inc.

▷▷

Number of shares to be acquired: 1,200 (1,200 voting rights)
Number of shares to be owned after transfer: 1,200 (1,200 voting rights, 100% of total)

Medical Asset Investment Corporation▷▷

Number of units to be acquired: 2,000
Number of units to be owned after transfer: 2,000 (of which indirectly owned: 2,000. Share of units: 100%, of which indirectly
owned: 100%)

Purchase price▷

Shares in LC Partners and units in Medical Asset Investment Corporation: JPY190mn (planned)

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Advisory and other expenses (estimate): JPY10mn
Total (estimate): JPY200mn

Schedule▷

Board decision: April 30, 2020▷

Share transfer: May 27, 2020 (completed)▷

Share transfer agreement: April 30, 2020

March 2020
On March 13, 2020, the company announced the transfer of a specified subsidiary.
At a meeting of the Board of Directors held the same day, the company resolved to invest in the following silent partnership,
which will make it a specified subsidiary of the company.

Reason for transfer
B-Lot will invest in a silent partnership operated by SSG24 LLC, with the aim of acquiring and holding trust beneficiary rights inoffice and retail store buildings located in Osaka Prefecture. B-Lot’s investment in the silent partnership represents more than
30% of the company’s net assets and more than 10% of its capital, making the silent partnership a specified subsidiary of thecompany.

Overview of subsidiary to be transferred▷

Name: Silent partnership operated by SSG24 LLC▷

Investment date: March 31, 2020 (scheduled)

▷
▷
▷


Business: Acquisition, holding, and disposition of real estate and related activities

Investment amount: JPY3.1bn
Relationship between the listed company and the silent partnership:

Capital relationship: 100% investment by the company

Business relationship: An asset management agreement will be signed between SSG24 LLC, the operator of the silent
partnership, and B-Lot Asset Management Co., Ltd., a consolidated subsidiary of the company.

On March 2, 2020, the company announced the cancellation of its issuance of new shares and secondary offerings of shares.
The company resolved at a meeting of its Board of Directors held on March 2, 2020, to cancel the issuance of new shares andsecondary offerings of shares that it had resolved to conduct at a meeting of its Board of Directors held on February 21, 2020.

Reasons for the cancellation of the new issuance of shares and secondary offerings of shares▷

The company had resolved to conduct an issuance of new shares and secondary offerings of shares in order to actively pursue
growth by purchasing real estate for sale, carrying out M&A activity, and investing in the development of new businesses.
However, the stock market is becoming increasingly volatile due to the spread of COVID-19, and the company decided toabandon the issuance of new shares and secondary offerings based on its judgment that continuing with them under suchcircumstances would not maximize profit for existing shareholders or other stakeholders.

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Future outlook
▷

▷
▷
▷

The company has used a combination of on-hand funds and bank loans to execute or commence all of the projects that were
to be funded by the new share issue and secondary offering, namely the acquisition of large properties, M&A, and new lines ofbusiness.
Although the cancellation’s direct impact on earnings is minimal at this time, there are still ample business opportunities, andthe company says that where it is able to arrange funding it will be able to effect further organizational growth.
The company initially forecast changes in the composition of major shareholders as a result of the new issuance of shares andsecondary offerings of shares, but such changes will not occur due to this cancellation.
The stock split announced on February 21, 2020, was implemented as planned, but the number of additional shares resulting
from the split will change as a result of this cancellation.

Group companies (as of end-December 2019)
Company

Business

Note

B-Lot Singapore Pte. Ltd.

Asset management services for investors in Asia

Consolidated subsidiary

B-Lot Asset Management Co., Ltd

Comprehensive real estate management services for Japanese andoverseas institutional investors

Consolidated subsidiary

Life Stage Co., Ltd.

Newly built condominium sales targeting family demographic

Consolidated subsidiary

Viento Creation Co., Ltd.

Ownership and operation of capsule hotels

Consolidated subsidiary

T&K Co., Ltd.

Operation of golf courses under contract, consulting, and advisory
services

Consolidated subsidiary

B-Lot Capital Link Co., Ltd.

Business succession consulting and planning, M&A advisory

Consolidated subsidiary

Source: Shared Research based on company data

Origin of company name
The letter “B” stands for “brain,” while “lot” is used in the colloquial sense of colleagues or mates as in “you lot.” The name is anattempt to convey the idea of a group of people who can put into practice their ideas.

Corporate governance and top management
B-Lot: corporate governance structure (after April 8, 2019)
Capital structure
Controlling interests

None

Foreign shareholding

Under 10%

Organization and directors
Organization

Company with Audit & Supervisory Board

Number of directors (under Articles of Incorporation)

15

Number of directors

9

Directors’ term of office (under Articles of Incorporation)

1 yearChairman of the Board of Directors

President

Number of outside directors

3

Number of independent outside directors

3

Nominating committee or compensation committee

None

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Number of members of Audit & Supervisory Board

3

Number of outside members of Audit & Supervisory Board

3

Number of independent outside members of Audit & Supervisory Board

3

Number of independent outside directors

3

Other
Incentives for directors

Stock options

Stock option eligibility

Internal directors and employees, subsidiaries’ directors andemployees

Disclosure of directors’ compensation

No individual disclosure

Policy to determine amount and calculation method of remuneration

Y

Corporate takeover defenses

None

Source: Shared Research based on company data

President and Representative Director Makoto Miyauchi (born 1969) was in charge of project finance and nonrecourse
property loans for eight years at The Sanwa Bank, Limited (currently The Bank of Tokyo-Mitsubishi UFJ, Ltd.). At Sanwa Securities
Co., Ltd. (currently Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.) he was involved in arranging real estate securitization. He
was involved in deals including the securitization of urban Class S buildings, the creation of commercial building funds, andstructuring special-lease condominium funds. Starting in 2006, he worked at Sun Frontier Fudousan, a real estate company listedon the TSE First Section, where he was responsible for planning and implementing new projects as general manager of theinvestment planning department. In 2008, he established B-Lot to launch a new real estate finance business, and assumed theposition of representative director and president.
After moving from Hokkaido to Tokyo, Director and Deputy President Shinichi Hasegawa (born 1972) joined Sun Frontier(currently Sun Frontier Fudousan) in 1996, where he was involved in commercial real estate brokerage. He has broad experiencein bankruptcy administration, Resolution and Collection Corporation, and loan servicer projects. Subsequently, as executive
responsible for solutions for listed company owners and high net worth individuals, he oversaw the brokerage, property
management, and leasing businesses. As managing director and general manager of the sales department, he assisted thecompany’s listing on JASDAQ five and a half years after founding and listing on the TSE First Section in under eight years. He
helped plan the establishment of B-Lot in 2008 and assumed the position of director and deputy president. In 2015, he wasappointed representative director and president of B-Lot Singapore Pte. Ltd.
Following work in a bank-affiliated real estate consulting company, Director and Deputy President Minoru Mochizuki (born1972) joined Sun Frontier (currently Sun Frontier Fudousan) in 1999, where he was instrumental in launching the real estate
revitalization business, with the aim of building an infrastructure business for the real estate industry. He was responsible for over
100 building revitalization projects, and oversaw market research, purchases, value enhancing plans, sales management, andsecuritization. As managing director and general manager of the Asset Division, he contributed to that company’s listing on
JASDAQ five and a half years after its founding, and on the Tokyo Stock Exchange First Section in under eight years. In 2009, hejoined B-Lot and assumed the position of director and deputy president.
Outside Director Takashi Osaka (born 1955) worked for four years at a trading company. In 1982 he joined Japan Recruit
Center (currently, Recruit Holding Co., Ltd). He was assigned to the Building Business Division, where he was involved inacquiring land for Recruit’s office buildings nationwide including Tokyo, Yokohama, Kawasaki, Kyoto, Osaka, and Kobe as well asplanning, project management, and operations. He participated in a management buyout of the business from Recruit in 2000,
and is involved in management as a director of the company, now known as Xymax. The company is engaged in property
management for office, retail, and logistics facilities nationwide. In 2014 he was appointed to his current post of vice chairman of
Xymax and in 2016 was appointed independent external director of B-Lot.

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Dividend policy
B-Lot considers the return of profits to shareholders to be an important management issue. The company’s basic policy is tostrengthen its financial position through adequate retained earnings while providing returns to shareholders that reflect its
performance. Distributions of profits are determined from a comprehensive viewpoint taking into full consideration corporate
performance and future business plans. The company’s basic policy is to maintain a dividend payout ratio of 20%.

Major shareholders (as of December 31, 2019)
Top shareholders

Shares held

Shinichi Hasegawa
Masahiro Mochizuki
M&M, Ltd.
Makoto Miyauchi
Mitsuru Otsuka
Fumie Mochizuki
Japan Trustee Services Bank, Ltd. (Trust account)
Hokuto Mfg. Co., Ltd.
Taro Togawa
Kentaro Ezaki
SUM

1,160,400
1,100,400
819,000
539,400
175,400
174,100
138,800
124,000
114,100
113,100
4,458,700

Shareholding
ratio
14.50%
13.83%
10.30%
6.78%
2.21%
2.19%
1.70%
1.56%
1.40%
1.40%
55.87%

Source: Shared Research based on company data
Note: On January 17, 2018, the company conducted a 2-for-1 common stock split, making total shares issued 8,020,200.

Employees
Number of
employees
ParentConsolidated

FY12/14
Cons.
24
24

FY12/15
Cons.
32
35

FY12/16
Cons.
35
134

FY12/17
Cons.
48
149

FY12/18
Cons.
54
201

FY12/19
Cons.
61
194

Source: Shared Research based on company data

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ProfileCompany Name
B-Lot Co., Ltd.

Head Office
Shimbashi Center Place 10F
1-11-7 Shimbashi, Minato-ku, Tokyo

Phone

Listed On+81(3)-6891-2525

TSE First Section

EstablishedExchange Listing

October 10, 2008

December 11, 2014

WebsiteFiscal Year-End

https://en.b-lot.co.jp/

December

IR Contact

IR Web+81(3)-6891-2525

https://www.b-lot.co.jp/ir.html (Japanese only)

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