R
B-Lot / 3452

COVERAGE INITIATED ON:

2018.01.17

LAST UPDATE:

2019.09.25

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.

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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
Business overview -------------------------------------------------------------------------------------------------------------------------------------------------3
Strengths and weaknesses--------------------------------------------------------------------------------------------------------------------------------------4
Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 8
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------8
Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 9
Quarterly trends and results -----------------------------------------------------------------------------------------------------------------------------------9
Full-year company forecasts --------------------------------------------------------------------------------------------------------------------------------- 14
Medium-term outlook ----------------------------------------------------------------------------------------------------------------------------------------- 15
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 20
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 20
Business model --------------------------------------------------------------------------------------------------------------------------------------------------- 23
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 32
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 33
Historical performance and financial statements ------------------------------------------------------------------------------------------ 38
Historical financial statements ------------------------------------------------------------------------------------------------------------------------------- 38
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 49
Historical performance versus initial company forecasts ------------------------------------------------------------------------------------------- 50
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 51
Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 52
Other information ---------------------------------------------------------------------------------------------------------------------------------- 53
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 53
News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 54
Group companies (as of end-June 2019) ---------------------------------------------------------------------------------------------------------------- 59
Origin of company name ------------------------------------------------------------------------------------------------------------------------------------- 59
Corporate governance and top management --------------------------------------------------------------------------------------------------------- 59
Dividend policy -------------------------------------------------------------------------------------------------------------------------------------------------- 60
Major shareholders (as of June 30, 2019) --------------------------------------------------------------------------------------------------------------- 61
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 61
Profile---------------------------------------------------------------------------------------------------------------------------------------------------------------- 62

02/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 have 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 seven years of continuous revenue and earnings growth, B-Lot usedprivate placement bonds and commitment line syndicated loans to boost leverage and grow (the net debt/equity ratio was
1.73 in FY12/18; average for 23 competitors with similar revenue was 1.11). Over the five years through FY12/18, revenue
grew at a CAGR of 55.5% and operating profit 72.3%.

◤ Growth is driven by the Investment business (84.3% of revenue in FY12/18), where it sold 13–26 properties a year between

FY12/13 and FY12/18 (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 with compliance, 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 estate companies, 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 JPY662mn in FY12/18; 3.8x the JPY172mn level of FY12/13). The company is now
diversifying into renovating compact hotels (size is between capsule hotels and business hotels) to be an early mover in
capturing the boom in inbound tourism to Japan. It mainly operates in major metropolitan areas including the Kanto region(Tokyo and the surrounding area; 42% of properties sold in FY12/18), Hokkaido (35%), Kyushu (19%), and Kansai (4%).
◤ Consulting and Management segments are stable earners, generating 5.8% and 9.9% of revenue in FY12/18, and with OPMof 23.8% and 44.6%. They share the Investment 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
segment is booked under the Management segment.

Trends and outlook◤ In FY12/18, revenue was JPY20.3bn (+54.7% YoY), operating profit JPY3.3bn (+39.8% YoY), recurring profit JPY2.8bn (+41.7%

YoY), and net income attributable to owners of parent JPY2.0bn (+56.8% YoY). Both revenue and profit rose for the eighthconsecutive year.

◤ For FY12/19, the company forecasts revenue of JPY26.3bn (+29.8% YoY), operating profit of JPY3.7bn (+13.0% YoY), recurring

profit of JPY3.4bn (+18.6% YoY), and net income attributable to owners of parent of JPY2.4bn (+20.2% YoY).

◤ 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 FY12/19 goal is described above. FY12/20 targets: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 parent of JPY2.8bn (+20.6% YoY). The basic policy of the company is 20% or higher net
income growth (a business indicator it has used for many years) and a 20% payout ratio.

03/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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).

04/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Key financial data
Income statement(JPYmn)
Revenue
YoY
Gross profit
YoY
GPM
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin
Per 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 (RP-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%

2,628
1.8
35.8

5,940
15.6
51.2

6,660
34.5
95.8

6,567
40.6
34.5
148.9

7,759
56.3
52.8
313.3

8,002
75.3
74.1
17.0
366.9

8,020
162.8
160.6
19.5
520.6

8,214
251.7
248.9
25.0
756.8

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
1,004
924
24,2694,456
6,058
11,98012,185
18,243
6,026

-

-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

2.7%
5.0%
33.5%

743
10.9%
23.6%
22.4%

1,787
5.6%
32.3%
17.7%

3,916
4.5%
25.3%
18.6%

6,903
5.3%
23.5%
24.4%

12,997
4.4%
22.4%
17.0%

13,794
7.0%
36.6%
21.0%

16,436
9.0%
39.3%
24.6%

FY12/19

FY12/20

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

4,552
21.8%
15.2%
4,121
22.6%
13.7%
2,843
20.6%
9.5%

Est.
26,30029.8%

Est.
30,000
14.1%

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 January 17, 2018. Values for EPS and EPS (fully diluted) are calculated assuming the stock split was conducted at
the start of FY12/17.

05/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25(JPYmn)Real Estate Investment and Development
YoY% of consolidated revenue
No. of properties soldYoY

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

FY12/12
Parent1,069

FY12/13
Parent1,897

FY12/14
Parent3,237

FY12/15
Cons.
6,137

FY12/16
Cons.
9,977

FY12/17Cons.
10,981

FY12/18
Cons.
17,208

79.9%

77.4%
85.0%

70.6%
87.3%

89.6%
88.3%

62.6%
85.1%

10.1%
83.7%

56.7%
84.3%

14

11

22

13

16

21

26

-

-21.4%

100.0%-40.9%

23.1%

31.3%

23.8%

<By type of property>
Residential

na

8

18

7

8

11

14

% of properties sold

na

72.7%

81.8%

53.8%

50.0%

52.4%

53.8%

Offices and stores% of properties sold

na
na

3
27.3%

4
18.2%

4
30.8%

5
31.3%

5
23.8%

7
26.9%

Land for detached houses

na

-

-

1

2

3

2

% of properties sold

na

-

-

7.7%

12.5%

14.3%

7.7%

Hotels% of properties sold

na
na

-

-

1
7.7%

1
6.3%

2
9.5%

3
11.5%

na
na

9
81.8%

na
na

8
61.5%

9
56.3%

15
71.4%

11
42.3%

<By region>
Kanto% of properties soldHokkaido

na

2

na

3

4

3

9

% of properties soldKyushu

na
na

18.2%
-

na
na

23.1%
1

25.0%
1

14.3%
3

34.6%
5

% of properties sold

na

-

na

7.7%

6.3%

14.3%

19.2%

na

-

na

1

2

0

1

na
76

172

na
147

7.7%
472

12.5%
624

0.0%
523

3.8%
662

Kansai% of properties soldRevenue per property soldYoY-

125.8%-14.7%

220.9%

32.1%-16.1%

26.6%

192

146

197

171

862

1,305

1,190

-

-24.1%

35.1%-13.1%

403.2%

51.4%

14.4%

6.5%

5.3%

2.5%

7.4%

9.9%

-8.8%
5.8%

No. of brokerage deals
YoY

25
-

28
12.0%

20
-28.6%

29
45.0%

31
6.9%

29
-6.5%

27
-6.9%

<By region>
Kanto

Real Estate Consulting
YoY% of consolidated revenue

na

19

7

15

19

18

12

% of brokerage deals
Hokkaido

na
na

67.9%
7

35.0%
8

51.7%
8

61.3%
7

62.1%
5

44.4%
5

% of brokerage deals
Kyushu% of brokerage deals

na
na
na

25.0%
-

40.0%
3
15.0%

27.6%
4
13.8%

22.6%
4
12.9%

17.2%
2
6.9%

18.5%
4
14.8%

na
na
8

2
7.1%
5

2
10.0%
10

2
6.9%
6

1
3.2%
28

4
13.8%
45

6
22.2%
44

77
-

188
144.9%

275
46.5%

642
133.2%

882
37.3%

839
-4.9%

% of consolidated revenue

5.7%

8.4%

7.4%

9.2%

7.5%

6.4%

141.0%
9.9%

No. of properties managed
YoY

20
-

31
55.0%

36
16.1%

40
11.1%

48
20.0%

59
22.9%

68
15.3%

<By region>
Kanto

Kansai% of brokerage deals
Average consulting revenue per deal
YoY

Real Estate Management
YoY

2,022

na

14

15

17

20

26

28

% of properties managed
Hokkaido% of properties managed
Kyushu% of properties managed
Kansai% of properties managed
Adjustments

na
na
na
na
na
na
na
-

45.2%
9
29.0%
8
25.8%
0
0.0%
-

41.7%
12
33.3%
9
25.0%
0.0%
-

42.5%
14
35.0%
9
22.5%
0.0%
-

41.7%
18
37.5%
9
18.8%
1
3.2%
-94

44.1%
23
39.0%
8
13.6%
2
6.9%
-28

41.2%
23
33.8%
14
20.6%
3
4.4%
-152

YoY

85
-

218
157.0%

378
73.8%

800
111.5%

1,175
46.9%

2,366
101.3%

3,307
39.8%

YoY
% of consolidated operating profit
OPM

120
61.8%
11.3%

311
157.9%
75.0%
16.4%

465
49.6%
73.5%
14.4%

840
80.8%
71.1%
13.7%

989
17.8%
55.2%
9.9%

2,316
134.1%
73.1%
21.1%

3,040
31.2%
72.0%
17.7%

YoY
% of consolidated operating profit
OPM

71
36.5%
37.0%

58
-18.9%
13.9%
39.5%

79
36.8%
12.5%
40.0%

58
-26.5%
4.9%
33.8%

346
496.9%
19.3%
40.1%

408
17.9%
12.9%
31.3%

283
-30.7%
6.7%
23.8%

YoY
% of consolidated operating profit
OPM
Adjustments

3
1.7%
4.2%
-110

46
1319.8%
11.0%
24.3%
-196

89
94.0%
14.0%
32.2%
-254

284
219.9%
24.0%
44.2%
-381

458
61.6%
25.6%
52.0%
-619

443
-3.3%
14.0%
52.8%
-802

902
103.5%
21.3%
44.6%
-917

Consolidated operating profit
Real Estate Investment and Development

Real Estate Consulting

Real Estate Management

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

06/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25(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

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%

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
-

11
45.8%
5
20.8%
4
16.7%
4.0
-

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

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%

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

07/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Recent updates
Highlights
On September 25, 2019, B-Lot Co., Ltd. announced a renewal of its syndicated loan agreement with a commitment line.

▷▷▷

Since September 2017, the company has had an unsecured commitment line in place through a syndicated loan agreement
arranged by the Tokyo Star Bank, Limited. A new agreement was signed on September 25, 2019 when the original term
expired.
The agreement will be used to provide flexible funds for corporate growth through purchasing real estate for sale and realestate revitalization nationwide.
The agreement will have a minimal impact on FY12/19 results.

Details of the loan agreement▷

Amount: JPY4.3bn in total (three new banks were added to the total of 11 participating financial institutions at the time of the▷

Period: September 30, 2019 to September 30, 2020▷▷▷previous agreement, increasing the total funds available by JPY1.3bn from the original amount of JPY3.0bn)

Use of funds: Working capital
Arranger and agent: Tokyo Star Bank
Participating financial institutions: Tokyo Star Bank and 13 other financial institutions

On September 5, 2019, Shared Research updated the report following interviews with the company.

On August 9, 2019, the company announced earnings results for 1H FY12/19; see the results section for details.

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

08/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Trends and outlook
Quarterly trends and results
FY12/17

Cumulative

FY12/19

FY12/18(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Revenue

2,021

5,270

6,263

13,097

2,752

4,999

6,814

20,268

5,886

7,376

YoY

195.6%

25.7%

4.8%

12.6%

36.2%

-5.1%

8.8%

54.7%

113.9%

47.5%

715

1,670

2,191

4,397

1,031

1,668

2,577

5,797

2,239

2,795

Gross profit
YoY

86.4%

83.0%

40.2%

67.8%

44.2%

-0.1%

17.6%

31.8%

117.1%

67.5%

GPM

35.4%

31.7%

35.0%

33.6%

37.5%

33.4%

37.8%

28.6%

38.0%

37.9%

SG&A expenses

556

1,050

1,541

2,032

557

1,094

1,749

2,490

711

1,409

YoY

183.0%

162.9%

72.3%

40.5%

0.3%

4.2%

13.5%

22.6%

27.5%

28.7%

SG&A ratio

27.5%

19.9%

24.6%

15.5%

20.3%

21.9%

25.7%

12.3%

12.1%

19.1%

Operating profit

160

620

649

2,366

474

574

828

3,307

1,528

1,386

YoY

-14.8%

20.7%

-2.8%

101.3%

197.0%

-7.4%

27.5%

39.8%

222.4%

141.6%

OPM

7.9%

11.8%

10.4%

18.1%

17.2%

11.5%

12.1%

16.3%

26.0%

18.8%

77

441

372

1,999

374

354

474

2,833

1,438

1,211

YoY

-42.0%

12.3%-24.6%

128.6%

385.7%-19.8%

27.3%

41.7%

284.6%

242.1%

RPM

3.8%

8.4%

5.9%

15.3%

13.6%

7.1%

7.0%

14.0%

24.4%

16.4%

Net income

63

304

263

1,251

263

221

303

1,961

1,023

854

-22.9%

11.4%-18.5%

112.6%

320.2%-27.1%

15.3%

56.8%

289.4%

285.8%

3.1%

5.8%

4.2%

9.5%

9.5%

4.4%

4.4%

9.7%

17.4%

11.6%

Q3

Q4

Q1

Q3

Q4

Q1

Recurring profit

YoY
Net margin

FY12/17

Quarterly(JPYmn)Q1

Q2

FY12/18
Q2

Q2

2,021

3,249

993

6,835

2,752

2,247

1,815

13,454

5,886

1,489

YoY

195.6%-7.4%-44.3%

20.9%

36.2%

-30.8%

82.8%

96.9%

113.9%-33.7%

715

955

521

2,207

1,031

637

909

3,220

2,239

556

YoY

86.4%

80.5%

-19.9%

108.6%

44.2%-33.3%

74.4%

45.9%

117.1%-12.7%

GPM

35.4%

29.4%

52.5%

32.3%

37.5%

28.3%

50.1%

23.9%

38.0%

37.3%

556

495

491

490

557

537

655

741

711

698

YoY

183.0%

143.5%-0.8%-11.0%

0.3%

8.6%

33.3%

51.2%

27.5%

30.0%

SG&A ratio

27.5%

15.2%

49.5%

7.2%

20.3%

23.9%

36.1%

5.5%

12.1%

46.9%

Operating profit

160

460

30

1,716

474

100

254

2,479

1,528

-142

YoY

-14.8%

41.2%-80.8%

238.6%

197.0%-78.3%

753.0%

44.4%

222.4%

-

OPM

7.9%

14.2%

3.0%

25.1%

17.2%

4.4%

14.0%

18.4%

26.0%

-

-227

SG&A expenses

Recurring profit

77

364

-69

1,627

374

-20

120

2,359

1,438

YoY

-42.0%

40.0%-

327.0%

385.7%

-

-

45.0%

284.6%

-

RPM

3.8%

11.2%

-

23.8%

13.6%

-

6.6%

17.5%

24.4%

-

-168

Net income
YoY
Net margin

Q4% of FY
22.4%

FY Est.
26,300
29.8%

88.5%

3,738
13.0%
14.2%

84.3%

3,360
18.6%
12.8%

83.2%

2,357
20.2%
9.0%

FY12/19

Revenue
Gross profit

FY12/19
Q3

63

241

-41

988

263

-41

82

1,657

1,023

-22.9%

25.9%-

271.7%

320.2%

-

-

67.8%

289.4%

-

3.1%

7.4%

-

14.5%

9.5%

-

4.5%

12.3%

17.4%

-

Q3

Q4

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

09/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp(JPYmn)Consolidated revenue
YoY

Real Estate Investment and Development

FY12/18

FY12/17

Segments (cumulative)

FY12/19

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2,021

5,270

6,263

13,097

2,752

4,999

6,814

20,268

5,886

7,376

195.6%

25.7%

4.8%

12.6%

36.2%

-5.1%

8.8%

54.7%

113.9%

47.5%

1,449

4,175

4,652

10,981

2,128

3,958

4,728

17,208

4,612

5,254

YoY

339.1%

16.7%

-3.8%

10.1%

46.8%

-5.2%

1.6%

56.7%

116.7%

32.7%% of consolidated revenue

71.7%

79.2%

74.3%

83.8%

77.3%

79.2%

69.4%

84.9%

78.3%

71.2%

374

641

958

1,278

456

634

881

1,038

542

691

YoY

168.3%

302.2%

98.7%

66.4%

21.9%

-1.2%

-8.1%

-18.8%

18.9%

9.1%

% of consolidated revenue

18.5%

12.2%

15.3%

9.8%

16.6%

12.7%

12.9%

5.1%

9.2%

9.4%

198

455

652

839

168

408

1,205

2,022

732

1,431

Real Estate Consulting

Real Estate Management
YoY

-7.6%

0.1%

-0.6%

-4.9%

-14.9%-10.3%

84.8%

141.0%

335.0%

250.7%% of consolidated revenue

9.8%

8.6%

10.4%

6.4%

6.1%

8.2%

17.7%

10.0%

12.4%

19.4%

160

620

649

2,366

474

574

828

3,307

1,528

1,386

-14.8%

20.7%

-2.8%

101.3%

197.0%

-7.4%

27.5%

39.8%

222.4%

141.6%

Consolidated operating profit
YoY

Real Estate Investment and Development

132

614

603

2,316

339

543

632

3,040

1,011

992

YoY

107.2%

80.3%

24.4%

134.1%

157.1%-11.6%

4.9%

31.2%

198.1%

82.9%% of consolidated operating profit

32.9%

58.2%

47.9%

73.1%

49.4%

53.7%

39.6%

72.0%

55.4%

51.3%

OPM

9.1%

14.7%

13.0%

21.1%

15.9%

13.7%

13.4%

17.7%

21.9%

18.9%

172

222

320

408

245

194

229

283

534

477

67.3%

78.4%

44.9%

17.9%

42.0%

-12.7%-28.4%-30.7%

118.0%

145.7%

Real Estate Consulting
YoY% of consolidated operating profit

43.1%

21.1%

25.4%

12.9%

35.7%

19.2%

14.4%

6.7%

29.2%

24.6%

OPM

46.1%

34.7%

33.4%

31.9%

53.7%

30.6%

26.0%

27.3%

98.5%

69.0%

Real Estate Management

96

218

274

734

902

281

YoY

-15.8%-11.5%

-2.2%

-3.3%

6.9%

25.9%

118.1%

103.5%

173.6%

70.1%% of consolidated operating profit

24.0%

20.7%

26.7%

14.0%

15.0%

27.1%

46.0%

21.3%

15.4%

24.1%

OPM

48.6%

47.9%

51.6%

52.8%

61.0%

67.3%

60.9%

44.6%

38.4%

32.6%

Adjustments

-241

-435

-610

-802

-213

-437

-768

-917

-298

443

103

-550

FY12/17

Segments (quarterly)(JPYmn)337

FY12/18
Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2,021

3,249

993

6,835

2,752

2,247

1,815

13,454

5,886

1,489

195.6%-7.4%-44.3%

20.9%

36.2%

-30.8%

82.8%

96.9%

113.9%-33.7%

1,449

2,725

478

6,329

2,128

1,830

770

12,480

4,612

642

YoY

339.1%-16.1%-62.0%

23.1%

46.8%

-32.8%

61.2%

97.2%

116.7%-64.9%% of consolidated revenue

71.7%

83.9%

48.1%

92.6%

77.3%

81.4%

42.4%

92.8%

78.3%

43.1%

YoY

Real Estate Consulting

374

267

317

319

456

178

247

157

542

149

YoY

168.3%

1233.3%

-1.7%

11.9%

21.9%

-33.5%-22.0%-50.8%

18.9%-15.9%% of consolidated revenue

18.5%

8.2%

32.0%

4.7%

16.6%

7.9%

13.6%

1.2%

9.2%

10.0%

198

257

197

186

168

240

797

816

732

698

-7.6%

6.9%

-2.2%

-17.3%-14.9%-6.7%

303.8%

337.8%

335.0%

191.4%

12.4%

46.9%

Real Estate Management
YoY% of consolidated revenue

Consolidated operating profit

9.8%

7.9%

19.9%

2.7%

6.1%

10.7%

43.9%

6.1%

160

460

30

1,716

474

100

254

2,479

1,528

YoY

-14.8%

41.2%-80.8%

238.6%

197.0%-78.3%

753.0%

44.4%

222.4%

-

OPM

7.9%

14.2%

3.0%

25.1%

17.2%

4.4%

14.0%

18.4%

26.0%

-9.6%

-19

Real Estate Investment and Development

132

482

-11

1,713

339

204

90

2,407

1,011

107.2%

74.1%-

239.6%

157.1%-57.8%-

40.5%

198.1%-% of consolidated operating profit

32.9%

73.7%

-5.3%

89.8%

49.4%

62.7%

15.3%

91.6%

55.4%

-17.1%

17.7%

-2.3%

27.1%

OPM

9.1%

15.9%

11.1%

21.9%

-2.9%

172

50

97

88

245

-51

35

54

534

-57

YoY

67.3%

131.4%

1.3%-29.5%

42.0%--64.1%-39.0%

118.0%-% of consolidated operating profit

43.1%

7.6%

47.5%

4.6%

35.7%

-15.7%

6.0%

2.0%

29.2%

-51.8%

OPM

46.1%

18.7%

30.7%

27.6%

53.7%

-28.6%

14.1%

34.3%

98.5%

-38.1%

96

122

119

107

103

172

460

168

281

Real Estate Management

FY Est.

28.0%

26,300
29.8%

3,738

37.1%

13.0%

11.6%

19.3%

Q3

Q4

-142

YoY

Real Estate Consulting% of FY

FY12/19

Q2

Real Estate Investment and Development

Q4

467

Q1

Consolidated revenue

FY12/19
Q3

186

YoY

-15.8%

-7.9%

21.4%

-6.8%

6.9%

40.9%

287.8%

57.3%

173.6%

8.2%% of consolidated operating profit

24.0%

18.6%

57.8%

5.6%

15.0%

52.9%

78.7%

6.4%

15.4%

168.9%

OPM

48.6%

47.4%

60.0%

57.1%

61.0%

71.7%

57.7%

20.5%

38.4%

26.6%

Adjustments

-241

-194

-175

-192

-213

-225

-330

-150

-298

-252

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

1H FY12/19 results (out August 9, 2019)
Summary▷

For 1H FY12/19, the company reported revenue of JPY7.4bn (+47.5% YoY), operating profit of JPY1.4bn (+141.6% YoY),
recurring profit of JPY1.2bn (+242.1% YoY), and net income attributable to owners of parent of JPY854mn (+285.8% YoY).
 On a quarterly basis, Q1 revenue was up 113.9% YoY and operating profit up 222.4% YoY, primarily due to the sale of the
newly built Hotel Torifito Otaru Canal in Otaru, Hokkaido to an investment company. In Q2 however, there were no
major sales, so revenue fell 33.7% YoY and there was an operating loss of JPY142mn (versus operating profit of JPY100mn▷

in Q2 FY12/18). Results vary quarter by quarter due to the nature of the business.
Progress versus plan: 1H FY12/19 revenue reached 28.0% of the full-year forecast (versus 13.6% of the full-year FY12/18 resultin 1H FY12/18), operating profit 37.1% (14.3%), recurring profit 36.0% (13.2%), and net income 36.3% (13.4%). The
company said it was making solid progress toward its full-year FY12/19 forecasts. The historical record shows that over the four
years from FY12/15–FY12/18, profit came in some 20–60% above initial forecasts. Amid expectations that similar trends willcontinue in FY12/19, there is a risk that delays in sales timing may have a larger impact on earnings than previously as real

10/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

estate for sale in process become bigger. However, the company said that it always keeps in mind the need to avoid large
fluctuations in full-year earnings despite quarterly variations.

▷

1H revenue up 47.5% 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
32.7% YoY in Real Estate Investment and Development, 9.1% YoY in Real Estate Consulting (revenue from externaltransactions), and 250.7% YoY in Real Estate Management.

▷

Operating profit up 141.6% YoY: Operating profit increased significantly in all segments, up 82.9% YoY in Investment andDevelopment, 145.7% YoY in Consulting, and 70.1% YoY in Management.

▷

Balance of real estate for sale and real estate for sale in process: Procurement was steady, and property types expanded.
Initiatives aimed at increasing the scale of projects made progress. The inventories on real estate for sale (including real estate
for sale in process) at end 1H FY12/19 was JPY18.3bn (+25.9% from end FY12/18), exceeding previous record. Procurement,
which took into account margins that meet the company’s investment criteria (excluding some bulk projects), grew steadily.
Using its track record of over 150 properties, debt finance proceeded smoothly (both short- and long-term liabilities increased).
However, due to the increasing size of properties and its desire to capitalize on business opportunities such as resort
development investment projects for high net worth individuals, the company is keen to raise more funds, including via
methods that do not involve bank loans.

▷

FY12/19 company forecasts: No change▷

Dividends: Dividend forecast for FY12/19 is pending

Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
13,45414,00012,00010,000
8,000

6,835
5,654

6,000
4,000
2,000
0

2,858

3,508

2,646

2,739

376

Q1

216
Q2

1,070
791
Q3

2,391
Q4

12,480

684
330
Q1

3,248

3,249
1,781 5,143 2,021

Q2

FY12/15

1,449

1,257
Q3

Q4

Q1

FY12/16

2,725
Q2

6,329

993
478
Q3

Q4

2,752

2,247

2,128

1,830

Q1

Q2

FY12/17

1,815
770
Q3

5,886

4,612 1,489

Q4

642
Q2

Q1

FY12/18Q3Q4

FY12/19

Source: Shared Research based on company data

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

Real Estate Consulting

27.4%

1,500
1,000
500
0
-500
-1,000

1,716

16.8%

9.3%
10.9%

367

(108)

180
-2
(98)

288

187

326

8.7%
155

109

304

64

277

144

(88)

(87)

(94)

(105)

(183)

507

9.0%
7.9%
160

505
(237)

132
(241)

OPM (right axis)

30%

26.0%

18.4%

17.2%

20%

1,528

14.0%

14.2%

12.8%

428

2,479

25.1%

2,500
2,000

Real Estate Management

2,407
460

1,713
30

482
(194)

474

3.0%

-11
(175)

(192)

4.4%

10%

254
1,011

100

339

204

90

(213)

(225)

(330)

(150)

(298)

0%

-19
(252)
-142
-9.6%

-9.3%

Q1

Q2

Q3

FY12/15

Q4

Q1

Q2

Q3

FY12/16

Q4

Q1

Q2

Q3

FY12/17

Q4

Q1

Q2

Q3

FY12/18

Q4

Q1

Q2

Q3

Q4

-10%

FY12/19

Source: Shared Research based on company data

11/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

By Segment
Real Estate Investment and Development segment▷▷

Segment revenue was JPY5.3bn (+32.7% YoY).
The company sold four properties (10 in 1H FY12/18): Two residential properties (four), one office/retail building (three), zeroland lots (two), and one hotel (one).
 A major earnings contribution came from the Q1 sale of newly built Hotel Torifito Otaru Canal in Otaru, Hokkaido to an
investment company through collaborative efforts between group companies B-Lot Singapore and B-Lot AssetManagement. The business plan for this project was put together in March 2016, land for development acquired in
October 2016, construction started in April 2017, construction finished and the hotel opened in April 2018, and theproperty was sold in February 2019. After the sale, the company has been providing contract asset management andproperty management services to the investment company that purchased the property; in partnership with the hotel
operator AB Accommo, it plans to provide follow-up support to the investment company in managing the property overthe long term.
 Together with AB Accommo, the company has already opened five accommodation facilities starting with a hostel inShinjuku, Tokyo in 2015, which are contributing to the company’s earnings. The two companies remain involved in threeof these (facilities in Shinjuku, Tokyo, Shintomicho, Tokyo, and Otaru, Hokkaido) even after their sale to investors. The
other two (facilities in Kiyomizu, Kyoto and Kitahorie, Osaka) are owned by the company and are contributing to theearnings at both partners. The sixth project (a 130-room hotel tentatively named Hotel Torifito Hakata Reisenmachi inFukuoka) is set to be completed in July 2020, and the seventh (a 161-room hotel tentatively called Hotel Torifito▷

Kanazawa) in June 2021.
The company purchased 12 properties (16 in 1H FY12/18): Four residential properties (seven), three office/retail buildings(three), five land lots, including land held for development (four), and none in the others category (two). By region, eight
were in Kanto (seven), none in Hokkaido (two), none in Kyushu (four), one in Kansai (three), and three in Chubu (none). The
breakdown of the three projects in the Chubu area were one in Ishikawa Prefecture, one in Nagano Prefecture, and one in Aichi
Prefecture. The company expects that new business development in new areas will lead to the development of partner▷▷companies that can contribute to the future growth of the company group.
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 two capsule hotels.
Inventories on real estate for sale (including real estate for sale in process) at end 1H FY12/19 was JPY18.3bn (+25.9% from end
FY12/18), exceeding previous record. Procurement, which took into account margins that meet the company’s investment
criteria (excluding some bulk projects), grew steadily. Parent company inventory was 33 properties at end 1H FY12/19 (25 at
end FY12/18). The breakdown was 10 residential (seven), 12 land lots (nine), four office/retail (two), three
hotel/accommodation facilities (three), one nursing care facility (one), two solar projects (two), and one logistics facility (one).
 The 10 residential properties include a large (land: 2,846sqm) Tokyo metropolitan residence in Nakano, Tokyo that thecompany plans to redevelop into a standard rental condominium (single building).
 Of the 12 land lots in the inventory, the company plans to use four lots to develop hotel/accommodation facilities and▷another four to develop residential condominiums, and sell the remaining four after adding value.
Segment profit was JPY992mn (+82.9% YoY).

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY691mn (+9.1% YoY).

12/63

R B-Lot / 3452
Coverage▷▷

LAST UPDATE: 2019.09.25

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

The company mainly brokered transactions in the Kanto area, completing 11 deals (16 in 1H FY12/18). Of the 11 completeddeals, eight were in Kanto (10), one in Hokkaido (two), none in Kyushu (two), and two in Kansai (two).
Commissioned condominium sales grew steadily (delayed from the original plan for sale in FY12/18), and the brokerage of
newly completed hotel in Otaru handled by subsidiary B-Lot Singapore contributed to results. The company also used its
ample network to supply undisclosed market information to broker a villa in Karuizawa to an overseas high net worth individual,
and was also involved in rebuilding and project management. The company’s global team is helping to meet the needs ofoverseas investors who are looking for diverse asset management options, as exemplified by closing such deals with overseas▷

high net worth individuals.
With the growing scale of projects and successful high-margin consulting services, segment profit came in at JPY477mn(+145.7% YoY).

Real Estate Management segment▷▷▷

Segment revenue was JPY1.4bn (+250.7% YoY).
The number of client-owned properties under property management rose to 77 (63 in 1H FY12/18). By region, the company
was managing 35 properties in Kanto (28), 24 in Hokkaido (24), 15 in Kyushu (nine), and three in Kansai (two).
Asset management revenue increased significantly backed by an increase in the number of properties managed by B-Lot AssetManagement and the consolidation of T&K Co., Ltd.
 In April 2019, “nine hours Namba Station” opened in Osaka, and in August 2019, “nine hours Nakasu Kawabata Station”
opened in Fukuoka. Both of these capsule hotels are on properties the company does not own. It leases large commercial
facilities to open the capsule hotels, which its business partner nine hours operates. Prospects are for steady revenue overthe medium to long term.
 The company contracted to provide asset management services to major Singaporean real estate developer SC Global
Developments Pte. Ltd. for Setsu Niseko, a 190-room (tentative) condo hotel in Niseko, Hokkaido. The company’s▷

Singapore-based subsidiary is promoting real estate investments in Japan to affluent clients in Southeast Asia.
Segment profit was JPY467mn (+70.1% YoY).

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, make▷business, 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.
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.

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

13/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Full-year company forecasts(JPYmn)
Revenue
YoY
Gross profit
YoY
GPM
SG&A expenses
YoY
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY

1H
5,270
25.7%
1,670
83.0%
31.7%
1,050
162.9%
620
20.7%
11.8%
441
12.3%
8.4%
304
11.4%

FY12/17
2H
7,827
5.3%
2,728
59.7%
34.8%
981
-6.2%
1,746
163.8%
22.3%
1,558
223.4%
19.9%
947
200.0%

FY
13,097
12.6%
4,397
67.8%
33.6%
2,032
40.5%
2,366
101.3%
18.1%
1,999
128.6%
15.3%
1,251
112.6%

1H
4,999
-5.1%
1,668
-0.1%
33.4%
1,094
4.2%
574
-7.4%
11.5%
354
-19.8%
7.1%
221-27.1%

FY12/18
2H
15,269
95.1%
4,129
51.4%
27.0%
1,396
42.2%
2,733
56.5%
17.9%
2,479
59.1%
16.2%
1,739
83.7%

FY
20,268
54.7%
5,797
31.8%
28.6%
2,490
22.6%
3,307
39.8%
16.3%
2,833
41.7%
14.0%
1,961
56.8%

FY12/19 Est.
1H
2H Est.
FY Est.
7,376
18,92426,300
47.5%
23.9%
29.8%
2,795
67.5%
37.9%
1,409
28.7%
1,386
2,352
3,738
141.6%-14.0%
13.0%
18.8%
12.4%
14.2%
1,211
2,149
3,360
242.1%-13.3%
18.6%
16.4%
11.4%
12.8%
854
1,503
2,357
285.8%-13.6%
20.2%

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

FY12/19 company forecasts
Overview
For FY12/19, the company forecasts revenue of JPY26.3bn (+29.8% YoY), operating profit of JPY3.7bn (+13.0% YoY), recurring
profit of JPY3.4bn (+18.6% YoY), and net income attributable to owners of parent of JPY2.4bn (+20.2% YoY).

Industry environment and company initiatives▷▷

Looking at FY12/19, while there remain some uncertainties in the global economy, domestic economy is expected to remain
on a recovery path supported by Japanese government-led economic measures and Bank of Japan’s monetary easing. The realestate industry also expects to see a continued favorable environment.
The company group has aimed to be a “company which achieves sustainable and long-term growth” for many years. Now that
it is a listed on TSE1, the company still maintains this goal. The company has developed a new medium-term management
plan (referenced below) and aims for further growth. As one means to achieve long-term continued growth, the company is▷prioritizing the enhancement of its treasury stock and aims to first boost profits.
The number of group companies is gradually increasing and the businesses are diversifying. The company plans to spur
opportunities to utilize synergies within the company group, enhance business opportunities, and maximize profits.

14/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Medium-term outlook
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. Plan targets are as follows.

▷▷

FY12/19 target is according to company forecasts
FY12/20 target: 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 parent of JPY2.8bn (+20.6% YoY)

Medium-term management plan targets (FY12/19–FY12/20)(JPYmn)
Revenue
YoY
Gross profit
YoY
GPM
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin

FY12/18 FY12/19 FY12/20
Cons.
Est.
Est.
20,26826,30030,000
54.7%
29.8%
14.1%
5,797
31.8%
28.6%
3,307
3,738
4,552
39.8%
13.0%
21.8%
16.3%
14.2%
15.2%
2,833
3,360
4,121
41.7%
18.6%
22.6%
14.0%
12.8%
13.7%
1,961
2,357
2,843
56.8%
20.2%
20.6%
9.7%
9.0%
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
Based on the management concept of “pursuing profits in conformity with societal standards and long-term, continued
growth,” achieved eighth consecutive year of higher revenue and profits since FY12/10
In 2018, changed listing from Mothers Section to First Section of Tokyo Stock Exchange
As a company on the First Section of the Tokyo Stock Exchange, will continue to pursue long-held business indicator (20% or
higher net income growth) in this new stage
Year-end dividend for FY12/18 planned for 20% payout ratio with JPY30.5 YoY increase (after consideration of stock split). The
company will continue to take efforts to achieve earnings target so that it can return profits to shareholders
In the Real Estate Investment and Development segment, a core business of the company group, the year-end balance ofproperties for sale in FY12/18 reached record highs (see FY12/18 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

Net income growth of over 20%
The company’s most important key performance indicator (KPI) is net income. B-Lot thinks that it needs to grow profit by roughly
20% per annum 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.

15/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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.
Domestic real estate transactions in July–December 2018 totaled JPY1.7tn (-34% YoY), showing short-term signs of buyers
holding off. However, real estate demand in Japan remains robust among real estate equity underwriters, REITs, domestic andoverseas institutional investors, affluent overseas buyers, and individuals in Japan seeking to make the most of revised inheritancetax 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 theirlending to certain key borrowers. Substantial demand for capital comes from M&A and real estate purchases. Banks havetightened lending to salaried worker investors who acquired real estate in the JPY100–200mn price range mainly financed bybank 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.
Note: See the Market and value chain for key indicators related to the above.

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 59 employees, and on a group-company basis including acquiredcompanies, there are 203 employees (as of end-June 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 1.73 in FY12/18; average for 23
competitors with similar revenue was 1.11). 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.

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

16/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Build expertise in utilizing a diverse talent pool▷

Secure fixed assets in the medium to long term and develop new products

Investment and development▷

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

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.

▷▷

The company entered hotel development ahead of the inbound tourism boom, opening two renovated accommodation
facilities in 2015: First Cabin Tsukiji (Chuo, 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 was▷▷over 83.5%, with over 17,000 guests.
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 a capsule hotel owned by subsidiary, Viento Creation Co., Ltd., and reopened it
under the brand name °C Ebisu (Shibuya, Tokyo; one minute by walk from Ebisu station). In April 2018, the company

reopened °C Gotanda (Shinagawa, Tokyo; three minutes by walk from Gotanda station). 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, and the seventh Hotel Torifito Kanazawa (tentative name) in June 2021.

17/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 manages assets
for Asian investors. Rather than a one-time transaction of simply selling a property, the group is involved with a property over thelong term, providing post-sales services including asset management and property management.
Hotel revitalization and development projects (both completed and under development)
Type
Revitalization
Revitalization
Revitalization
Revitalization
Type
Development
Development
Development
Development
Development
Development
Development
Development
Under development
Under development

Project
First Cabin Tsukiji
IMANO TOKYO HOSTELo

C Ebisu
C Gotanda
Project
the kamui nisekonine hours Shinjuku-NorthIMANO TOKYO GINZAIMANO TOKYO GINZA HOSTEL
Tissage Hotel Naha by Nest
Hotel Torifito Otaru Canal
NESTHOTEL KYOTO SHIJOKARASUMAIMANO OSAKA SHINSAIBASHI HOSTEL
Hotel Torifito Hakata Reisenmachi
Hotel Torifito KanazawaoAt time of purchase
After renovation
Office building
Accommodation (hostel)
Office building
Accommodation (hostel)Stores and guest houses
Accommodation (major renovation and rebranding)
Guest houses
Accommodation (major renovation and rebranding)Description
B-Lot's first condominium for subdivision
B-Lot's first hotel
Hostel located in the popular Ginza area
Hostel within walking distance from major sightseeing spots in Kyoto
First real estate for sale in Okinawa
Hotel specialized in accommodation with over 100 rooms in Otaru
Budget hotel (holding)Opened in March 2019 (holding)
To be completed in July 2020
To be completed in June 2021

Source: Shared Research based on company materials

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 ℃ brand (pronounced“doe-shi”) that incorporate saunas. The first such property, ℃ Ebisu, opened on December 16, 2017, and the second, ℃
Gotanda, was opened in 2018.

Expansion into new business areas
B-Lot is involved in accommodation facilities and nursing care facilities, and would also like to commercialize 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.

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
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.

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 enter overseas real estate investment, revitalization, development, or financing.
Singapore, where the company established a subsidiary, could be a hub to invest in Southeast Asian countries. Clients alreadyinclude English-speaking investors, and the company has hired Taiwanese staff as it plans to target Chinese speakers as well.

Acquisitions
In April 2016, B-Lot purchased Life Stage, whose main business is marketing 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 line with its core strategy of hiring talented employees and business diversification, the

18/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

company plans to proactively use acquisitions to increase synergies between individual businesses and offer end-to-end services
as a group. In April 2018, the company purchased shares in golf course and sports facility operator T&K Co., Ltd., making it asubsidiary. The company is trying its hand in a new business territory, and aims to boost the value of its golf courses by providing
new values to golfers in Japan and overseas.

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.

Transfer to the Tokyo Stock Exchange First Section
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.

19/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 FY12/18, the breakdown of earnings by segment was: Investment 84.3% of revenue, 72.0% of operating profit; Consulting
5.8% of revenue, 6.7% of operating profit; and Management 9.9% of revenue and 21.3% of operating profit. OPM was 17.7%,
23.8%, and 44.6% respectively. B-Lot aims to diversify its building types and regions in the Real Estate Investment segment.
Breakdown by building type: residential 14 (54% of properties sold), office/retail buildings seven (27%), detached lots two (8%),
and hotels three (12%). Breakdown by region: Kanto 11 (42% of properties sold), Hokkaido nine (35%), Kyushu five (19%), andKansai one (4%). The average sales price per property sold in the Real Estate Investment segment was JPY662mn, up sharply from
JPY76mn in FY12/12. In the Consulting segment, the company won around 30 deals per annum, plus 440 sales contracts from Life
Stage (consolidated subsidiary from FY12/16). In the Management segment, management contracts rose from 20 in FY12/12 to
68 in FY12/18.
Segment revenue and operating profit (FY12/18: excluding adjustments)
2,022
10%

1,190
6% 90221%

FY12/18
Revenue
20,268283
7%17,208
84%

3,040
72%

Outer: Revenue
Inner: Operating profit(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
Source: Shared Research based on company data

Revenue, operating profit, recurring profit, and OPM
35,000

18.1%
16.3%

30,00025,00020,0009.8%

15,000

10.2%

6.3%

0
(JPYmn)457

23

FY12/10

6

1,338
85 78

2,231
218 183

FY12/11

FY12/12FY12/13

494

Revenue

3,709
378 295
FY12/14

Operating profit

20,26810.1%

FY12/15

1,175

18%
16%
12%
10%
8%
6%

6,951
800 655

20%

14%

14.2%

13,097

11,627

10,000
5,000

11.5%

26,30030,00015.2%

874

FY12/16

Recurring profit

2,366
1,999

3,307
2,833

FY12/17

FY12/18

3,738
3,360

4,552
4%
4,121

FY12/19 Est. FY12/20 Est.

2%0%

OPM (right axis)

Source: Shared Research based on company data

20/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 ideas 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 JPY662mn in FY12/18. 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 properties (floor space of 300–5,000 tsubo [992–16,529sqm]) and large
properties (over 5,000 tsubo [over 16,529 sqm]). In terms of rentable area (floor space), small and medium properties accounted for 47% (5.94mn
tsubo [19.6mn sqm]) versus 53% (6.68mn tsubo [22.1mn sqm]) for large properties. By number of buildings, small and medium office buildings
accounted for the vast majority or 92% (8,162 buildings) versus 8% (737 large buildings). Source: Xymax Real Estate Institute, Office Stock Pyramid
2018

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 Investment 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.

21/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 segment, and has grown thanks to stable earnings sources, Consulting and Management.
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 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 section for details.) B-Lot had a small team of skilled
professionals at the time of its establishment; as of end-June 2019, including acquired companies, the group had 203 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).

22/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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, thecompany 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.

23/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 Investment segment accounts for around 85% of revenue (FY12/12–FY12/18 average) and the segment profit margin during
these years was 10–21%. In recent years, revitalization and new development projects accounted for almost half and half (of the
27 items of real estate for sale at the start of FY12/18, 12 were land for development). The company sold 26 properties andacquired 24 properties in FY12/18. The acquired properties break down into 11 residential properties, five office/retail buildings,
one land lot, four land lots for development, and three others. The others include two solar power generation facilities and one
logistics facility, which are firsts for the company. The inventories are diversified regionally and by type of property. Many of thecompany’s customers own several buildings, particularly in Tokyo. Some are repeat customers who also aim to diversify theirportfolios by owning properties in Hokkaido and Fukuoka, 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.)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 those

24/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

regarding 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.
Investment 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 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
OPM

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

FY12/16Cons.

FY12/17Cons.

FY12/18
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%

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%

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%
0
0.0%
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%

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

Investment 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

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%

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
-

11
45.8%
5
20.8%
4
16.7%
4.0
-

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

na
na
na
na
na
na
na
na

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%

Source: Shared Research based on company materials

25/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Investment 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<By region>
Kanto
YoY
% of total number of properties in inventory
Hokkaido
YoY% of total number of properties in inventory
KyushuYoY% of total number of properties in inventory
Kansai
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%

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
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%
-

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

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%

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%

7
58.3%
4
33.3%
1
8.3%
284
168.4%

10
42.9%
55.6%
6
50.0%
33.3%
1
0.0%
5.6%
1
5.6%
337
18.9%

14
40.0%
56.0%
3
-50.0%
12.0%
6500.0%
24.0%
2
100.0%
8.0%
456
35.1%

7
-50.0%
25.9%
7
133.3%
25.9%
7
16.7%
25.9%
5
150.0%
18.5%
421
-7.7%

FY12/18Cons.
14,50027.7%

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–
FY12/18 average), and OPM was 24–40% (FY12/12–FY12/18). The segment’s composition of overall revenue had continued togrow, from 2.5% in FY12/15, to 7.4% in FY12/16, to 9.9% in FY12/17, but contracted to 5.8% in FY12/18.
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 segment for creating procurement
networks and in sales and marketing activities.

26/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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
OPM

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%

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%

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 68 buildings. In FY12/18, the segment
accounted for 9.9% of revenue and OPM was 44.6%.
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 issold.
Number of tenants and total rentable floor space (sqm)
Total rental space (right axis)(Sqm)

No. of tenants

Source: company materials

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

27/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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.
Number of buildings under management
68

70

Kanto

60

Hokkaido

KyushuKansai

50

43

40

31

30
20
10
0

16

13

0
12/08

1
1
12/09

1
1
12/10

3

2

8
9

36

10

9
12

16

48
1
9

59

3

2
8

14

23

23

26

28

12/17

12/18

18

11

13

14

15

17

20

12/11

12/12

12/13

12/14

12/15

12/16

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

28/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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
OPM

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%

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%

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

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 group

B-Lot Singapore Pte. Ltd.

Services 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

29/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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.
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 is conducting major renovations at the two capsule hotels in preparation for reopening.

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.

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 the

30/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

revitalization 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, the company
has been using higher levels of leverage than its competitors to accelerate growth (the net debt/equity ratio was 1.73 in FY12/18;
average for its 23 competitors with similar revenue was 1.11). Over the five years through FY12/18, revenue grew at a CAGR of
55.5% and operating profit of 72.3%.
Comparison with main competitors
Ticker Company

FiscalRevenueyear(JPYmn) (JPYmn)

OP

3244
2337
4321
8923
3299
8934
8940
3457
3230
8914
3250
3454

Samty
IchigoKenedix
Tosei
Mugen Estate
Sun Frontier Fudousan
Intellex
HOUSEDO
Star Mica
Arealink
A. D. WorksFirst Brothers

FY11/18
FY02/19
FY12/18
FY11/18
FY12/18
FY03/19
FY05/19
FY06/19
FY11/18
FY12/18
FY03/19
FY11/18

84,27482,54063,372
61,54353,93153,291
36,981
31,54630,281
28,82824,861
21,864

14,033
26,27914,516
10,875
5,985
13,305
1,672
3,156
3,838
2,782
2,116
5,130

3452

B-Lot

FY12/18

20,268

3294
3236
8929
3277
3475
1717
8925
3241
3237
8918

e'grand
Properst
Aoyama Zaisan Networks
Sansei Landic
Goodcom Asset
Meiho Enterprise
ArdeproWill
IntranceLand

FY03/19
FY05/19
FY12/18
FY12/18
FY10/18
FY07/18
FY07/18
FY12/18
FY03/19
FY02/19
Average

18,18018,002
17,227
16,833
16,817
14,47911,491
6,054
2,752
2,244
31,203OPM

ROA

ROE Equity Net debt-to-(RP-based)
16.7%
31.8%
22.9%
17.7%
11.1%
25.0%
4.5%
10.0%
12.7%
9.7%
8.5%
23.5%

37.9%
30.9%
48.7%
37.5%
32.9%
50.3%
29.0%
27.8%
26.9%
49.5%
39.0%
29.7%

0.72
1.47
0.28
0.93
1.39
0.39
1.72
0.96
2.33
0.24
0.59
1.60

3,307 16.3%

13.1% 39.3% 24.6%

1.73

904
1,378
1,464
1,765
1,678
2,746
1,102
507
375
771
5,204

4.1% 7.4%
4.1% 23.0%
10.8% 28.6%
9.8% 11.9%
12.5% 22.3%
27.9% 46.1%-2.2% -24.1%
8.3% 13.1%
6.6% 1.9%
9.0% 8.7%
8.6% 15.3%

1.03
4.30
0.17
0.28
-0.13
0.76
4.12
0.71
-0.11
-0.02
1.11

5.0%
7.7%
8.5%
10.5%
10.0%
19.0%
9.6%
8.4%
13.6%
34.4%
14.6%

7.1%
7.5%
7.2%
7.8%
8.3%
12.6%
4.0%
8.5%
5.5%
7.5%
5.9%
10.8%

ratio Equity ratio
16.9%
16.3%
13.4%
14.0%
16.3%
16.8%
8.0%
19.2%
13.2%
10.3%
6.0%
22.3%

37.6%
15.6%
35.9%
53.1%
51.1%
41.2%
17.6%
38.1%
59.4%
83.7%
39.0%

Main businesses(% of revenue)
Real estate (development and revitalization) (89), rental (8)Value-added (revitalization) (93), clean energy (4), asset management (3)Real estate investment (74), asset management (15)
Revitalization (57), Development (22), Rental (10)Buying and selling (revitalization) (94), rental and other (6)Renovation (85), asset management (5)Renovation and sale of pre-owned condominiums (77)House leaseback (44), real estate buying and selling (29), renovation (10)Pre-owned condominium (sale and rental) (73)Property management (87), property revitalization & liquidation (13)Sale of rental real estate (88), recurring-fee business (12)Investment bank (100)Real estate investment and development (85), real estate consulting (5), realestate management (10)Renovation of pre-owned houses (99)Development of properties for rental (55), renovation (42)Property consulting (27), real estate transaction (67), sublease and other (6)Real estate sales (95), construction (5)Domestic sales (58), sales to real estate companies (38), property management (4Subdivision (83), rental (14)
Revitalization of real estate (91), real estate rental revenue and other (9)Development for subdivision (54), renovation (25)
Principal (development) investment (76), solutions (17)Renewable energy-related investments (52), real estate sales (39)

Source: Shared Research based on company data

31/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 1.73 in FY12/18; average for 23 competitors with similar revenue was 1.11). Over the five years throughFY12/18, revenue grew at a CAGR of 55.5% and operating profit 72.3%.
◤ 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 JPY662mn in FY12/18) 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 (roughly 50 employees at the parent company). Real estate companies that focus on small and medium-sized properties
tend to concentrate 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 26
properties the Investment segment sold in FY12/18, 11 (42%) were in Kanto, nine (35%) in Hokkaido, five (19%) in Kyushu,
and one (4%) in Kansai. Diversification enables B-Lot to mitigate the risk of regional price fluctuations and increases
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
1.73 in FY12/18, versus an average of 1.11 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 FY12/18 was just JPY662mn. 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.
◤ Lack of retained earnings: B-Lot has a shareholders’ equity ratio of 24.6%, the third lowest compared to a similar sized peergroup of 23 companies, which have an average ratio of 39.0%. The company’s net D/E ratio, which is 1.6 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.

32/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Market and value chain
Japanese real estate transactions
Market size
After peaking in fiscal 2014, Japanese real estate transactions declined in fiscal 2015 before a slight recovery in fiscal 2016. The
value of Japanese real estate transactions by listed companies in fiscal 2016 was JPY4.1tn (+0.5% YoY). Real estate transactions
grew 21.1% YoY in fiscal 2017, but transactions by listed companies in the first half of fiscal 2018 was down 3.4% YoY to JPY1.8tn
and was down 34% YoY to 1.7tn in July–December 2018. 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), which deterredbuying by overseas investors. Meanwhile, widening yield spreads*** accompanying declining interest rates saw the real estate
funds market expand to JPY34.2tn (+6.9% YoY) in the first half of 2018. In addition to growth in J-REIT, private placement funds
specializing in Japanese real estate are also growing. Banks have tightened lending to salaried worker investors who acquired realestate in the JPY100–200mn price range mainly financed by bank loans after revelations of improper lending by Suruga Bank, butreal 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 JPY56.8mn/unit in 2017 to JPY59.0mn (+3.6%) in2018 (source: Real Estate Economic Institute, simple average of monthly prices). Prices for pre-owned condominiums rose 1.7% YoY from
JPY35.8mn/70sqm in 2017 to JPY36.4mn/70sqm in 2018 (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
1,340

7,000
6,000

2,000

2,480.1
1,601.9

4,122.8524
2,032.5

2,408.2810
676

3,208.4
2,408.2

1,107.0 1,163.0

1,730.9

2,627.9 2,232.7 2,390.3

1,858.5 1,664.8
1,890.1 1,958.6

925.5

949.1

677.3

809.8

FY00

FY01

FY02

FY03

FY04

FY05

1H transactions

2,240.0

801.5

1,111.5

1,057.0

FY06

FY07

FY08

2,658.5
2,054.9
1,198.1

1,722.5

4,976.3

1,000

4,089.7 4,108.2
3,140.4
1,999.9800
3,155.0600

2,557.2

400

1,811.3

983.1

553.3

856.8

739.4

847.2

FY09

FY10

FY11

FY12

2H transactions

2,645.7

1,200

1,100

1,014

4,599.7

673

513

502

1,818.1

878.2(JPYbn)5,289.0

4,348.9

648

594

1,000
0

859

846

4,000
3,000

1,124

5,448.4

5,000

1,400

1,259

1,241

1,199

1,155

1,954.0 2,148.6 2,089.8

1,551.0 1,821.3 1,760.0

FY13

FY16

FY14

FY15

FY17

FY18

200
0

Number of transactions (right axis)

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

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

400
308

300

265
229

200

136

100

206

186
183

158

219

226
206

238

223

197

194

276
228

258
204

169

163

159

158

164

176

262
240

254

197

204

318
294
265

263

214

213

154

156

157

157

157

158

160

163

165

166

167

168

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018
Jan-Oct

Steel fiber reinforced concrete

Reinforced concrete

WoodenSteel

Source: Shared Research based on MLIT data

33/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

New and pre-owned condominium in Tokyo metropolitan, sold and contracted
120,000
110,000
100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,000027,09028,03954.70
29,37847.92
28,498

46.85

45.79

50

45.28

45

31.28

31,18328.24

30,34729.65

28,871
29.79

33,79831,397

60
55

50.45

48.72
36,432

28,744
29.00

45.10

58.86

56.81

55.53

28.63

27.91

28.51

34,77637,32937,217

34.76

35.77

36.38

37,189

40
35
30

30.70

25.06

24.80

25.20

85,42984,14874,46361,02143,73336,37644,53544,49945,60256,47644,91340,44935,77235,89837,132

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

New subdivided condos (units sold)Pre-owned condos (units contracted)

Price of new condos (per unit; right axis)

Price of pre-owned condos (per 70sqm; right axis)

25
20(JPYmn)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
34.2
32.0 32.5
2.2
30.3 30.8
1.5 2.0
28.6 28.8
1.7 1.1
27.1 27.3 27.4 27.7
26.8
26.5
25.9
1.6 1.7
1.2 1.1 1.7
24.5 25.0 25.2 24.5 24.6 25.4 25.2
2.3 2.2 1.7
14.7
2.8
2.9
2.5
1.9
14.3 14.0
21.1 3.4 4.0 3.7 3.1
13.8 14.2
13.5 13.1
14.4 13.4
16.3 4.3
15.0 14.9
15.3
14.8 15.8
14.7
14.9
14.7
3.5
14.0 13.8
13.7 13.6
10.0
6.7
17.3
14.8 15.5 16.2 16.5
12.6 13.5 14.0
10.4 11.2 11.9
9.0
8.7
8.0 8.3
6.1 6.8 7.4 7.4 7.5 7.6 7.8 7.8

35
30
25
20
15
10
5
0
(JPYtn)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

J-REIT

Private placement fund specialized in Japan

Private placement fund (global; assets under management in Japan)

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

Interest rates (%)
（%）
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-09Housing loans (Flat 35; over 21-year; fixed-rate)

Oct-10

Oct-11

Oct-12Oct-13

Bank loans

Oct-14Oct-15Oct-16Oct-17Oct-1810-year JGB

Source: Shared Research based on Japan Housing Finance Agency, Bank of Japan, and Ministry of Finance data

34/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Expected yields on one-room investment condominiums in Tokyo7%
6.0% 6.0%

6%5%

5.6% 5.5% 5.5%

5.4% 5.3%

4.8% 4.8% 4.7% 4.8%

4%3%

5.8% 5.7%

5.3%

4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2% 4.2%
3.5% 3.5% 3.5% 3.5%

3.8%

5.1% 5.0%

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%

3.0% 3.0%

2%
Condominiums (Jonan area, Tokyo; for families)

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

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
3,000

600

543

2,500

506

503

425

394

2,000
1,500

217

2,184.4

1,000
500
0

98
47
358.0

364.9

2001

2002

562.3
2003

161
1,506.4

1,342.2

84

208

1,007.9

809.4
2004

(JPYbn)

57

2005

2006

2007

2008

Transaction value

2009

529.7
2010

367

400
247

202

2,286.5
1,595.8 1,597.1

83

246.6

500

434

710.8

804.2

2011

2012

2013

2014

1,769.2

2015

2016

300
200

1,339.4

2017

100
0

Number of transactions (right axis)

Source: Shared Research based on ARES data

Bank loans outstanding to property sector
15.7%

100

15.3%

90

14.8%

80
70
60

14.0%

14.3%

14.4%

14.3%

13.9%

14.2%

14.0%

14.0%

30

74.8

74.9

76.8

76.0

76.1

77.1

78.2

80.1

15%

14.3%

14%

50
40

16%

84.2

89.7

94.9

99.0

13%
12%

20
10
0
(JPYtn)

2007

2008

2009

2010

Outstanding loans for the real estate industry

2011

2012

2013

2014

2015

2016

2017

2018 Oct11%

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

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 2018 (July–September) was around JPY6,470/sqm (+2.7% YoY, +3.2% QoQ). Rents have been
climbing since bottoming out in Q3 2012 (July–September). The vacancy rate for Class B buildings in central Tokyo was 0.8%
(dropping below 1%). The downtrend since Q2 2011 continues, against a backdrop of the end of large increases of newly
constructed office building supply.

35/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Class B office rent and vacancy rates in Tokyo(Vacancy)(Rent; JPY/sqm)
9,000

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

Rent

1,000

1.0%

05Q1
05Q2
05Q3
05Q4
06Q1
06Q2
06Q3
06Q4
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
13Q4
14Q1
14Q2
14Q3
14Q4
15Q1
15Q2
15Q3
15Q4
16Q1
16Q2
16Q3
16Q4
17Q1
17Q2
17Q3
17Q4
18Q1
18Q2
18Q3

0

2.0%

Vacancy rate

(JPY/sqm)

16Q1

16Q2

16Q3

16Q4

17Q1

17Q2

17Q3

17Q4

18Q1

18Q2

18Q3

Rent

6,041

5,851

5,830

5,561

5,972

5,861

6,299

5,997

6,063

6,271

6,470

Vacancy rate

3.0%

2.5%

2.6%

2.2%

2.0%

1.6%

1.4%

1.1%

1.0%

0.9%

0.8%

0.0%

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)

2.5
2.0

41 40
32

44

((bu

46 47

29 30

0.0

1.83

1.14
1.00
1.18
1.081.04
0.83

29

27
21

0.5

45
36

36

1.5
1.0

50

43

22
17

14

16

2.21

1.19
1.18
0.99
0.89
0.92
0.74
0.72
0.36

27

26
21

20
1.62

1.18
0.82

29 29

35

1.81

1.26
0.900.82
0.64

1.19

40

32

19 18

22 21

30

22 22 22

19

1.47

1.18
0.99
0.92
0.66
0.76

25
20

1.73

1.00

15

9
0.53

4
0.29

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

Supply (mn sqm)

1050Supply (units; right axis)

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.

36/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

HotelsIn 2018, there were 31.2mn overseas tourist arrivals in Japan (+8.7% YoY). Although affected by a succession of natural disasters
which discouraged some tourists from visiting Japan, arrivals were up YoY by the end of 2018 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 (%)
70

60.00

60
50

80.0%

40

73.9%

30

67.3%

20

67.0%

10
0

82.7%
78.6%
69.5%

84.2%
83.2%
74.1%
72.1%

87.8%
86.3%
78.7%
74.2%

83.3%
76.6%
74.4%

84.8%
79.0%

8.35

10.36

13.41

2012

2013

2014

Foreign travelers visiting Japan (mn)Occupancy (Tokyo right axis)
Occupancy (Aichi; right axis)

19.73
2015

24.04
2016

85%

40.00

80%
75%

75.4%

67.7%

28.69

95%
90%

85.1%

85.2%

100%

70%
65%

31.19

60%
55%

2017

2018

Occupancy (nationwide; right axis)
Occupancy (Osaka; right axis)

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

37/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Historical performance and financial statements
Historical financial statements
Q1 FY12/19 results (out May 15, 2019)▷▷▷

For Q1 FY12/19, the company reported revenue of JPY5.9bn (+113.9% YoY), operating profit of JPY1.5bn (+222.4% YoY),
recurring profit of JPY1.4bn (+284.6% YoY), and net income attributable to owners of parent of JPY1.0bn (+289.4% YoY). Bothrevenue and profit increased for the ninth consecutive year.
Progress versus plan: Q1 FY12/19 revenue reached 22.4% of the full-year forecast (versus 13.6% of the full-year FY12/18 result
a year earlier), operating income 40.9% (14.9%), recurring profit 42.8% (13.2%), and net income 43.4% (13.4%).
B-Lot recorded a strong Q1 FY12/19, putting the company on track for 9 straight years of revenue and operating profit increase.
Typically, revenue and profit tend to come in stronger in Q4 every year. In Q1 FY12/19, however, B-Lot sold newly built Hotel
Torifito Otaru Canal (Otaru, Hokkaido) to foreign investors (see below for detail), resulting in a strong Q1 progress rate.
Properties under its development are growing in size, with each property having greater influence on business performance.

▷▷

Large-scale properties contributed significantly to profits. Procurement in Q1 fared steadily (see below).
Not only does the company focus on long term profit growth, it has also delivered results that exceed company forecast eachyear. Looking at the difference between initial forecasts and actual results over the four-year period between FY12/15-FY12/18,
its operating profit exceeded initial forecast by an average of 42%.
Q1 revenue up 113.9% 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
116.7% YoY in Real Estate Investment and Development, 18.9% in Real Estate Consulting (revenue from external transactions),▷▷

and 335.0% in Real Estate Management.
Operating profit up 222.4% YoY: Operating profit increased significantly in all segments, up 198.1% in Investment andDevelopment, 118.0% in Consulting, and173.6% in Management.
Balance of real estate for sale and real estate for sale in process: Procurement was steady as property types expanded. Initiatives
aiming to increase scale of projects made progress. The inventories on real estate for sale (including real estate for sale inprocess) at end-Q1 FY12/19 was JPY15.7bn (+8.0% from end-FY12/18). Using its track record of over 150 properties, debt▷

finance is proceeding smoothly (shifting debt to long-term)
Dividends: Dividend guidance for FY12/19 is pending

Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
13,45414,00012,00010,000
8,000

6,835
5,654

6,000
4,000
2,000
0

2,858

3,508

2,646

2,739

376

Q1

216
Q2

1,070
791
Q3

2,391
Q4

12,480

684

3,248

330
Q1

Q2

FY12/15

3,249
1,781 5,143 2,021
1,449

1,257
Q3

FY12/16

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

5,886

4,612

Q4

Q1

Q2

Q3

Q4

FY12/19

Source: Shared Research based on company data

38/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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

Real Estate Management

3,000

27.4%

9.3% 8.7%

1,000

0
-500

367

180

428
-35
Q1

-2

109

Q2

-9.3%
Q3

10.9%
288
304
Q4

FY12/15

187
64
Q1

326

155

277

144

Q2

Q3

9.0%
507 7.9%
160
505

Q4

FY12/16

14.0%

14.2%
460

1,713
30

132

482

-11

Q1

Q2

Q3

FY12/17

474

3.0%

Q4

1,528

18.4%

17.2%

16.8%
12.8%

30.0%

26.0%

25.1%
1,716

2,000

500

40.0%

2,479

2,500

1,500

OPM (right axis)

4.4%

20.0%

2,407

10.0%

254
1,011

100

339

204

90

Q1

Q2

Q3

Q4

FY12/18

Q1

0.0%

Q2

Q3

Q4

-10.0%

FY12/19

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment
▷
▷
▷

▷

Segment revenue was JPY4.6bn (+116.7% YoY). The company sold three properties (five in Q1 FY12/18): One residential
property (two), one office/retail buildings (one), zero land lots (one), and one hotel (one).
The sale of the newly built Hotel Torifito Otaru Canal (Otaru, Hokkaido) to a foreign investor, a collaborative project of groupcompanies B-Lot Singapore Pte. Ltd and B-Lot Asset Management, significantly contributed to results.
The company purchased five properties (seven in Q1 FY12/18): Two residential properties (three), one office/retail buildings(three), two land lot (none), and others none (one). By region, four were in Kanto (six), none in Kyushu (one), and one in
Kansai (none).
According to B-Lot, procurement is steady and new development properties are increasingly becoming larger in scale.
Generally speaking, however, development projects tend to carry higher risk as there are a variety of factors that can change
before the properties start producing rental revenues, like economic conditions and the lending environment. The company
believes the domestic real estate market carries a large percentage of old stock, and there is a need to replace this with new
stock to keep the market liquid, especially when considering financial institutions’ lending policies toward properties built▷▷▷

according to legacy seismic building codes.
As for revitalization projects, the company is conservatively procuring stock as lending for individual investors slows down.
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 one residential property, two condominiums, and two capsule hotels.
Segment profit was JPY1.0bn (+198.1% YoY).

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY542mn (+18.9% YoY). Segment revenues includinginter-segment transactions was JPY740mn (+47.1% YoY). The sale of newly built Hotel Torifito Otaru Canal to foreign investors,
which was a result of close coordination between B-lot Singapore Pte. Ltd. and B-Lot Asset Management, contributed tosegment revenue (commissions were booked in the Real Estate Consulting segment). Additionally, B-lot Singapore is steadily▷▷

booking profits as well.
B-lot Singapore is steadily generating profit. To facilitate foreign investment in Japan, uses B-Lot’s unique consulting capabilities
to collect real estate information and offer one-stop services covering purchasing, management, and sales. This enables thecompany to provide the precise asset management demanded by Asian investors.
The company mainly brokered transactions in the Kanto area, completing six deals (13 in Q1 FY12/18). Of the six completeddeals, five were in Kanto (nine), one in Hokkaido (two), none in Kyushu (one), and none in Kansai (one).

39/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

In addition to the completion of a large commercial property deal, completion of commissioned condominium sales grew▷With a favorable business environment including the growing scale of projects, segment profit came in at JPY534mn (+118.0%

significantly. Three years after acquiring Kansai region based Life Stage, the synergies are coming to fruition.

YoY).

Real Estate Management segment▷▷▷▷

Segment revenue was JPY732mn (+335.0% YoY).
The number of client-owned properties under property management rose to 74 (62 in Q1 FY12/18). By region, the company
was managing 32 properties in Kanto (28), 24 in Hokkaido (23), 15 in Kyushu (9), and 3 in Kansai (2).
Asset management revenue increased significantly backed by an increase in the number of properties managed by B-Lot AssetManagement, and the consolidation of T&K Co., Ltd.
Segment profit was JPY281mn (+173.6% YoY).

Full-year FY12/18 results (out February 14, 2019)▷▷▷

For FY12/18, the company reported revenue of JPY20.3bn (+54.7% YoY), operating profit of JPY3.3bn (+39.8% YoY), recurring
profit of JPY2.8bn (+41.7% YoY), and net income attributable to owners of parent of JPY2.0bn (+56.8% YoY). Both revenue andprofit increased for the eighth consecutive year.
Progress versus plan: FY12/18 results ended in line with revised forecasts* announced on December 17, 2018. Against theinitial forecasts for the full year, revenue was 101.3% while operating profit was 131.6%, recurring profit was 137.7%, and net
income attributable to owners of the parent was 138.7%.
Revenue up 54.7% YoY: In the mainstay Real Estate Investment and Development segment, the company steadily sold off
revenue-generating buildings, renovated rental apartment buildings, and newly built properties it developed. Revenue
increased 56.7% YoY in Real Estate Investment and Development, declined 18.8% in Real Estate Consulting (revenue from▷▷external transactions), and grew 141.0% in Real Estate Management.
Operating profit up 39.8% YoY: Operating profit was up 31.2% in Investment and Development and fell 30.7% in Consulting,but rose 103.5% in Management.
Balance of real estate for sale and real estate for sale in process: Procurement was steady as property types expanded. Initiatives
aimed at increasing the scale of projects made progress. The inventories on real estate for sale (including real estate for sale inprocess) at end-FY12/18 was JPY14.5bn (+27.7% YoY). Using its track record of over 150 properties, debt finance is▷proceeding smoothly (shifting debt to long-term)
Dividend increase: As 2018 marks B-Lot’s 10th anniversary, the company’s policy for the FY12/18 year-end dividend calls for apayout ratio of 20%. B-Lot has decided to increase the ordinary dividend by JPY30.5 from JPY19.5 in FY12/17 (after consideringstock split) to JPY50 per share.

Revised full-year FY12/18 earnings forecasts (out December 17, 2018)

▷
▷
▷
▷
▷

Revenue:

JPY20.2bn (previous forecast: JPY20.0bn)

Operating profit:

JPY3.3bn (JPY2.5bn)

Recurring profit:

JPY2.8bn (JPY2.1bn)

Net income*:

JPY1.9bn (JPY1.4bn)

EPS:

JPY248.98 (JPY183.65)* Net income refers to net income attributable to owners of parent.
Reasons for revision
The revised revenue forecast is largely in line with the previous forecast. However, the company expects profits to exceed its previous forecasts owing
to successive sales of real estate for sale in Q4 and corresponding strong margins in the mainstay Real Estate Investment and Development business.

40/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
13,45414,00012,00010,000
8,000

6,835
5,654

6,000
4,000
2,000
0

2,858

2,646

2,739

376

Q1

216
Q2

1,070
791
Q3

2,391
Q4

12,480

3,508
684

3,248

330
Q1

Q2

FY12/15

3,249
1,781

5,143

1,449

1,257
Q3

Q4

6,329

2,021

993

2,725

Q1

478
Q3

Q2

FY12/16

Q4

2,752

2,247

2,128

1,830

Q1

Q2

FY12/17

1,815
770
Q3

Q4

FY12/18

Source: Shared Research based on company data

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

Real Estate Management

Real Estate Consulting

OPM (right axis)

3,000

2,479

2,500

27.4%

1,500

500
0
-500

428

9.3%

10.9%
180

109
(108)
(88)
-35
-9.3%
Q1
Q2
Q3
-2
(98)

14.0%

14.2%

12.8%
367

18.4%

17.2%

16.8%

1,000

30.0%

25.1%
1,716

2,000

288

187

326

8.7%

9.0%
507
7.9%

155

160
505

277

304
(87)

64
(94)

144

(105)

(183)

(237)

Q4

Q1

Q2

Q3

Q4

FY12/15

460

1,713
30

474

4.4%
100

339

3.0%

10.0%

254

0.0%

-11
(175)

204

90

(241)

(192)

(213)

(225)

(330)

(150)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY12/16

FY12/17

20.0%

2,407

482
(194)

132

40.0%

-10.0%

FY12/18

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment▷▷

Segment revenue was JPY17.2bn (+56.7% YoY). The company sold 26 buildings (21 in FY12/17): 14 residential properties (11),seven office/retail buildings (five), two land lots (three), and three hotels (two). By region, 11 were in Kanto (15), nine in
Hokkaido (three), five in Kyushu (three), and one in Kansai (none).
In FY12/18, the company finished construction on five properties for development. Three of these properties opened as new
accommodations facilities. Each accommodations facility has maintained a high level of occupancy since its opening. Amongthem, the business hotel in Naha City, Okinawa named Tissage Hotel Naha was sold in 2018, greatly contributing to group

▷

▷
▷
▷

earnings.
The company purchased 24 properties (22 in FY12/17): 11 residential properties (11), five office/retail buildings (four), one
land lot (three), four land lots for development (four); and three others (none). By region, 13 were in Kanto (eight), two in
Hokkaido (seven), five in Kyushu (four), and four in Kansai (three).
Of the acquired properties, two were solar energy facilities and one was a logistics facility, the first of their kind for thecompany group. The company aims to further expand its business content by expanding the types of properties it handles.
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 one residential property, four condominiums, and two capsule hotels.
Segment profit was JPY3.0bn (+31.2% YoY).

Real Estate Consulting segment▷

Segment revenue (revenue from external transactions) was JPY1.0bn (-18.8% YoY).

41/63

R B-Lot / 3452
Coverage▷▷▷

LAST UPDATE: 2019.09.25

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

The company won projects for consulting and brokerage of investment real estate, mainly in Kanto, and completed 27 deals(29 in FY12/17). Of the 27 completed deals, 12 were in Kanto (18), five in Hokkaido (five), four in Kyushu (two), and six in
Kansai (four).
The new condominium Pleagia Kyoto Yamashina Higashino is being sold by the company through Life Stage Co., Ltd. This saleis making progress, showing the cross-group synergy advantages.
However, revenue was down 8.8% due to booking delays on contract sales and brokerage projects. Segment profit was
JPY283mn (-30.7% YoY).

Real Estate Management segment▷▷▷

Segment revenue was JPY2.0bn (+141.0% YoY).
The number of client-owned properties under property management rose to 68 (59 in FY12/17). By region, the company was
managing 28 properties in Kanto (26), 23 in Hokkaido (23), 14 in Kyushu (eight), and three in Kansai (two).
In asset management, the number of properties managed by B-Lot Asset Management has increased and efforts to tap into
new customers by working with a local corporation in Singapore has been successful.

▷

In addition to higher revenue accompanying the acquisition of shares in T&K Co., Ltd., rents on properties for sale increased▷

Segment profit was JPY902mn (+103.5% YoY).

significantly on the launch of hotels the company developed.

Dividend increase
As 2018 marks B-Lot’s 10th anniversary, the company’s policy for the FY12/18 year-end dividend calls for a payout ratio of 20%.
B-Lot has decided to increase the ordinary dividend by JPY30.5 from JPY19.5 in FY12/17 (after considering stock split) to JPY50 per
share (20% payout ratio).

Q3 FY12/18 results (out November 14, 2018)
Earnings overview
For cumulative Q3 FY12/18, the company reported revenue of JPY6.8bn (+8.8% YoY), operating profit of JPY828mn (+27.5%
YoY), recurring profit of JPY474mn (+27.3% YoY), and net income attributable to owners of parent of JPY303mn (+15.3% YoY).
Progress toward FY12/18 forecasts was revenue 34.1% (47.8% of full-year FY12/17 results in Q3 FY12/17), operating profit 33.0%(27.4%), recurring profit 23.0% (18.6%), and net income attributable to owners of parent 21.4% (21.0%). The company’s listing
was transferred from Mothers market of the Tokyo Stock Exchange to the First Section in Q1 FY12/18. The company plans to sell
several real estate properties in Q4, including large hotel properties it has been developing for some time, and indicates thatrevenue and all categories of profit performed in line with initial forecasts in cumulative Q3.
Land prices in major cities have continued on a slight upward trend overall, based on the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT) Trend Report of the Value of Intensively Used Land in Major Cities (Land Value LOOK Report) for
April 1–July 1, 2018. Competition for the acquisition of commercial land remains intense, due in part to the Bank of Japan’s
negative interest monetary policy to stimulate the market. Under these conditions, the company increased the number ofprojects in the Real Estate Investment and Development and Real Estate Consulting businesses.

Revenue
Up 8.8％ YoY. Revenue increased 1.6% in Real Estate Investment and Development, declined 8.1% in Real Estate Consulting,and grew 84.8% in Real Estate Management.

42/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management
6,835
186
319

7,000
5,654
225
286

6,000
5,000
4,000
2,858
100 20

3,000
2,000

2,739

1,000
0

376
130
216

Q1

3,508
240 202,646
204 50

Q2

1,070
2,391
209 71
791
30
Q3

Q4

684
214
139
330
Q1

3,248

1,781
202
323

5,143

2,021
198
374

Q2

Q3

6,329

2,725

993
197
317
478

Q2

Q3

1,449

1,257

FY12/15

3,249
257
267

Q4

Q1

FY12/16

Q4

2,752
168
456

2,247
240
178

1,815

2,128

1,830

797
247
770

Q1

Q2

Q3

FY12/17Q4

FY12/18

Source: Shared Research based on company data

ProfitOperating profit grew 27.5% YoY. Operating profit was up 4.9% in Investment and Development and fell 28.4% in Consulting,but rose 118.1% in Management.
Quarterly operating profit and YoY (%)(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management

2,000

500
0
-500

40.0%

107
88
27.4%

1,500
1,000

OPM (right axis)

17.2%

16.8%
12.8%
47
428

0

(108)

62
-2
(98)

Q1

Q2

118 41
3 109
(88)

-9.3%

Q3

30.0%

25.1%

10.9%
56 14

9.3%
132

8.7%

1149.0%
125
7.9%
96
505
172
132

103
245

122
50

277

304
(87)

114
103
64
(94)

22 98
96
144

(105)

(183)

(237)

(241)

(194)

119
97 -11
(175)

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

FY12/15

FY12/16482

FY12/17

(192)

4.4%
172
339
204
-51
(213)
(225)

(330)

Q4

Q1

Q3

3.0%

20.0%

14.0%

1,713

14.2%

Q2

10.0%

460
35
90

0.0%

Q4

-10.0%

FY12/18

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment
Segment revenue was JPY4.7bn (+1.6% YoY). The company sold 13 buildings (13 in Q3 FY12/17): five residential properties(eight), four office/retail buildings (two), three land lots (two), and one hotel condominium (one).
The company purchased 19 properties (13 in Q3 FY12/17): nine residential properties (six), four office/retail buildings (two), four
land lots including land for development (five); and two others (none). By region, nine were in Kanto (six), two in Hokkaido(two), four in Kyushu (four), and four in Kansai (one). The number of properties held in inventory in Q3 FY12/18 was 33 (26 in
Q3 FY12/17), making solid progress toward commercialization. The company’s first business hotel development in Kyoto wascompleted and opened in August as Nest Hotel Kyoto Shijokarasuma. An office building was also completed in central Tokyo andpreparations are under way for sales. 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 one residential property, six condominiums,
and two capsule hotels.
Segment profit was JPY632mn (+4.9% YoY).
Main real estate property sales announced in Q4: as of December 7, 2018
Large sales announced in Q4 alone comprised the following five properties:▷

New rental condominium building (Fukuoka-shi, Fukuoka): 2,608.75sqm in registered total floor space (estimated); registered
lot area of 499.04sqm; buyer and selling price undisclosed

43/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Hotel (Tissage Hotel Naha in Naha-shi, Okinawa): 3,758.76sqm in registered floor space; registered lot area of 875.38sqm;▷

Residential complex and garage (Setagaya-ku, Tokyo): 1,929.53sqm in registered floor space; registered lot area of 991.73sqm;▷

IMANO TOKYO GINZA HOSTEL (Chuo-ku, Tokyo): 915.65sqm in registered floor space; registered lot area of 137.01sqm;▷

purchased by Fukuoka REIT Corporation; selling price of JPY2.8bn (tax not included)

buyer and selling price undisclosed

buyer is a foreign investor; selling price undisclosed; jointly assumed responsibility for asset management with anothercompany
Retail store (Taito-ku, Tokyo): 1,291.10sqm in registered floor space; registered lot area of 168.59sqm; buyer and selling priceundisclosed(The above properties are outlined in further detail in the “Recent updates” section)

Acquisition of second solar power station: announced on November 7, 2018
In March 2018, the company concluded a business alliance with Asia Energy Bank Co., Ltd. and acquired a solar power station in
Kasama-shi, Ibaraki with the goal of expanding the product lineup of its Real Estate Investment and Development business. Later, inNovember 2018, the company acquired Sakate, Joso-shi, Ibaraki No. 3 MS power station, its second power station.

Recently, a new “secondary solar market” has formed in Japan, through which already-operational solar power stations arepurchased and sold. Yano Research Institute Ltd., a marketing research company, predicts that the market scale* of secondary solar
power stations will expand from 450MW in fiscal 2018, to 650MW in fiscal 2019, and later to 800MW in fiscal 2020.
*Based on the power outputs of already-operational solar power stations that have been or will be traded during FY12/18.

The group views expansion in these kinds of markets as a business opportunity and will apply renewable energy technologies
during the commercialization of solar power stations, thereby reducing its environmental impact. At the same time, the groupwill build expertise in conducting highly transparent trading in the solar power generation industry and contribute to regionaland social development. B-Lot indicates that it is giving thought to accumulating solar power stations and selling them ascommodity packages.

Real Estate Consulting segment
Segment revenue was JPY935mn (-5.1% YoY). The company won consulting projects mainly in Japan’s major cities, andcompleted 23 deals (21 in Q3 FY12/17). Of the 23 completed deals, 11 were in Kanto (13), five in Hokkaido (four), two in Kyushu(one), and five in Kansai (three). Segment profit was JPY229mn (-28.4% YoY) due to the ongoing increase in SG&A expenses,
although the number of completed deals has been increasing (mainly investment properties in the Kanto region).

Real Estate Management segment
Segment revenue was JPY1.2bn (+84.8% YoY). The number of client-owned properties under management rose to 66 (58 in Q3
FY12/17). By region, the company was managing 27 properties in Kanto (25), 24 in Hokkaido (23), 13 in Kyushu (nine), and two
in Kansai (one). High occupancy rates of hotels that opened in spring and summer 2018 drove revenue and profit growth.
Segment profit was JPY734mn (+118.1% YoY).

1H FY12/18 results (out August 10, 2018)
Earnings overview
For 1H FY12/18, B-Lot reported revenue of JPY5.0bn (-5.1% YoY), operating profit of JPY574mn (-7.4% YoY), recurring profit of
JPY354mn (-19.8% YoY), and net income attributable to owners of parent of JPY221mn (-27.1% YoY).

44/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Progress toward FY12/18 forecasts was revenue 25.0% (40.2% of FY12/17 results in 1H FY12/17), operating profit 22.8% (26.2%),
recurring profit 17.2% (22.1%), and net income attributable to owners of parent 15.7% (24.3%). The company stated that
results were in line with its initial forecasts and that it expects to sell the large hotel properties it has been developing during 2H
FY12/18.

Stock exchange listing moved to Tokyo Stock Exchange's First Section
The company’s stock exchange listing was transferred from Mothers market of the Tokyo Stock Exchange to the First Section in
1H FY12/18 (on February 2, 2018). B-Lot says it is already seeing benefits stemming from the change in its stock exchange listing,including an enhanced reputation and greater name recognition as evidenced by increases in both the quantity and quality of
information it receives on a wide range of property proposals, including large properties and properties overseas. The company
says it has also seen an increase in invitations to participate as a partner in various deals. Because customers now perceive B-Lot as
more reliable as a result of its listing on the First Section of the Tokyo Stock Exchange, it has also received more referrals for highly
confidential cases involving inheritance planning, as well as more referrals for its asset management and property management
services. In short, the increase in B-Lot's brand recognition has led to an increase in the flow of information it receives, itscustomer base, and the number of financial institutions with which it can do business with on favorable terms, and increased its
ability to attract talented employees.
We would highlight the following four points in discussing 1H results:◤ 1H results in line with plan: Revenue and profits at all levels were in line with expectations; the company expects to sell thelarge hotel properties it has been developing during 2H FY12/18.

◤ Property purchases going well: As of end-1H the company's balance sheet showed a total of JPY18.9bn in inventory of realestate for sale (including real estate for sale in process), a JPY7.5bn increase over end-FY12/17. The company said its property
acquisitions during the period went well, and included a range of properties in terms of both use and geographic location.

◤ Complete construction of multiple hotel projects located in major cities around Japan: Its first hotel development

projects, the 128-room Hotel Torifito Otaru Canal (the first hotel with more than 100 rooms built in the Otaru area of
Hokkaido in nine years) and the 132-room, Tissage Hotel Naha (a large, 4,000sqm-plus hotel designed with bothbusinessmen and tourists in mind; within walking distance of the Okinawa Prefecture government building), were opened in
April 2018 and have maintained high occupancy rates since then. Two hostels opened in FY12/17, the 120-bed Imano Tokyo
Ginza Hostel (within walking distance of Tokyo's Ginza district) and the 113-bed Imano Kyoto Kiyomizu Hostel (located in the
Kiyomizu Gojo district of Kyoto), saw very high occupancy rates for a short while and have continued to do well since then.
While it generally takes about three years for hotels to become well known enough to achieve high occupancy rates, thehotels and hostels developed by B-Lot have managed to achieve high occupancy rates in only about three months.

◤ Moved into new business fields offering more earnings opportunities: The company has started handling different

types of properties such a logistics centers, golf courses, and solar power generation facilities; in May 2018, B-Lot established
B-Lot Capital Link Co., Ltd. as a subsidiary to handle M&A- and personnel-related businesses.

Revenue
Down 5.1％ YoY. Revenue declined by 5.2% in Real Estate Investment and Development, by 1.1% in Real Estate Consulting, andby 10.3% in Real Estate Management.

45/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Quarterly revenue(JPYmn)Real Estate Consulting

Real Estate Investment and Development

7,000
5,654
225
286

6,000
5,000
4,000
3,000

2,858
100 20

2,000
1,000
0

2,739

376
130
216

Q1

3,508
240 202,646
204 50

Q2

1,070
2,391
209 71
791
30
Q3

3,248

684
214
139
330

Q4

1,781
202
323

5,143

Q1

Q2

FY12/15

Q3

2,021
198
374

3,249
257
267

6,329

2,725

993
197
317
478

Q2

Q3

1,449

1,257
Q4

Real Estate Management
6,835
186
319

Q1

FY12/16

Q4

2,752
168
456

2,247
240
178

2,128

1,830

Q1

Q2

FY12/17Q3Q4FY12/18

Source: Shared Research based on company data

ProfitOperating profit fell 7.4% YoY. Operating profit was down by 11.6% in Investment and Development and by 12.7% in
Consulting, but up by 25.9% in Management.
Quarterly operating profit and YoY (%)(JPYmn)Real Estate Investment and Development

Real Estate Consulting

Real Estate Management

2,000

1,000
500
0
-500

16.8%

428

9.3%

10.9%
56 14

0

(108)

62
-2
(98)

Q1

Q2

118
41
3 109
304
(88)
(87)

-9.3%

Q3

Q4

30.0%

25.1%

12.8%
47

40.0%

107
88

27.4%

1,500

OPM (right axis)

132

8.7%

114
9.0%
125
505

7.9%
96
172

114
103
64
(94)

277

132

482

(105)

(183)

(237)

(241)

(194)

Q1

Q2

Q3

Q4

Q1

Q2

FY12/16

17.2%
103
245

122
50

22 98
96
144

FY12/15

1,713

14.2%

119 3.0%
97-11
(192)
(175)
Q3

FY12/17

Q4

20.0%

(213)

4.4%
172
204
-51
(225)

Q1

Q2

339

10.0%
0.0%

Q3

Q4

-10.0%

FY12/18

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment
Property sales
Segment revenue was JPY4.0bn (-5.2% YoY). The company sold 10 buildings (11 in 1H FY12/17): four residential properties (six),
three office/retail buildings (two), two land lots (two), and hotel condominium (one). Further, thanks to synergies with Life Stage
Co., Ltd., the company remains on track to sell out all its newly built condominiums, a new initiative that began in 2018.
The average sales price of properties sold during the period was JPY400mn. The company did not disclose details for individual
property sales, but said that some of the ten properties sold during the period went for several tens of million yen while otherlarge properties sold for close to JPY1.0bn.

Property acquisitions
B-Lot purchased 16 properties (eight in 1H FY12/17) and steadily continues to purchase new properties: seven residential
properties (three), three office/retail buildings (one), four land lots including land for development (four); and two others (none).
By region, seven were in Kanto (four), two in Hokkaido (one), four in Kyushu (three), and three in Kansai (none).
As of end-1H FY12/18, the company's balance sheet showed a total of JPY18.9bn in inventory of real estate for sale (including realestate for sale in process), an increase of JPY7.5bn over end-FY12/17. The jump in inventory was driven by a total of 16
acquisitions in 1H FY12/18, including four valued at roughly JPY1.0bn each. In addition to the steady properties acquisitions, the46/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

company also completed construction of large hotels that it plans to sell during 2H FY12/18; cost on uncompleted construction
projects (consisting of payments to the construction companies involved) was booked as inventory of real estate for sale.

Real estate inventory
B-Lot continues to expand the types of properties it handles and among the other properties acquired was one of the group’s firstprojects to revitalize a logistics facility. The number of properties held in inventory was 33 (23 in 1H FY12/17), significantly
exceeding 1H FY12/17. The company has been steadily preparing to sell real estate for sale in 2H FY12/18 and from FY12/19
onward. While the number of properties outlined above does not include real estate for sale owned by Life Stage Co., Ltd. andViento Creation Co., Ltd., the company’s inventory includes three condominiums and two capsule hotels.
Of the 33 properties currently held in inventory, 12 are land holdings (nine of which will be developed and three of which will be
resold after the soil has been prepared). Another 12 are residential properties, four being hotels or other lodging facilities, twobeing office or commercial space, one logistics facility (new area), and one solar power generation facility (new area). Other thanthe land, the properties will either developed or existing buildings will be revitalized. Of the nine plots of land bought fordevelopment, four will be used to develop hotels or other lodging facilities, three will be developed into residential properties,
and two will be developed into office or commercial space.
Geographically, of the 33 properties ten are located in the Kanto area, six in Hokkaido, nine in Kyushu, and eight in the Kansaiarea, giving the company a nice balance of real estate holdings across four of Japan's major urban centers (Tokyo, Sapporo,
Fukuoka, and Osaka).

ProfitSegment profit was JPY543mn (-11.6% YoY).

1H FY12/18 Topics:
Increasing dealings with overseas investors located in Hong Kong, Singapore, and Beijing
B-Lot Singapore Pte. Ltd. President Shinichi Hasegawa (who is also the Deputy President of B-Lot) has held sales events in Singapore to promote
investments in Japanese real estate among overseas investors, especially investors in Singapore. In the spring of 2018, B-Lot Singapore in cooperation
with the Hokkaido government sponsored a tour for overseas investors from Singapore to promote investment in Hokkaido properties. The tour
included visits to various parts of Hokkaido, from popular spots such as Sapporo and Niseko to Eastern Hokkaido. By providing potential investors withthe opportunity to conduct on-site inspections, the company was able to sell all seven of the remaining units at its hotel-condominium complex in
Niseko to overseas investors.
Fukuoka branch office
One of B-Lot's branch offices is located in the city of Fukuoka, one of Japan's major cities with a population of some 1.5 million people (the greater
Fukuoka area has a population of some 2.5 million). Fukuoka is currently ranked as the number one city in Japan based on factors such as growthpotential, the amount of travel time from the international airport to the city's central district, the number of travelers arriving on foreign ships, growthin the number of non-Japanese residents, and the number of international conferences held. (Source: Company data based on Visual Ranking ofJapanese Cities by Growth Potential by Nomura Research Institute, the Fukuoka city government's website, bulletins published by the Fukuoka city
government, and statistical data on the Fukuoka Facts).
Still, the company says business development in the city of Fukuoka can be problematic because a lot of different businesses are crowded into an
extremely narrow area centering on the Tenjin district. Not only are most of the properties that domestic and foreign investors would like to acquireconcentrated in the Chuo and Hakata wards of the city, there are also a lot of rival real estate investment groups that compete for properties in thissmall area, so much so that property prices in some locations are on par with Tokyo prices.
Amid these local market conditions, B-Lot has been steadily pursuing business since it opened its Fukuoka branch office in 2013. Much of the credit
goes to Kentaro Ezaki, the native-born Fukuoka branch’s general manager who is especially good at development and was appointed to the company's
director in March 2018. Under the leadership of Mr. Ezaki, the Fukuoka branch office is working on a number of different real estate projects, including
the development of a hotel in the Reisenmachi on the east side of the Tenjin district and a revitalization project involving a single office building locatednear the Fukuoka airport. The Fukuoka branch is also in the process of building condominium complexes in the Ropponmatsu and Imagawa areas on thewest side of the Tenjin district and is also buying land a little bit further west of there.
According the company, its success in winning projects has come from establishing close relationships with locals and allowing the businessdevelopment opportunities to emerge from there. For example, while many companies would bring a condominium development and construction

47/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

project to an end once it was sold to investors, B-Lot stays involved by serving as the investor's property manager and thus is able to establish arelationship over a long period of time with both the property and the investor. By serving as the property manager, B-Lot is able to make plans formaintaining and enhancing the value of its client's property while at the same time planning how to maintain and enhance the value of properties inthe surrounding area. This method of establishing close ties with local residents is a textbook example of how B-Lot operates and one of its mainstrengths.

Real Estate Consulting segment
Segment revenue was JPY634mn (-1.2% YoY). The company won consulting projects mainly in the Kanto region, and completed
16 deals (12 in 1H FY12/17). Of the 16 completed deals, 10 were in Kanto (eight), two in Hokkaido (two), two in Kansai (one),and two in Kyushu (one). The brokerage of investment real estate has continued to be brisk since Q1 FY12/18, and the company
is seeing a rise in consulting projects. Segment profit was JPY194mn (-12.7% YoY). The decline in segment profit came mainly
from increased selling expenses amid a 1.2% YoY decline in segment revenue.
Working in its capacity as the sales agent for the newly built Pleagia Kyoto Yamashina Higashino condominium complex, B-Lot
expects to sell even more the units in 2H FY12/18 in conjunction with its Life Stage subsidiary. Having bought roughly one-thirdof 70 units from a large developer based in Osaka at a discount price, B-Lot is using the sales force of its Life Stage subsidiary tosell the units individually by providing detailed explanations, with the majority of the units going to families. Financial backing of
B-Lot and sales force of Life Stage made these collaborative sales activities possible.

Real Estate Management segment
Segment revenue was JPY407mn (-10.3% YoY). The number of client-owned properties under management rose to 63 (54 in 1H
FY12/17). By region, the company was managing 28 properties in Kanto (22), 24 in Hokkaido (22), two in Kansai (one), and ninein Kyushu (nine). Revenue declined YoY due to a decrease in real estate for lease. However, utilization of hotels opened in spring2018 (Hotel Torifito Otaru Canal, Tissage Hotel Naha, ℃ Gotanda) steadily increased, contributing to earnings. Reduced cost ofrevenue and SG&A expenses helped absorb the decline in segment revenue. Segment profit was JPY274mn (+25.9% YoY).

Topics: Opening “minpaku” (Airbnb-style private accommodation) lodging facilities in designated district
B-Lot recently acquired a roughly 40-year old condominium complex in the Nakatsu district of Kita Ward in Osaka (about two minutes’ walk from
Nakatsu Station). Because the city of Osaka has established a specially designated district where minpaku facilities can be legally operated, B-Lot madeuse of this location to startup a minpaku lodging facility. The building has a total of nearly 30 units but roughly half were vacant. After renovating all of
the vacant units along with all of the common areas, in the spring of 2018 B-Lot started a minpaku lodging business at the building using the renovatedrooms while all of the existing residents remained in place. Despite legal restrictions that, among other things, require that rooms used as minpaku
lodging must be reserved for a minimum of two nights, the occupancy rate for the rooms quickly shot up thanks to the building's location near Osaka's
popular Umeda district.

48/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Income statement
Income statement
FY12/09 FY12/10(JPYmn)ParentParentRevenue532
457
YoY-14.2%
Cost of revenue
Gross profit
YoY
GPM
SG&A expenses
SG&A ratio
Operating profit
YoY
OPM
Non-operating income
Non-operating expenses
Recurring profit
1
23
YoY- 1,545.2%
RPM
0.3%
5.1%
Extraordinary gains (losses)
Extraordinary gains
Extraordinary losses
Income taxes
Implied tax rate
Net income attrib. to non-controlling interests
Net income
215
YoY
702.6%Net margin
0.3%
3.2%

FY12/11 FY12/12
ParentParent
494
1,338
8.2%
170.9%
1,011
327
24.4%
242
18.1%
85
6.3%
6
78
-74.6% 1,229.7%
1.2%
5.8%
4
42
-72.9%
944.6%
0.8%
3.1%

FY12/13
Parent
2,231
66.7%
1,614
617
88.6%
27.7%
399
17.9%
218
157.0%
9.8%
0
35
183
133.4%
8.2%
78
42.9%
104
149.8%
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%

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 FY12/17, thecompany posted CAGR of 57.8%. The key segment and growth driver is the Investment business, while the Managementbusiness is a recurring revenue business that has posted ongoing leaps in profit in line with the number of management contracts.
Meanwhile, the Consulting business generally posts strong growth, but profit in a single fiscal year may decline due tofluctuations 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 FY12/17. From FY12/13 through FY12/16, the operating
profit margin has been stable at 10–12%, but in FY12/17 it rose to 18.1%. OPM remained at a high level of 16.3% in FY12/18.
Profitability and financial indicators
Profit margins(JPYmn)Gross profit
GPM
Operating profit
OPM
EBITDAEBITDA margin
Net margin
Financial ratios
ROA (RP-based)
ROE
Total asset turnover
Inventory turnoverDays in inventory
Working capital requirement
Current ratio
Quick ratio
OCF / Current liabilities
Net debt / Equity
OCF / Total liabilities
Cash conversion cycle (days)
Changes 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%

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

Source: Shared Research based on company data

49/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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%

Source: Shared Research based on company data

There are only two years of earnings forecasts available to compare company forecasts and actual results. Still, in FY12/15,
FY12/16, and FY12/18, results soundly exceeded the company’s initial forecasts in terms of both revenue and profit. In FY12/17
actual revenue fell short of initial forecasts due to a delay in certain projects into the next fiscal year, but actual profit surpassed
initial forecasts by a wide margin.

50/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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

FY12/10 FY12/11 FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18
ParentParentParentParentParent
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
Accumulated other comprehensive 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

-

-

4
19
921
-

160

281

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
43
961
1,004
2,507
35
24,269

-

-

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
18,243

66
-

94
-

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

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

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

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 25% of total assets (a large increase from around 15% in
FY12/16), and fixed assets account for about 10% of total assets.

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

51/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Shareholders’ equity
Net assets account for approximately 25% of total liabilities and net assets. As of end-FY12/18 the shareholders’ equity ratio was
24.6%.

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.
-1,229-190-1,4192,631-1,259Source: 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 business, and from FY12/12 through FY12/16, it saw cash outflows from operating activities. In
FY12/17 cash flows from operating activities were positive due to reduction in inventories and a large increase in pre-tax profit on
the back of steadily increasing sales in the Real Estate Investment business, but the company again recorded cash outflows in
FY12/18.

Cash flows from investing activities
From FY12/12 through FY12/18, cash flows from investing activities have been negative as the company has purchased tangible
and intangible fixed assets and acquired subsidiaries.

Cash flows from financing activities
From FY12/12 through FY12/18, 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.

52/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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 segment, and Consulting and Management are stable earners.
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 (around 59 employees
in the parent company) at the time of its establishment; as of end-June 2019, including the companies it has acquired, the group
had around 203 employees overall.
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 Fukuoka City, 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

53/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

News and topics
March 2019
On March 28, 2019, the company announced it will acquire shares in Yokohama Shoen Co., Ltd. (formerly known as Yokohama
Fujireibyo Co., Ltd.), making the company an equity-method affiliate.

Reason for share acquisition▷

Yokohama Shoen, which will become an equity-method affiliate through the share acquisition, is located in a prime locationthat is a six-minute walk from Kishine Koen Station on the Blue Line of the Yokohama Municipal Subway. It was spun off fromthe company that owns and manages Fujikinenkan/Fujireibyo, a funeral hall and columbarium (building for storing funeralurns) facility that has been in operation for 45 years. (The spin-off was an incorporation-type demerger for the purpose of

▷
▷
▷
▷
▷

establishing an entity to hold and manage a real estate property.)
The company name was changed from Yokohama Fujireibyo to Yokohama Shoen after the share acquisition.
Following the share acquisition, the facility will expand indoor space for funeral urns, conduct exterior renovations, andundergo earthquake reinforcements.
By combining B-lot’s expertise in real estate revitalization and its extensive track record in regenerating operational assets with
Fujireibyo’s expertise in columbarium operations, both companies will venture into a new business field.
As Japan’s population continues to age going forward, the development of indoor-type columbaria in urban locations not only
has social significance, but is also expected to become a stable source of long-term revenue.
The impact of the share acquisition on FY12/19 earnings is currently under review.

Details of share acquisition▷

Shares held before acquisition: 0 shares▷

Acquisition cost: JPY378mn (estimated JPY375mn for the common shares of Yokohama Shoen, estimated advisory fees and▷▷Number of shares to be acquired: 100 shares (number of shareholder voting rights: 100)other costs)
Shares held after acquisition: 100 shares (number of shareholder voting rights: 100; percentage of voting rights: 50.0%)

On the same day, the company announced it will purchase and cancel its 7th stock acquisition rights (with provisions to revise
exercise price) and 8th stock acquisition rights.
The company has resolved to purchase all outstanding 7th and 8th stock acquisition rights* issued on June 6, 2018, and cancelsuch rights upon acquisition.

Reason for purchase and cancellation of stock acquisition rights▷

The stock acquisition rights in question were issued to raise (1) acquisition funds for real estate for sale and real estate for lease,(2) cash reserves for M&A and capital and business alliances, and (3) funds to bolster the company’s financial standing andraise its equity ratio. A total of 230 stock acquisition rights (corresponding to 23,000 shares) were exercised, and the amount▷

paid upon exercise of the stock acquisition rights was JPY36,296,500.
Amid a subsequent downturn in real estate sector stocks, the company’s stock price fell roughly 30% below its closing price on
the business day prior to the date of the resolution regarding the issuance of the stock acquisition rights. No stock acquisitions
rights have been exercised since June 19, 2018 as the stock price has remained below the exercise price.

54/63

R B-Lot / 3452
Coverage▷▷

LAST UPDATE: 2019.09.25

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

Meanwhile, the company’s earnings have held steady, and its equity ratio has risen to 24.6% (FY12/18). After taking into
overall consideration factors such as future growth, share dilution, and the market environment, the company has decided topurchase and cancel all outstanding 7th and 8th stock acquisition rights.
The impact on earnings is expected to be negligible.

Summary of offer (from release on May 15, 2018)
Allocation dateJune 6, 2018

Number of stock acquisitionrights to be issued

12,400 units
7th stock acquisition rights: 10,000 units
8th stock acquisition rights: 2,400 units

Issue price

JPY810 per 7th stock acquisition right
JPY364 per 8th stock acquisition right
On any day between May 17, 2018 and May 21, 2018, if the price calculated using
the same method used to determine the issue price above exceeds the above
price, the amount by which the calculated price exceeds the above price shall be
set by the President and Representative Director, or his representative, based on
the authorization of the Board of Directors.

Number of issuable shares

Number of issuable shares: 1,240,000 shares(100 shares per stock acquisition right)
7th stock acquisition rights: 1,000,000 shares
8th stock acquisition rights: 240,000 shares
The 7th stock acquisition rights have a provision for exercise price revision. Even at
the minimum exercise price, the number of issuable shares for the 7th stockacquisition rights is 1,000,000 shares.

Funds to be raised (estimated net JPY3.0bn
proceeds)
Method of offer/allocation

Third-party allocation managed by SBI Securities Co., Ltd.

February 2019
On February 28, 2019, the company announced the sale of a real estate property.

Outline of property sold
Location: Otaru, Hokkaido
Building type: Newly built hotel
Total floor space (registered): 4,358.19sqm
Lot size (registered): 1,420.03sqm
Buyer and sales price: Undisclosed due to a confidentiality clause in the sales contract for the property. Proceeds from the sale has
been incorporated into FY12/19 company forecasts.
On February 22, 2019, Shared Research updated the report following interviews with the company.

December 2018
On December 17, 2018, the company announced revisions to its full-year FY12/18 earnings forecasts and dividends fromsurplus (dividend increase).

Revised full-year FY12/18 earnings forecasts▷

Revenue:▷

Recurring profit:▷▷

JPY20.2bn (previous forecast: JPY20.0bn)

Operating profit: JPY3.3bn (JPY2.5bn)

Net income*:

JPY2.8bn (JPY2.1bn)
JPY1.9bn (JPY1.4bn)

55/63

R B-Lot / 3452
Coverage▷

LAST UPDATE: 2019.09.25

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

EPS: JPY248.98 (JPY183.65)* Net income refers to net income attributable to owners of parent.

Reasons for revision
The revised revenue forecast is largely in line with the previous forecast. However, the company expects profits to exceed its
previous forecasts owing to successive sales of real estate for sale in Q4 and corresponding strong margins in the mainstay Real
Estate Investment and Development business.

Dividends from surplus
As 2018 marks B-Lot’s 10th anniversary, the company’s policy for the FY12/18 year-end dividend calls for a payout ratio of 20%.
Taking into account its dividend policy and the upward revision to its full-year forecasts, B-Lot has decided to increase theordinary dividend by JPY30.50 from JPY19.50 in FY12/17 to JPY50 per share.

Overview of property
The company announced the sale of the following real estate commodities in Q3 FY12/18:

Outline of property announced on December 7, 2018
Facility name: Ropponmatsu View Apartment (new rental condominium building)
Location (displayed address): Chuo-ku, Fukuoka-shi, Fukuoka
Construction completed: November 30, 2018
Variety/structure: residential complex/ reinforced concrete/ 14-story (39 total units, 13-section parking lot)
Total floor space (registered): 2,577.42sqm
Lot size (registered): 499.04sqm
Buyer: industrial corporation located in Minato-ku, Tokyo

Outline of property announced on December 7, 2018
Facility name: Tissage Hotel Naha
Location (displayed address): 2-14-1 Nishi, Naha-shi, Okinawa
Construction completed: February 26, 2018
Variety/ structure: hotel/ reinforced concrete/ 13 stories above ground (132 total units)
Total floor space (registered): 3,758.76sqm
Lot area (registered): 875.38sqm
Buyer: Fukuoka REIT Corporation

November 2018
Outline of property announced on November 28, 2018
Facility name: Toranomon SE (new office building)
Location (displayed address): 1-19-8 Nishi-Shimbashi, Minato-ku, Tokyo
Construction completed: June 27, 2018
Variety/ structure: office and retail building/ reinforced concrete/ flat roof with eight stories and one basement level (three stores,
six offices)
Total floor space (registered): 406.09sqm
Lot area (registered): 67.06sqm
Buyer: industrial corporation in Osaka-shi, Osaka

Outline of property announced on November 27, 2018
Facility name: Maison Milano Nakatsu (condominium building offering minpaku (Airbnb-style private accommodations) lodging
facility in a designated district)
Location (displayed address): Nakatsu, Kita-ku, Osaka-shi, Osaka

56/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Variety/ structure: office and residential complex/ reinforced concrete/ flat roof with five stories (30 total units, 16 of which areminpaku-style rooms)
Total floor space (registered): 1,395.20sqm
Lot area (registered): 558.21sqm
Operating company: Main Tree Japan
Buyer: undisclosed

Property outline
Location (displayed address): Setagaya-ku, Tokyo
Variety: residential complex and garage
Total floor space (registered): 1,929.53sqm
Lot area (registered): 991.73sqm
Buyer: undisclosed

Outline of property announced on November 7, 2018
Facility name: Sakate, Joso-shi, Ibaraki No. 3 MS power station (solar power station)
Location (displayed address): 1385-1-37 Aza Nishiyatsu, Sakate-machi, Joso-shi, Ibaraki
Date of acquisition: November 7, 2018
Lot area (registered): 15,629sqm
Operations commenced: March 2018
Unit price of electricity: JPY36/ kWh (tax not included)
Electricity buyer: TEPCO Energy Partner, Inc.
Output: 1,333.8kW

Outline of property announced on November 2, 2018
Location (displayed address): Shimohyaku-cho, Mitsuhashi-machi, Yanagawa-shi, Fukuoka
Date of acquisition: September 27, 2018
Construction completed: August 30, 1990
Variety/ structure: medical office and residential complex/ steel and reinforced concrete/ slate roof with 11 stories above ground(one medical office, two stores, 36 residential units, 50 parking-section parking lot)
Total floor space (registered): 4,204.38sqm
Lot area (registered): 2,300.00sqm

October 2018
Outline of property announced on October 31, 2018
Facility name: IMANO TOKYO GINZA HOSTEL
Location (displayed address): 1 Shintomi, Chuo-ku, Tokyo
Structure: reinforced concrete/ 10 stories above ground (30 total rooms with 120 beds)
Total floor space (registered): 915.65sqm
Lot area (registered): 137.01sqm
Operating company: ABaccommo Co., Ltd.
Buyer: Foreign investor

Outline of property announced on October 11, 2018
Location (displayed address): Taito-ku, Tokyo
Variety: retail store
Total floor space (registered): 1,291.10sqm
Lot area (registered): 168.59sqm
Buyer: undisclosed

57/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

September 2018
Outline of property announced on September 27, 2018
Location (displayed address): Kyoto-shi, Kyoto
Variety: land for development
Lot area (registered): 451.65sqm

58/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Group companies (as of end-June 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

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

59/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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.

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%.

60/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

Major shareholders (as of June 30, 2019)
Shareholding
ratio
1,280,400
16.10%
1,100,400
13.83%
819,000
10.30%
539,400
6.78%
175,400
2.21%
174,100
2.19%
124,000
1.56%
108,000
1.37%
107,000
1.36%
72,0000.91%
4,648,044
58.44%

Top shareholders

Shares held

Shinichi Hasegawa
Masahiro Mochizuki
M&M, Ltd.
Makoto Miyauchi
Mitsuru Otsuka
Fumie Mochizuki
Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
Hokuto Mfg. Co., Ltd.
SBI Securities Co., Ltd.
SUM

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

Source: Shared Research based on company data

61/63

R B-Lot / 3452
Coverage

LAST UPDATE: 2019.09.25

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

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)

62/63

R About Shared Research Inc.
Coverage

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

We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously
updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on the web at http://www.sharedresearch.jp.
Current Client Coverage of Shared Research Inc.
Accordia Golf Trust

Gamecard-Joyco Holdings, Inc.

Oisix ra daichi Inc.

ADJUVANT COSME JAPAN CO., LTD.

GCA Corporation

Oki Electric Industry Co., Ltd

Aeon Delight Co., Ltd.

Good Com Asset Co., Ltd.

ONO SOKKI Co., Ltd.

Aeon Fantasy Co., Ltd.

Grandy House Corporation

ONWARD HOLDINGS CO.,LTD.

Ai Holdings Corporation

Hakuto Co., Ltd.

Pan Pacific International Holdings Corporationand factory, inc.

Hamee Corp.

PARIS MIKI HOLDINGS Inc.

ANEST IWATA Corporation

Happinet Corporation

PIGEON CORPORATION

AnGes Inc.

Harmonic Drive Systems Inc.

QB Net Holdings Co., Ltd.

Anicom Holdings, Inc.

HOUSEDO Co., Ltd.

RACCOON HOLDINGS, Inc.

Anritsu Corporation

IDOM Inc.

Raysum Co., Ltd.

Apaman Co., Ltd.

IGNIS LTD.

RESORTTRUST, INC.

ARATA CORPORATION

i-mobile Co.,Ltd.

ROUND ONE Corporation

Arealink Co.,Ltd.

Inabata & Co., Ltd.

RVH Inc.

Artspark Holdings Inc.

Infocom Corporation

RYOHIN KEIKAKU CO., LTD.

AS ONE CORPORATION

Infomart Corporation

SanBio Company Limited

Ateam Inc.

Intelligent Wave, Inc.

SANIX INCORPORATED

Aucfan Co., Ltd.

ipet Insurance CO., Ltd.

Sanrio Company, Ltd.

AVANT CORPORATION

istyle Inc.

SATO HOLDINGS CORPORATION

Axell Corporation

Itochu Enex Co., Ltd.

SBS Holdings, Inc.

Azbil Corporation

JSB Co., Ltd.

Seikagaku Corporation

AZIA CO., LTD.

JTEC Corporation

Seria Co.,Ltd.

AZoom, Co., Ltd.

J Trust Co., Ltd

SHIFT Inc.

BEENOS Inc.

Japan Best Rescue System Co., Ltd.

SHIP HEALTHCARE HOLDINGS, INC.

Bell-Park Co., Ltd.

JINS HOLDINGS Inc.

SIGMAXYZ Inc.

Benefit One Inc.

JP-HOLDINGS, INC.

SMS Co., Ltd.

B-lot Co.,Ltd.

KAMEDA SEIKA CO., LTD.

Snow Peak, Inc.

Broadleaf Co., Ltd.

Kanamic Network Co.,LTD

Solasia Pharma K.K.

Canon Marketing Japan Inc.

Kenedix, Inc.

SOURCENEXT Corporation

Career Design Center Co., Ltd.

KFC Holdings Japan, Ltd.

Star Mica Holdings Co., Ltd.

Carna Biosciences, Inc.

KI-Star Real Estate Co., Ltd.

Strike Co., Ltd.

CARTA HOLDINGS, INC

Kondotec Inc.

SymBio Pharmaceuticals Limited

CERES INC.

Kumiai Chemical Industry Co., Ltd.

Synchro Food Co., Ltd.

Chiyoda Co., Ltd.

Lasertec Corporation

TAIYO HOLDINGS CO., LTD.

Chugoku Marine Paints, Ltd.

LUCKLAND CO., LTD.

Takashimaya Company, Limited

cocokara fine Inc.

MATSUI SECURITIES CO., LTD.

Take and Give Needs Co., Ltd.

COMSYS Holdings Corporation

Medical System Network Co., Ltd.

Takihyo Co., Ltd.

CRE, Inc.

MEDINET Co., Ltd.

TEAR Corporation

CREEK & RIVER Co., Ltd.

MedPeer,Inc.

Tenpo Innovation Inc.

Daiichi Kigenso Kagaku Kogyo Co., Ltd.

Mercuria Investment Co., Ltd.

3-D Matrix, Ltd.

Daiseki Co., Ltd.

Micronics Japan Co., Ltd.

TKC Corporation

DIC Corporation

Milbon Co., Ltd.

TKP Corporation

Digital Arts Inc.

MIRAIT Holdings Corporation

TOKAI Holdings Corporation

Digital Garage Inc.

Monex Goup Inc.

TOYOBO CO., LTD.

Dream Incubator Inc.

MORINAGA MILK INDUSTRY CO., LTD.

Toyo Ink SC Holdings Co., Ltd

Earth Corporation

NAGASE & CO., LTD

Toyo Tanso Co., Ltd.

Elecom Co., Ltd.
en-Japan Inc.

NAIGAI TRANS LINE LTD.
NanoCarrier Co., Ltd.

Tri-Stage Inc.
VISION INC.

euglena Co., Ltd.

Net One Systems Co.,Ltd.

VISIONARY HOLDINGS CO., LTD.

Evolable Asia Corp.

Nichi-Iko Pharmaceutical Co., Ltd.

WirelessGate, Inc.

FaithNetwork Co., Ltd.

Nihon Denkei Co., Ltd.

YELLOW HAT LTD.

Ferrotec Holdings Corporation

Nippon Koei Co., Ltd.

YOSHINOYA HOLDINGS CO., LTD.

FIELDS CORPORATIONNIPPON PARKING DEVELOPMENT Co., Ltd.

YUMESHIN HOLDINGS CO., LTD.

Financial Products Group Co., Ltd.

NIPRO CORPORATION

Yume no Machi Souzou Iinkai Co., Ltd.

FreeBit Co., Ltd.

Nisshinbo Holdings Inc.

Yushiro Chemical Industry Co., Ltd.

FRONTEO, Inc.

NS TOOL CO., LTD.

ZAPPALLAS, INC.

Fujita Kanko Inc.

OHIZUMI MFG. CO., LTD.

Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.
Disclaimer: This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared Research Inc. offers
no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. We shall not be held responsible for any damage
caused by the use of this report. The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared
Research Reports belong to Shared Research. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are strictly
prohibited and a violation of the copyright of this report. Our officers and employees may currently, or in the future, have a position in securities of the companies
mentioned in this report, which may affect this report’s objectivity.
Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer: The report has been prepared by Shared Research under a contract with the company
described in this report (“the company”). Opinions and views presented are ours where so stated. Such opinions and views attributed to the company areinterpretations made by Shared Research. We represent that if this report is deemed to include an opinion by us that could influence investment decisions in thecompany, such opinion may be in exchange for consideration or promise of consideration from the company to Shared Research.
Contact Details
Shared Research Inc.
3-31-12 Sendagi Bunkyo-ku Tokyo, Japan
URL: https://sharedresearch.jp
Phone: +81 (0)3 5834-8787
Email: info@sharedresearch.jp

63/63