R
B-Lot / 3452

COVERAGE INITIATED ON:

2018.01.17

LAST UPDATE:

2018.05.15

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is toprovide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
always present opinions from company management as such. Our views are ours where stated. We do not try toconvince or influence, only inform. We appreciate your suggestions and feedback. Write to us at
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INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.

Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3
Business overview -------------------------------------------------------------------------------------------------------------------------------------------------3
Strengths and weaknesses--------------------------------------------------------------------------------------------------------------------------------------4
Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 8
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------8
Trends and outlook --------------------------------------------------------------------------------------------------------------------------------- 11
Quarterly trends and results --------------------------------------------------------------------------------------------------------------------------------- 11
Full-year company forecasts --------------------------------------------------------------------------------------------------------------------------------- 15
Medium-term outlook ----------------------------------------------------------------------------------------------------------------------------------------- 17
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 21
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 21
Business model --------------------------------------------------------------------------------------------------------------------------------------------------- 24
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 33
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 34
Historical performance ---------------------------------------------------------------------------------------------------------------------------- 39
Historical financial statements ------------------------------------------------------------------------------------------------------------------------------- 39
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 46
Historical performance versus initial company forecasts ------------------------------------------------------------------------------------------- 47
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 48
Cash flow statement -------------------------------------------------------------------------------------------------------------------------------------------- 49
Other information ---------------------------------------------------------------------------------------------------------------------------------- 50
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 50
News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 50
Group companies (as of end-December 2017) ------------------------------------------------------------------------------------------------------- 51
Origin of company name ------------------------------------------------------------------------------------------------------------------------------------- 51
Corporate governance and top management --------------------------------------------------------------------------------------------------------- 51
Dividend policy -------------------------------------------------------------------------------------------------------------------------------------------------- 53
Major shareholders (as of end-December, 2017)----------------------------------------------------------------------------------------------------- 53
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 53
Profile---------------------------------------------------------------------------------------------------------------------------------------------------------------- 53

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Executive summary
Business overview◤ B-Lot is a mid-sized real estate company with three core businesses: Real Estate Investment and Development, Real EstateConsulting, and Real Estate Management. The three founders 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 27 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

2.23 in FY12/17; average for 23 competitors with similar revenue was 1.46). Over the five years through FY12/17, revenue
grew at a CAGR of 57.8% and operating profit 94.6%.
◤ Growth is driven by the Investment business (83.7% of revenue in FY12/17), where it sold 13–22 properties a year between

FY12/12 and FY12/17 (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 JPY523mn in FY12/17; if bulk projects are treated as a single item, the average is
JPY625mn). The company is now diversifying into renovating compact hotels (size is between capsule hotels and businesshotels) to be an early mover in capturing the boom in tourism to Japan. It mainly operates in major metropolitan areas
including the Kanto region (Tokyo and the surrounding area; 71% of buildings sold in FY12/17), Hokkaido (14%), Kyushu(14%), and Kansai (no sales in FY12/17).
◤ Consulting and Management segments are stable earners, generating 9.9% and 6.4% of revenue in FY12/17, and with OPMof 31.3% and 52.8%. 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 FY12/17, revenue was JPY13.1bn (+12.6% YoY), operating profit JPY2.4bn (+101.3%), recurring profit JPY2.0bn (+128.6%),

and net income attributable to owners of parent JPY1.3bn (+112.6%).

◤ For FY12/18, the company forecasts revenue of JPY20.0bn (+52.7% YoY), operating profit of JPY2.5bn (+6.2%), recurring

profit of JPY2.1bn (+2.9%), and net income attributable to owners of parent of JPY1.4bn (+13.1%).

◤ B-Lot has not released a medium-term plan, to enable flexibility in response to changing economic conditions. Its mostimportant key performance indicator (KPI) is net income. B-Lot thinks that it needs to grow profit roughly 20% per annum tobe seen as a growth company. 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. The company has
already purchased Life Stage, which has different operating areas and business methods, as well as capsule hotel owner
Viento Creation. It plans to continue proactive acquisitions.

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

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Key financial data
Income statement(JPYmn)
Revenue
YoY
Gross profit
YoY
GPM
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin
Per share data (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 FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17 FY12/18
ParentParentParentParent
Cons.
Cons.
Cons.
Est.
494
1,338
2,231
3,709
6,951 11,627 13,097 20,000- 170.9%
66.7%
66.3%
87.4%
67.3%
12.6%
52.7%
327
617
937
1,556
2,621
4,397
88.6%
51.9%
66.1%
68.4%
67.8%
24.4%
27.7%
25.3%
22.4%
22.5%
33.6%
85
218
378
800
1,175
2,366
2,512
- 157.0%
73.8% 111.5%
46.9% 101.3%
6.2%
6.3%
9.8%
10.2%
11.5%
10.1%
18.1%
12.6%
6
78
183
295
655
874
1,999
2,057
- 1,229.7% 133.4%
61.7% 122.1%
33.4% 128.6%
2.9%
1.2%
5.8%
8.2%
8.0%
9.4%
7.5%
15.3%
10.3%
4
42
104
177
401
588
1,251
1,414
- 944.6% 149.8%
69.2% 126.8%
46.9% 112.6%
13.1%
0.8%
3.1%
4.7%
4.8%
5.8%
5.1%
9.5%
7.1%
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

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

4,855
6,643
16,761
596
897
825
19,110
8,017
9,138
5,777
5,963
15,101
4,009

-

-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

2.7%
5.0%
33.5%

743
10.9%
23.6%
22.4%

1,787
9.9%
29.4%
17.7%

3,916
7.6%
24.8%
18.6%

6,903
8.6%
23.5%
24.4%

12,997
6.6%
22.4%
17.0%

13,794
11.2%
36.6%
21.0%

183.7
-

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
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 startof FY12/17.

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FY12/12
Parent1,338
170.9%
1,069

FY12/13
Parent
2,231
66.7%
1,897

FY12/14
Parent
3,709
66.3%
3,237

FY12/15
Cons.
6,951
87.4%
6,137

FY12/16Cons.
11,62767.3%
9,977

FY12/17Cons.
13,097
12.6%
10,981

79.9%

77.4%
85.0%

70.6%
87.3%

89.6%
88.3%

62.6%
85.1%

10.1%
83.7%

No. of properties sold
YoY

14
-

11
-21.4%

22
100.0%

13-40.9%

16
23.1%

21
31.3%

<By type of property>
Residential(JPYmn)Consolidated revenue
YoY

Real Estate Investment and Development
YoY% of consolidated revenue

na

8

18

7

8

11

% of consolidated revenue

na

72.7%

81.8%

53.8%

50.0%

52.4%

Offices and stores% of consolidated revenue

na
na

3
27.3%

4
18.2%

4
30.8%

5
31.3%

5
23.8%

Land for detached houses% of consolidated revenue

na
na

-

-

1
7.7%

2
12.5%

3
14.3%

Hotels

na

-

-

1

1

2

% of consolidated revenue<By region>

na

-

-

7.7%

6.3%

9.5%

Kanto
% of consolidated revenue

na
na

9
81.8%

na
na

8
61.5%

9
56.3%

15
71.4%

Hokkaido

na

2

na

3

4

3

% of consolidated revenue
Kyushu

na
na

18.2%
-

na
na

23.1%
1

25.0%
1

14.3%
3

% of consolidated revenue
Kansai

na
na

-

na
na

7.7%
1

6.3%
2

14.3%
0

% of consolidated revenue
Revenue per property sold

na
76

172

na
147

7.7%
472

12.5%
624

0.0%
523

YoY

Real Estate Consulting
YoY% of consolidated revenue
No. of brokerage deals-

125.8%-14.7%

220.9%

32.1%-16.1%

192
14.4%
25

146
-24.1%
6.5%
28

197
35.1%
5.3%
20

171
-13.1%
2.5%
29

862
403.2%
7.4%
31

1,305
51.4%
9.9%
29

YoY
<By region>
Kanto% of consolidated revenue
Hokkaido-

12.0%-28.6%

45.0%

6.9%

-6.5%

na
na
na

19
67.9%
7

7
35.0%
8

15
51.7%
8

19
61.3%
7

18
62.1%
5

% of consolidated revenue
Kyushu% of consolidated revenue
Kansai, others% of consolidated revenue

na
na
na
na
na

25.0%
2
7.1%

40.0%
3
15.0%
2
10.0%

27.6%
4
13.8%
2
6.9%

22.6%
4
12.9%
1
3.2%

17.2%
2
6.9%
4
13.8%

77
5.7%

188
144.9%
8.4%

275
46.5%
7.4%

642
133.2%
9.2%

882
37.3%
7.5%

839
-4.9%
6.4%

20
-

31
55.0%

36
16.1%

40
11.1%

48
20.0%

59
22.9%

na
na
na
na
na
na
-

14
45.2%
9
29.0%
8
25.8%
-

15
41.7%
12
33.3%
9
25.0%
-

17
42.5%
14
35.0%
9
22.5%
-

20
41.7%
18
37.5%
9
18.8%
-94

26
44.1%
23
39.0%
8
13.6%
-28

85
120
61.8%
11.3%
71
36.5%
37.0%
3
1.7%
4.2%
-110

218
157.0%
311
157.9%
75.0%
16.4%
58
-18.9%
13.9%
39.5%
46
1319.8%
11.0%
24.3%
-196

378
73.8%
465
49.6%
73.5%
14.4%
79
36.8%
12.5%
40.0%
89
94.0%
14.0%
32.2%
-254

800
111.5%
840
80.8%
71.1%
13.7%
58
-26.5%
4.9%
33.8%
284
219.9%
24.0%
44.2%
-381

1,175
46.9%
989
17.8%
55.2%
9.9%
346
496.9%
19.3%
40.1%
458
61.6%
25.6%
52.0%
-619

2,366
101.3%
2,316
134.1%
73.1%
21.1%
408
17.9%
12.9%
31.3%
443
-3.3%
14.0%
52.8%
-802

Real Estate Management
YoY% of consolidated revenue

No. of properties managed
YoY<By region>
Kanto% of consolidated revenue
Hokkaido% of consolidated revenue
Kyushu% of consolidated revenue
Adjustments

Consolidated operating profit
YoY

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

Real Estate Consulting

YoY% of consolidated operating profit
OPM

Real Estate Management

YoY% of consolidated operating profit
OPM
Adjustments

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

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LAST UPDATE: 2018.05.15(JPYmn)Number of properties acquired
YoY<By type of property>
Residential% of total properties acquired
Offices and stores% of total properties acquired
Land for development% of total properties acquired
Other% of total properties acquired<By region>
Kanto% of total properties acquired
Hokkaido% of total properties acquired
Kyushu% of total properties acquired
Kansai% of total properties acquired

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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%

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%
7
31.8%
-

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%

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

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Recent updates
Highlights
On May 15, 2018, B-Lot Co., Ltd. announced earnings results for Q1 FY12/18; see the results section for details.

On the same day, the company announced issuance of the 7th stock acquisition rights (with provisions to revise exercise price)and 8th stock acquisition rights via third-party allotment.

Summary of offer
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 pricecalculated 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 andRepresentative Director, or his representative, based on theauthorization 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 pricerevision. Even at the minimum exercise price, the number of issuable
shares for the 7th stock acquisition 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.

Purpose of fund raising
Intended use

Amount (JPYmn)

Scheduled period of spend

Acquisition of real estate for sale in Real
Estate Investment and Development,
acquisition of real estate for lease in Real
Estate Management, and improvements toenhance asset values.

1,968

June 2018 – June 2020

M&A and investment in capital or business
partnerships

1,000

June 2018 – June 2020

On April 17, 2018, the company announced that it will establish a subsidiary B-Lot Capital Link Co., Ltd.

Reasons for establishing a subsidiary
B-Lot moved its stock listing to the First Section of the Tokyo Stock Exchange in February 2018, and it is in a stage to further
increase the company value. Through recent M&A of hotel and golf course operating companies, it aims to expand into new
business areas.

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Leveraging its network of business clients and contacts, the company decided to establish a subsidiary B-Lot Capital Link to
expand into new businesses with the theme of “Creating new business value to enhance the value of various companies andindividuals.” B-Lot Capital Link will operate staffing- and M&A-related businesses.
The subsidiary’s staffing-related business provides services to address a management issue of securing and training talented
individuals, that many companies face. Its M&A-related business intends to offer solutions to small and medium enterprises inJapan to facilitate smooth business succession by leveraging B-Lot group’s network and expertise in providing solutions. With thelack of successors at SME as a growing concern going forward in Japan, the company aims to contribute in solving this social
issue.

Overview of the new subsidiary▷ Business areas: Worker dispatching service, fee-charging job placement service, M&A-related service, business succession
advisory service▷ Capital: JPY20mn▷ Date of establishment: Mid May 2018 (tentative)▷ Start of operations: June 1, 2018 (tentative)▷ Major shareholder and shareholding ratio: B-Lot Co., Ltd., 100%On April 5, 2018, Shared Research updated the report following interviews with the company.

On March 29, 2018, the company announced the acquisition of real estate for sale and the issuance of unsecured corporate
bonds.
The company announced that it had decided to acquire real estate for sale and was issuing unsecured corporate bonds to financethe purchase.
Overview of property to be acquired
Type

Location
Setagaya, Tokyo

Total floor space（sqm）

Residential complex/
warehouse

1,929.53

Lot size（sqm）（registered）
991.73

Overview of seller and purchase price
The seller is a corporation located in Tokyo's Setagaya Ward. The price at which the property will be acquired cannot be
disclosed owing to a confidentiality clause in the sales contract. There are no capital, personal, or business relationships to report
between B-Lot and the seller.

Overview of unsecured corporate bond issue
Name of issue

Series eight unsecured floating rate interest-bearing corporate bonds(guaranteed by Sumitomo Mitsui Banking Corporation, limited toqualified institutional investors)

Issuing amount

JPY1,150mn

Face value of individual bonds

JPY115mn

Interest payment date

Interest paid after end of every six-month period

Interest rate

Six-month Japanese Yen TIBOR rate (floating rate, adjusted every six

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months)Payment date

March 29, 2018

Redemption date

March 29, 2021

Fiscal agent

Sumitomo Mitsui Banking Corporation

Guarantor

Sumitomo Mitsui Banking Corporation

General underwriter

Sumitomo Mitsui Banking Corporation

Transfer agent

Japan Securities Depository Center, Inc.

The acquisition of the above-mentioned property is not expected to have a material impact on FY12/18 results.

On the same day, the company also announced it was postponing its acquisition of T&K K.K. shares.
With regard to the planned acquisition of the shares of T&K K.K. announced on March 15, 2018, the company said it had decided
to push back the share transfer date, previously set for March 29, 2018, to April 11, 2018.
The company said it was still trying to determine the impact of this transaction on FY12/18 results and would promptly disclose
any matters requiring public announcement.

On March 15, 2018, the company announced a share acquisition of T&K K.K., making it a subsidiary.
At a Board of Directors meeting held on March 15, 2018, the company resolved to acquire shares of T&K K.K. (hereinafter T&K),
making it a subsidiary. The date of the share transfer will be March 29, 2018 (planned).
In recent years, the company has proactively acquired operational assets, such as lodging and nursing facilities. The company has
a track record of improving asset value, even in properties where operational elements are crucial, through forming partnerships
with operators, which produce stable, long-term profits in a systematic manner.
Through this acquisition, the company aims to enter a new business realm with the mission statement to “create new value forgolfers in and outside Japan and improve the asset value of golf courses.” It plans to achieve this by fusing its expertise inrevitalizing properties and track record of revitalizing operational assets with T&K’s golf course operational know-how andnetwork of high-income customers.

Overview of T&K K.K.
▶

Business: Operation, consulting, assessment, design, renovation, and supervision of golf courses and other sports▶

Capital: JPY95mn

facilities

Acquisition price and status of holdings after acquisition▶

Acquired shares: 1,518 (voting rights: 1,518)▶

Holdings after acquisition: 1,518 shares (1,518 voting rights; 53.1% share of total voting rights)▶

Acquisition price: JPY70mn (planned), JPY5mn in advisory costs (estimate), total price of JPY75mn (estimate)

For corporate releases and developments more than three months old, see the News and topics section.

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Trends and outlook
Quarterly trends and results
FY12/16

Cumulative

FY12/18

FY12/17

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Revenue

684

4,192

5,973

11,627

2,021

5,270

6,263

13,0972,752-76.1%

29.6%

38.8%

67.3%

195.6%

25.7%

4.8%

12.6%

36.2%

384

913

1,563

2,621

715

1,670

2,191

4,397

1,031

YoY

-30.8%

29.5%

45.4%

68.4%

86.4%

83.0%

40.2%

67.8%

44.2%

GPM

56.1%

21.8%

26.2%

22.5%

35.4%

31.7%

35.0%

33.6%

37.5%

196

399

895

1,446

556

1,050

1,541

2,032

557

YoY

4.8%

7.2%

59.1%

91.2%

183.0%

162.9%

72.3%

40.5%

0.3%

SG&A ratio

28.7%

9.5%

15.0%

12.4%

27.5%

19.9%

24.6%

15.5%

20.3%

Operating profit

187

513

668

1,175

160

620

649

2,366

474

YoY

-49.0%

54.4%

30.5%

46.9%

-14.8%

20.7%

-2.8%

101.3%

197.0%

6.2%

OPM

27.4%

12.2%

11.2%

10.1%

7.9%

11.8%

10.4%

18.1%

17.2%

12.6%

Gross profit

SG&A expenses

Recurring profit

Q3

Q4% of FYFY Est.

Q1

YoY

Q2

FY12/18(JPYmn)13.8%

20,000
52.7%

18.9%

133

393

493

874

77

441

372

1,999

374

YoY

-61.0%

44.1%

21.7%

33.4%

-42.0%

12.3%-24.6%

128.6%

385.7%

2.9%

RPM

19.4%

9.4%

8.3%

7.5%

3.8%

8.4%

5.9%

15.3%

13.6%

10.3%

Net income

81

273

323

588

63

304

263

1,251

263

YoY

-62.8%

57.8%

27.8%

46.9%

-22.9%

11.4%-18.5%

112.6%

320.2%Net margin

11.9%

6.5%

5.4%

5.1%

3.1%

5.8%

4.2%

9.5%

9.5%

Quarterly

FY12/16
Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Revenue

684

3,508

1,781

5,654

2,021

3,249

993

6,835

2,752

-76.1%

832.3%

66.4%

113.7%

195.6%-7.4%-44.3%

20.9%

36.2%

384

529

650

1,058

715

955

521

2,207

1,031

YoY

-30.8%

251.4%

75.9%

119.6%

86.4%

80.5%

-19.9%

108.6%

44.2%

GPM

56.1%

15.1%

36.5%

18.7%

35.4%

29.4%

52.5%

32.3%

37.5%

196

203

495

551

556

495

491

490

557

YoY

4.8%

9.5%

161.1%

184.5%

183.0%

143.5%-0.8%-11.0%

0.3%

SG&A ratio

28.7%

5.8%

27.8%

9.7%

27.5%

15.2%

49.5%

7.2%

20.3%

Operating profit

187

326

155

507

160

460

30

1,716

474

YoY

-49.0%--13.9%

76.0%-14.8%

41.2%-80.8%

238.6%

197.0%

OPM

27.4%

9.3%

8.7%

9.0%

7.9%

14.2%

3.0%

25.1%

17.2%

133

260

101

381

77

364

-69

1,627

374

YoY

-61.0%--24.3%

52.4%-42.0%

40.0%-

327.0%

385.7%

RPM

19.4%

7.4%

5.6%

6.7%

3.8%

11.2%

-

23.8%

13.6%

81

192

50

266

63

241

-41

988

263

YoY

-62.8%--37.4%

79.3%-22.9%

25.9%-

271.7%

320.2%Net margin

11.9%

5.5%

2.8%

4.7%

3.1%

7.4%

-

14.5%

9.5%

YoY

SG&A expenses

Recurring profit

Net income

18.6%

2,057

1,414
13.1%
7.1%

FY12/18

FY12/17(JPYmn)Gross profit

18.2%

2,512

Q2

Q3

Q4

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

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FY12/16

Segments (cumulative)

FY12/17

FY12/18(JPYmn)

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Consolidated revenue

684

4,192

5,973

11,627

2,021

5,270

6,263

13,0972,752-76.1%

29.6%

38.8%

67.3%

195.6%

25.7%

4.8%

12.6%

36.2%

330

3,578

4,835

9,977

1,449

4,175

4,652

10,981

2,128

YoY-88.0%

21.1%

29.1%

62.6%

339.1%

16.7%

-3.8%

10.1%

46.8%

% of consolidated revenue

48.3%

85.4%

80.9%

85.8%

71.7%

79.2%

74.3%

83.8%

77.3%

139

159

482

768

374

641

958

1,278

456

YoY

611.6%

219.4%

298.5%

348.1%

168.3%

302.2%

98.7%

66.4%

21.9%

% of consolidated revenue

20.4%

3.8%

8.1%

6.6%

18.5%

12.2%

15.3%

9.8%

16.6%

214

455

656

882

198

455

652

839

168

YoY

115.4%

98.1%

49.9%

37.3%

-7.6%

0.1%

-0.6%

-4.9%

-14.9%% of consolidated revenue

31.3%

10.8%

11.0%

7.6%

9.8%

8.6%

10.4%

6.4%

6.1%

YoY

Real Estate Investment and Development

Real Estate Consulting

Real Estate Management

Consolidated operating profit
YoY

Real Estate Investment and Development

187

513

668

1,175

160

620

649

2,366

474

-49.0%

54.4%

30.5%

46.9%

-14.8%

20.7%

-2.8%

101.3%

197.0%

64

340

485

989

132

614

603

2,316

339

YoY

-85.1%-20.1%

-9.5%

17.8%

107.2%

80.3%

24.4%

134.1%

157.1%% of consolidated operating profit

22.6%

47.8%

46.2%

55.2%

32.9%

58.2%

47.9%

73.1%

49.4%

OPM

19.3%

9.5%

10.0%

9.9%

9.1%

14.7%

13.0%

21.1%

15.9%

103

125

221

346

172

222

320

408

245

-

4489.7%407.4%

496.9%

67.3%

78.4%

44.9%

17.9%

42.0%

% of consolidated operating profit

36.7%

17.5%

21.0%

19.3%

43.1%

21.1%

25.4%

12.9%

35.7%

OPM

74.0%

78.2%

45.8%

45.1%

46.1%

34.7%

33.4%

31.9%

53.7%

114

246

344

458

96

218

337

443

YoY

143.7%

125.8%

51.5%

61.6%

-15.8%-11.5%

-2.2%

-3.3%

6.9%

% of consolidated operating profit

40.7%

34.6%

32.8%

25.6%

24.0%

20.7%

26.7%

14.0%

15.0%

OPM

53.3%

54.2%

52.4%

52.0%

48.6%

47.9%

51.6%

52.8%

61.0%

-94

-199

-382

-619

-241

-435

-610

-802

-213

Real Estate Consulting
YoY

Real Estate Management

Adjustments

FY12/16

Segments (quarterly)

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Consolidated revenue

684

3,508

1,781

5,654

2,021

3,249

993

6,835

2,752

-76.1%

832.3%

66.4%

113.7%

195.6%-7.4%-44.3%

20.9%

36.2%

330

3,248

1,257

5,143

1,449

2,725

478

6,329

2,128

YoY

-88.0%

1403.5%58.9%

115.1%

339.1%-16.1%-62.0%

23.1%

46.8%

% of consolidated revenue

48.3%

92.6%

70.5%

91.0%

71.7%

83.9%

48.1%

92.6%

77.3%

139

20

323

286

374

267

317

319

456

YoY

611.6%-33.9%

354.1%

467.3%

168.3%

1233.3%

-1.7%

11.9%

21.9%

% of consolidated revenue

20.4%

0.6%

18.1%

5.1%

18.5%

8.2%

32.0%

4.7%

16.6%

214

240

202

225

198

257

197

186

168

YoY

115.4%

84.9%

-3.2%

10.4%

-7.6%

6.9%

-2.2%

-17.3%-14.9%% of consolidated revenue

31.3%

6.8%

11.3%

4.0%

9.8%

7.9%

19.9%

2.7%

6.1%

187

326

155

507

160

460

30

1,716

474

YoY

-49.0%--13.9%

76.0%-14.8%

41.2%-80.8%

238.6%

197.0%

OPM

27.4%

9.3%

8.7%

9.0%

7.9%

14.2%

3.0%

25.1%

17.2%

64

277

144

505

132

482

-11

1,713

339

Real Estate Consulting

Real Estate Management

Consolidated operating profit

Real Estate Investment and Development
YoY-85.1%

-

31.9%

65.8%

107.2%

74.1%-

239.6%

157.1%% of consolidated operating profit

22.6%

64.3%

42.7%

67.8%

32.9%

73.7%

-5.3%

89.8%

49.4%

OPM

19.3%

8.5%

11.5%

9.8%

9.1%

17.7%

-2.3%

27.1%

15.9%

103

22

96

125

172

50

97

88

245

-

718.1%

135.5%

766.4%

67.3%

131.4%

1.3%-29.5%

42.0%

Real Estate Consulting
YoY% of consolidated operating profit

36.7%

5.0%

28.4%

16.8%

43.1%

7.6%

47.5%

4.6%

35.7%

OPM

74.0%

107.8%

29.7%

43.8%

46.1%

18.7%

30.7%

27.6%

53.7%

114

132

98

114

96

122

119

107

103

YoY

143.7%

112.4%-17.2%

102.2%-15.8%

-7.9%

21.4%

-6.8%

6.9%

% of consolidated operating profit

40.7%

30.7%

28.9%

15.4%

24.0%

18.6%

57.8%

5.6%

15.0%

OPM

53.3%

55.0%

48.4%

50.7%

48.6%

47.4%

60.0%

57.1%

61.0%

-94

-105

-183

-237

-241

-194

-175

-192

-213

Real Estate Management

Adjustments

Q1% of FY
13.8%

FY Est.
20,000
72.0%

2,512

18.9%

113.8%

FY12/18

FY12/17

Q1

Real Estate Investment and Development

FY12/18
Q3

103(JPYmn)
YoY

Q2

Q2

Q3

Q1

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

Q1 FY12/18 results (out May 15, 2018)
Earnings overview
For Q1 FY12/18, the company reported revenue of JPY2.8bn (+36.2% YoY), operating profit of JPY474mn (+197.0%), recurring
profit of JPY374mn (+385.7%), and net income attributable to owners of parent of JPY263mn (+320.2%). Progress toward
FY12/18 forecasts was revenue 13.8% (Q1 FY12/17 results were 15.4% of the full-year FY12/17 results), operating profit 18.9%(6.7%), recurring profit 18.2% (3.9%), and net income attributable to owners of parent 18.6% (5.0%). The company’s listing
was transferred from Mothers market of the Tokyo Stock Exchange to the First Section of the same exchange in Q1 FY12/18.

Revenue
Up 36.2％ YoY. Revenue was up by 46.8% in Real Estate Investment and Development, by 21.9% in Real Estate Consulting, and-by 14.9% in Real Estate Management. Real Estate Investment and Development and Real Estate Consulting drove revenue
growth.

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Quarterly revenue(JPYmn)Real Estate Investment and Development

Real Estate Consulting

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

684
214
139
330

Q4

3,248

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

7,000

Q1

FY12/16

2,752
168
456
2,128

Q4

Q1

Q2

FY12/17Q3Q4FY12/18

Source: Shared Research based on company data

ProfitOperating profit rose 197.0% YoY. Operating profit was up by 157.1% in Investment and Development, by 42.0% in Consulting,and by 6.9% in Management. Operating profit rose YoY in all segments.
Quarterly operating profit and YoY (%)
Real Estate Investment and Development(JPYmn)Real Estate Consulting

Real Estate Management

2,000

1,000
500
0
-500

47

9.3%

10.9%
56 14

0

428
(108)

62
-2
(98)

Q1

Q2

118
41
3 109
304
(88)
(87)

-9.3%

Q3

Q4

30.0%

25.1%

16.8%
12.8%

40.0%

107
88

27.4%

1,500

OPM (right axis)

132

8.7%

114
103
64
(94)

277

22 98
96
144

(105)

(183)

Q1

Q2

Q3

FY12/15

FY12/16

114
9.0%
125
505

1,713

14.2%
7.9%
96
172

122
50

132

482

(237)

(241)

(194)

Q4

Q1

Q2

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

FY12/17

Q4

17.2%

20.0%

103
245

10.0%

339

0.0%

(213)
Q1

Q2

Q3

Q4

-10.0%

FY12/18

Source: Shared Research based on company data

By Segment
Real Estate Investment and Development segment
Segment revenue was JPY2.1bn (+46.8% YoY). The company sold five buildings (three in Q1 FY12/17): two residential properties(one), one office/retail building (none), one land lot (one), and hotel condominium (one). Of this, seven out of eight blocks ofthe newly built "the kamui niseko" hotel condominium in Niseko, a global ski resort in Abuta, Hokkaido, were sold.
The company purchased seven properties (five in Q1 FY12/17): three residential properties (three), three office/retail buildings(none), no land lots including land for development (two); and one other (none). By region, six were in Kanto (two), none in
Hokkaido (one), and one in Kyushu (two). The balance of real estate for sale and real estate for sale in process increased by
JPY4.2bn from end-FY12/17, with continued purchases of new properties. In addition, out of this total balance, two new hotels
were completed in March 2018 (Hotel Torifito Otaru Canal in Otaru, Hokkaido and Tissage Hotel in Naha, Okinawa). These hotels
opened in April and are making progress towards commercialization. The number of properties held in inventory was 29 (28 in
Q1 FY12/17). The number of properties does not include lots for detached housing owned by Life Stage Co., Ltd.
Segment profit was JPY339mn (+157.1% YoY).

Real Estate Consulting segment
Segment revenue was JPY456mn (+21.9% YoY). The company won consulting projects mainly in the Kanto region, andcompleted 13 deals (seven in Q1 FY12/17). Of the 13 completed deals, nine were in Kanto (four), two in Hokkaido (two), one in

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Kansai (zero), and one in Kyushu (one). With a number of large-scale projects completed (mainly brokered deals), both revenues
and number of contracts were well ahead of FY12/17. In addition, B-Lot Singapore Pte. Ltd. revenue also increased YoY, and thecompany’s network of overseas investors further expanded. Segment profit was JPY245mn (+42.0% YoY).

Real Estate Management segment
Segment revenue was JPY168mn (-14.9% YoY). The number of client-owned properties under management rose to 62 (51 in Q1
FY12/17). By region, the company was managing 28 properties in Kanto (21), 23 in Hokkaido (19), two in Kansai (one), and ninein Kyushu (ten). In asset management, the number of projects managed by B-Lot Asset Management Co., Ltd. increased YoY.
However, sales fell YoY on lower rental revenue from the company’s own properties. Reduced cost of revenue and SG&A
expenses helped absorb the decline in sales. Segment profit was JPY103mn (+6.9% YoY).

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

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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
4,192
29.6%
913
29.5%
21.8%
399
7.2%
513
54.4%
12.2%
393
44.1%
9.4%
273
57.8%

FY12/162H
7,435
100.1%
1,708
100.7%
23.0%
1,046
172.9%
662
41.5%
8.9%
482
25.8%
6.5%
316
38.6%

FY
11,627
67.3%
2,621
68.4%
22.5%
1,446
91.2%
1,175
46.9%
10.1%
874
33.4%
7.5%
588
46.9%

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
7,809
5.0%
2,728
59.7%
34.9%
981
-6.2%
1,746
163.8%
22.4%
1,558
223.4%
19.9%
947
200.0%

FY
13,079
12.5%
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%

FY12/18 Est.
FY Est.
20,000
52.9%

2,512
6.2%
12.6%
2,057
2.9%
10.3%
1,414
13.1%

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

FY12/18 company forecasts
Overview
For FY12/18, the company forecasts revenue of JPY20.0bn (+52.9% YoY), operating profit of JPY2.5bn (+6.2%), recurring profit of
JPY2.1bn (+2.9%), and net income attributable to owners of parent of JPY1.4bn (+13.1%).

Industry environment
Looking at FY12/18, while there are some concerns for a downturn in the global economy, domestic economy is expected toremain on a recovery path supported by Japanese government-led economic measures and Bank of Japan’s monetary easing. The
real estate industry also expects to see continued growth driven by a financial environment that maintains its strength. The
company stated that, in light of this outlook, it aims to aggressively develop its businesses by leveraging synergies within thegroup, expanding business opportunities, and maximizing profits, and through these initiatives achieve sustainable growth.

Main properties under development/revitalization
At present, the principal sites under development/revitalization by the company are as follows:◤ Hostels opened in July 2017 (Shintomi, Tokyo) and September 2017 (Kiyomizu, Kyoto)◤ Completion of Hotels in March 2018 (Naha, Okinawa, and Otaru, Hokkaido). The former is to be opened as Tissage Hotel by

Nest Naha, and the latter as Hotel Torifito Otaru Canal, respectively, in April 2018

◤ June 2018: hotel (Shijo, Kyoto)◤ July 2018: office building (Shimbashi, Tokyo)◤ November 2018: rental condominium building (Ropponmatsu, Fukuoka)

Expansion into Okinawa
Although in the past many real estate companies have failed when advancing into Okinawa, for several years the company has
had its sights on real estate in Okinawa on the basis that Japan will continue to become more popular as a tourist destination. As
stated above, the company completed an income-generating condominium project worth over JPY1.5bn in FY12/17. Additionally,in FY12/18 the company is to open a site that it acquired two years ago and developed as Tissage Hotel by Nest Naha, referred toabove. The company sees a robust demand for property in Okinawa, and it will continue to focus on opportunities there. The
company is considering opening a base in Okinawa, and is looking for reliable partners.

Acquisition policy
The company plans to continue to actively pursue acquisition in the future.

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Previous year results: Viento Creation
Viento Creation, which became a subsidiary in January 2017, owns and operates capsule hotels (Central Inn Gotanda, Hotel Siesta
Ebisu). As a result, the company enhanced personnel with the addition of people with hotel operation expertise, expanded realestate purchasing methods, developed M&A know-how, and inherited a hotel network. Hotel Siesta Ebisu was reopened in

December 2017 with a new operator, rebranded as ℃ Ebisu. The Gotanda location is also scheduled for reopening in autumn

2018.

Targeting the acquisition of businesses holding operational assets
The company wants to be actively involved in real estate with strong operational factors. In the past the company has been
involved in a large number of accommodation facilities. Initially it was involved in changing the use of office buildings toaccommodation facilities, and after that it also developed accommodation facilities from zero. With the capsule hotel
revitalization mentioned above, although the use is the same, it is currently being operated under a different brand, operator,and facilities (e.g. an enlarged sauna). Although the company does not directly participate in hotel management, it works inpartnership with operators. The company hopes to become actively involved in other fields, making changes like these to raisethe value of real estate, such as: nursing homes, warehouses, tenant changes at large shopping centers, and golf courses. The
company plans to actively acquire operational assets, partner with operators that systematically generate stable long-term profits,
and improve the asset value of real estate where operational factors hold the key for success.

Making T&K K.K. a subsidiary
On March 15, 2018, the company announced a share acquisition of T&K K.K., making it a subsidiary (see Recent updates).

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Medium-term outlook
Overview
B-Lot has not released a medium-term plan to enable flexibility in response to changing economic conditions. The company’s
most important key performance indicator (KPI) is net income. B-Lot thinks that it needs to grow profit by roughly 20% perannum to be seen as a growth company on the TSE Mothers. The company also aims to expand its sales bases in key cities inJapan 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, whichmarkets condominiums to families and operates in different areas with different methods, as well as the acquisition of capsulehotel owner Viento Creation. According to President Miyauchi, the ideal segmental earnings breakdown in the medium 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.

Company view on the real estate market
B-Lot thinks that the current conditions in the real estate market will likely persist for some time due to steady fund inflows. Banks
now have healthy balance sheets, and are showing tendencies of narrowing their lending to certain key borrowers. Substantial
demand for capital comes from M&A and real estate purchases. There is also an abundance of equity underwriters for real estate,
and many aggressive purchasers of Japanese real estate including REITs, domestic and overseas institutional investors, individuals
in response to the revised inheritance taxes, and high net worth individuals overseas.
In addition to abundant funds, another characteristic particular to Japanese real estate market is low interest rates. Yield spreads
are wider than other markets, and there are no signs that interest rates will rise in the near future.
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 27 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. The parent company has a small, skilled team ofaround 48, and on a group-company basis including acquired companies, there are 149 employees (as of end-December 2017).

Financial strategy
B-Lot is growth-oriented and uses higher leverage than its peers (the net debt/equity ratio was 2.23 in FY12/17; average for 23
competitors with similar revenue was 1.46). 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 thinks

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that 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◤ Create group synergies: Monetize overall group synergies by coordinating product lineup of accommodation facilities

nearing completion for wealthy overseas investors◤ Increase external collaboration: Enter and strengthen business alliances to facilitate development of new areas and create new

business models◤ Build sound financial platform: While aggressively rolling out business as a startup company, build sound financial platform◤ Build a diverse team: Employ diverse human resources including IT personnel and non-Japanese employees, and manage soeach can maximize their potential◤ Establish a structure for organizational growth: Establish a structure with sound corporate governance framework and internal

control system that can make swift, accurate management decisions

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 Shinjuku 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). 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 capsule hotel. 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) in collaboration with
ABaccommo Co., Ltd., and in October 2017 opened the third, Imano Kyoto Kiyomizu Hostel in the Higashiyama area of Kyoto.
*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 hotel charges.

The company has budget hotel projects underway in Naha, Okinawa (scheduled for completion in March 2018), Otaru, Hokkaido(March 2018), and Shijo, Kyoto (June 2018).
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. Leveraging the group structure,
the company has sold thee hotels to date.

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Hotel revitalization and development projects (both completed and under development)
Project
First Cabin Tsukiji
IMANO TOKYO HOSTEL

Type
Revitalization
Revitalization
Revitalization
Revitalization
Type
DevelopmentoDevelopment
Development
Development
Development
Development
Development

the kamui niseko
IMANO TOKYO GINZAIMANO TOKYO GINZA HOSTEL
Tissage Hotel Naha by Nest
Hotel Torifito Otaru Canal
Shijo-karasuma Project (planned)

C Ebisu
C Gotanda
Project
nine hours Shinjuku-Northo

At 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 hotel development project (capsule hotel)- Average occupancy 83.5%+ (206 capsules in total)- Total number of visitors over 17,000
B-Lot's first condominium for subdivision
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

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 scheduled to open in spring 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, thecompany plans to proactively use acquisitions to increase synergies between individual businesses and offer end-to-end services
as a group.

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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.

Application to list on 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.

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Business
Business description
Overview
B-lot is a mid-sized real estate company with three core businesses: real estate investment, consulting, and management. In its
key Real Estate Investment and Development business, the company aims to take on some risk and drive growth. Real EstateConsulting and Real Estate Management, meanwhile, are stable earners. The company handles various types of real estate, andtransactions range between JPY100mn and JPY3bn. Its properties are mainly in major cities, but it also handles properties
nationwide. The Kanto area is covered by the head office, while branches have a track record 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 FY12/17, the breakdown of earnings by segment was: Investment 83.7% of revenue, 73.1% of operating profit; Consulting
9.9% of revenue, 12.9% of operating profit; and Management 6.4% of revenue and 14.0% of operating profit. OPM was 21.1%,
31.3%, and 52.8% respectively. B-Lot aims to diversify its building types and regions in the Real Estate Investment segment.
Breakdown by building type: residential 11 (52% of properties sold), office/retail buildings five (24%), detached lots three (14%),and hotels two (10%). Breakdown by region: Kanto 15 (71% of properties sold), Hokkaido three (14%), Kyushu three (14%), and,Kansai zero (no sales in FY12/17). The average sales price per property sold in the Real Estate Investment segment was JPY625mn(if bulk projects are treated as a single item), 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 59 in FY12/17.
Segment revenue and operating profit (FY12/17: excluding adjustments)
839
6%
1,305
10% 443
14%
408
13%

FY12/17
Revenue
13,097

10,981
84%

2,316
73%

(JPYmn)Real Estate Investment and Development

Outer: Revenue
Inner: Operating profit
Real Estate Consulting

Real Estate Management
Source: Shared Research based on company data

Revenue, operating profit, and recurring profit (JPYmn) and OPM
20,00018.1%

15,0009.8%

10,000

10.2%

6.3%

5,000
0
(JPYmn)457

23

FY12/10

6

1,338
85 78

FY12/11

FY12/12

494

Revenue

11.5%

20%
18%
16%

13,097
11,62720,000

12.6%

12%

10.1%

10%
8%

6,951
2,231
218 183
FY12/13

Operating profit

3,709
378 295
FY12/14800 655
FY12/15

Recurring profit

14%

1,175 874
FY12/16

2,366

1,999

FY12/17

2,512

6%
2,057

FY12/18 Est.

4%
2%
0%

OPM (right axis)

Source: Shared Research based on company data

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Characteristics
Based on accumulated real estate investment and management expertise, B-lot’s segments operate in line with overall corporate
goals. For each project individual divisions collaborate, each contributing 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 JPY523mn in FY12/17 (JPY625mn if bulk projects are treated as a single item). Still, suchproperties* 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 suchsituations 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) and large properties (over5,000 tsubo). In terms of rentable area (floor space), small and medium properties accounted for 46% (5.51mn tsubo) versus 54% (6.64mn tsubo) forlarge properties. By number of buildings, small and medium office buildings accounted for the vast majority or 91% (7,031 buildings) versus 9% (732large buildings). Source: Xymax Real Estate Institute, Office Stock Pyramid 2016

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. 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). The company used its

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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. (See Group companies section for details.) B-Lot had a small
team of skilled professionals at the time of its establishment. As of end-December 2017, including acquired companies, the group
had around 149 employees.
In September 2016, a fund the company invested in jointly with Misawa Homes started operating. (Property size: roughly
JPY1.0bn, investment share: Misawa Homes 89.8%, B-Lot 10.2%.) The company’s subsidiary, B-Lot Asset Management, put
together a real estate fund backed by two relatively new rental condominium buildings in Osaka. In March 2017, the fund boughta newly built rental condominium building in Osaka (Luxe Tennoji).

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

Properties with profitability issues
For low-margin properties, B-Lot improves rent levels and occupancy rates, repurposes properties, attracts tenants, andrefurbishes. Alternatively, the company may develop or review long-term repair plans to improve profitability. In some cases, 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)

Source: Shared Research based on company materials

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

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

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

Targeted
property

Source: Shared Research based on company materials

The Investment segment accounts for around 85% of revenue (FY12/12–17 average) and the segment profit margin during theseyears 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). Of the 27 properties, twelve were land,
including land for development (44% of the 27 properties), two were office/retail properties (7%), nine were residentialbuildings (33%), three were hotel/accommodation properties (11%), and one was a nursing care facility (4%). The inventories
are regionally diversified as well. Many of the company’s customers own several buildings, particularly in Tokyo. Some are repeat
customers who also aim to diversify their portfolios by owning properties in Hokkaido 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 thoseregarding property rights. In some cases, the company’s planning comes first, such as when turning an office building into a
compact hotel (smaller than a business hotel, but larger than a capsule hotel). The company said that it can usually sell suchproperties for a high price, so it can afford to pay more to obtain them. In many cases, individual operators use the company’sorganization and brand power to develop projects. B-Lot said that recently, operating companies and individual operators are
increasingly bringing in projects.

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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 consolidated revenue
Offices and stores% of consolidated revenue
Land for detached houses% of consolidated revenue
Hotels% of consolidated revenue<By region>
Kanto% of consolidated revenue
Hokkaido% of consolidated revenue
Kyushu% of consolidated revenue
Kansai% of consolidated revenue
Revenue 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.

FY12/17
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%

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%

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%

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%

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%
7
31.8%
-

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%

Source: Shared Research based on company materials

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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 inventories for sale
Offices and stores
YoY% of inventories for sale
Residential
YoY% of inventories for sale
Hotel, accomodation related
YoY% of inventories for saleNursing care facilities
YoY% of inventories for sale
<By region>
Kanto
YoY
% of inventories for sale
Hokkaido
YoY% of inventories for sale
KyushuYoY% of inventories for saleKansai
YoY% of inventories for sale
Inventory value 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%

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 8% of revenue (FY12/12–17
average), and OPM was 34–40% (FY12/12–17). The segment’s composition of overall revenue has continued to grow, from
2.5% in FY12/15, to 7.4% in FY12/16, to 9.9% in FY12/17
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.

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

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%

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 59 buildings. The segment accounted for
6.4% of revenue and OPM was 52.8% (FY12/17).
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)(Sqm)
Total rental space
No. of tenants (right axis)

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

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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
59

60

Kanto

Hokkaido

KyushuKansai

50

43
36

40
31
30

8

20

13
2

10
0

12/08

1
1
12/09

1
1
12/10

16
3

9

16

8

9
23

10

9
12

48

18

11

13

14

15

17

20

12/11

12/12

12/13

12/14

12/15

12/16

26

12/17

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

▷ Elgar House Kanazawa (wedding hall, northern Ishikawa): land, 4,169.77sqm, building 197.22sqm, built in April 1999
▷ Bay East (rental condominiums, Yokohama): land, 1,110.37sqm, building 4,144.25sqm, built in February 1992
▷ Two condo hotel blocks, Okinawa

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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 consolidated revenue
Hokkaido% of consolidated revenue
Kyushu% of consolidated revenue
Kansai, other% of consolidated revenue
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%

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%

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 Corporation, and Viento
Creation 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 had two employees (as of end-September 2017).
B-Lot Singapore business model
B-Lot Singapore Pte. Ltd.

B-Lot groupServices by Singaporean subsidiary★ Coordinate investments in real estate in Japan- Local real estate license gives sense of security- Provide guidance on the Japanese market- Provide real estate information- 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 had four employees (as of end-September 2017).
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

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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 had 92 employees (as of end-September2017). Life Stage was established in December 1990.
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. Viento Creation
had 0 employees (as of end-September 2017, following M&A it transferred all employees to B-Lot). The company was establishedin July 1995.

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 (the average sale price per property in FY12/17 was
JPY523mn; JPY625mn if bulk projects are treated as a single item) 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 as well asvarying sources of exclusive real estate information (typically real estate brokers). B-Lot differentiates such as through therevitalization of compact hotels, and its overseas network via its Singapore subsidiary means that it can provide support foroverseas investment into Japan.
Using the creditworthiness and fundraising ability gained by listing on the TSE Mothers market in December 2014, the company
has been using higher levels of leverage than its competitors to accelerate growth (the net debt/equity ratio was 2.23 in FY12/17;
average for its 23 competitors with similar revenue was 1.46). Over the five years through FY12/17, revenue grew at a CAGR of
57.8% and operating profit of 94.6%.

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Comparison with main competitors
Company

FiscalRevenueyear(JPYmn) (JPYmn)

OP

IchigoMugen Estate
Samty
Tosei
Intellex
Sun Frontier Fudousan
Kenedix
Star Mica
Arealink
A. D. WorksFirst Brothers
e'grand
House DO
Properst
Aoyama Zaisan Networks
Sansei Landic

FY02/17
FY12/17
FY11/17
FY11/17
FY05/17
FY03/17
FY12/17
FY11/17
FY12/17
FY03/17
FY11/17
FY03/17
FY06/17
FY05/17
FY12/17
FY12/17

109,253
63,56860,47957,754
41,40040,394
26,34923,075
21,48918,96918,76618,487
16,84814,874
14,562
13,09821,781
7,122
10,131
9,833
1,756
9,380
12,285
3,575
2,379
1,040
3,373
1,233
1,249
1,162
1,094
1,762

B-Lot

FY12/17

13,097

Goodcom Asset
ArdeproMeiho Enterprise
Will
Land
Intrance

FY10/17
FY07/17
FY07/17
FY12/17
FY02/17
FY03/17
Average

9,834
7,733
7,496
5,222
4,331
2,743
26,514

OPM

ROA

ROE

EquityNet Debt /ratio

Equity ratio

29.4%
32.5%
23.4%
37.7%
26.6%
56.0%
48.2%
28.3%
54.7%
24.7%
29.7%
34.2%
13.7%
15.7%
28.7%
47.3%

1.58
1.18
2.26
0.94
1.95
0.16
0.34
2.25
0.15
0.31
1.60
1.13
4.01
3.92
0.27
0.48

2,366 18.1%

11.2% 36.6% 21.0%

2.23

907
820
675
630
828
569
4,172

8.9%
-3.7%
7.5%
13.7%
27.7%
7.3%
8.5%

1.95
5.04
1.03
0.16
-0.19
0.77
1.46

(RP-based)
19.9%
11.2%
16.8%
17.0%
4.2%
23.2%
46.6%
15.5%
11.1%
5.5%
18.0%
6.7%
7.4%
7.8%
7.5%
13.5%

9.2%
10.6%
9.0%
12.1%
19.1%
20.7%
14.4%

7.5%
11.0%
5.5%
7.4%
4.0%
15.1%
6.2%
5.6%
9.1%
3.4%
8.1%
6.4%
6.7%
6.1%
8.6%
12.0%

20.2%
24.7%
15.8%
14.1%
9.7%
19.6%
11.7%
14.1%
9.8%
8.8%
19.1%
12.8%
29.8%
26.1%
22.2%
15.0%

24.5%
0.8%
28.2%
18.2%
67.6%
9.5%
20.0%

25.7%
12.9%
35.7%
49.4%
49.8%
42.8%
33.4%

Main businesses(% of revenue)
Value-added (revitalization) (84), asset management (4)Buying and selling (revitalization) (96)Real estate (development and revitalization) (85), rental (12)Revitalization (70), Development (9), Rental (11)Renovation and sale of pre-owned condominiums (84)
Renovation (88), asset management (4)Asset management (44), real estate investment (32)Pre-owned condominium (sale and rental) (77)Property management (91), property revitalization & liquidation (9)Sale of rental real estate (90), recurring-fee business (10)Investment bank (100)
Renovation of pre-owned houses (99)Real estate buying and selling (42), renovation (17), house leaseback (17)Renovation (53), development of properties for subdivision (39)Property consulting (27), real estate transaction (65), sublease and other (8)Real estate sales (91), construction (9)Real estate investment and development (84), real estate consulting (10), realestate management (6)Domestic sales (54), sales to real estate companies (40), property management
Revitalization of real estate (95), real estate rental revenue and other (5)Subdivision (70), rental (26)Development for subdivision (48), renovation (28)Real estate sales (79)
Principal (development) investment (74), solutions (20)

Source: Shared Research based on company data

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

Hasegawa’s expertise is in consulting for high net worth individuals and customer development, and Deputy President
Mochizuki is skilled in property revitalization (acquisitions and sales). The three founders previously worked together
managing a real estate company that listed on the TSE First Section. In addition to a high level of expertise and people skills,
the trust gained by the company listing on TSE Mothers in December 2014 has led to rapid growth in the number of
introductions to high net worth individuals from private bankers and from other wealthy individuals. There are many repeat
customers. Backed by six years of continued revenue and its track record in real estate revitalization, the company usedprivate placement bonds and commitment line syndicated loans to boost leverage above level of its peers to grow (the net
debt/equity ratio was 2.23 in FY12/17; average for 23 competitors with similar revenue was 1.46). Over the five years throughFY12/17, revenue grew at a CAGR of 57.8% and operating profit 94.4%.
◤ 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 JPY523mn in FY12/17; JPY625mn if bulk projects are treated as a single item) that are larger companies

don’t want to handle. The company leverages its information network that spans large cities across Japan and Singapore andoperates 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 aremany 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 21 properties the Investment segment sold in FY12/17, 15 (71%) were in
Kanto, three (14%) in Hokkaido, three (14%) in Kyushu, and zero (0%) in Kansai. Diversification enables B-Lot to mitigate therisk 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 renovatingcompact 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
2.23 FY12/17, versus an average of 1.46 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 sales price of buildings sold in FY12/17 was just JPY523mn (JPY625mn ifbulk projects are treated as a single item). The company’s president, Makoto Miyauchi, was involved in arranging numerous
large deals in his previous career at a bank and securities firm, but the company as a whole has no such experience. To growover 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 21.0%, the fourth lowest compared to a similar sizedpeer group of 23 companies, which have an average ratio of 33.4%. The company’s net D/E ratio, which is 1.5 times theaverage, is a reflection of the high valuation that banks place on the company’s real estate for sale, but the balance sheet is notstrong.

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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). The trend towards
recovery continued in 1H FY12/17, with transaction of JPY1.8tn in 1H FY12/17 (+17.4% YoY). 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). Meanwhile, widening yield spreads*** accompanying declining interest rates saw the real estate funds market
expand to JPY32.0tn (+5.6% YoY) in the first half of 2017. In addition to growth in J-REIT, private placement funds specializing inJapanese real estate are also growing. Bank lending to the real estate sector is also in an uptrend.
*Rising property prices: Prices of newly built condominiums in the Tokyo metropolitan area rose from JPY55.5mn/unit in 2016 to JPY56.8mn (+2,3%) in2017 (source: Real Estate Economic Institute, simple average of monthly prices). Prices for pre-owned condominiums rose 2.9% YoY from
JPY34.8mn/70sqm in 2016 to JPY35.8/70sqm in 2017 (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 (JPYbn) and number of transactions
1,340

7,000
6,000
846

4,000
3,000

1,124

5,448.4

5,000

2,000
1,000
0

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 2,240.0

925.5

949.1

677.3

809.8

FY00

FY01

FY02

FY03

FY04

FY05

FY06

1H transactions

FY07

801.5

1,111.5

1,057.0FY08

2,658.5
2,054.9
1,198.1

1,722.5
983.1

2,645.7

1,200

1,014

1,000

4,089.7 4,108.2

800

3,140.4
1,999.9600

2,557.2

400

1,811.3
1,954.0 2,148.6 2,089.8

553.3

856.8

739.4

847.2

FY09

FY10

FY11

FY12

2H transactions

4,599.7

673

513

502

1,818.1

878.2(JPYbn)5,289.0

4,348.9648

594
2,480.1

859

1,400

1,259

1,241

1,199

1,155

FY13

FY14

1,551.0 1,821.3

FY15

FY16

FY17

200
0

Number of transactions (right axis)

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

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

56.81

31.28

31,183
28.24

60
55

50.45

50

45.28

45

36,432
28,744

29.00

45.10

48.72

55.53

33,79830,34728,871

31,397

29.65

29.79

28.63

27.91

28.51

34,77637,18934.76

35.77
34,318

30.70

40
35
30

25.06

24.80

25.20

85,42984,14874,46361,02143,73336,37644,53544,49945,60256,47644,91340,44935,772

29,418

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

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

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

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Real estate fund market (JPYtn)
35

32.0 32.5
30.3 31.1 1.0
1.6
28.6 28.8
1.1
1.6
26.8 26.5 27.1 27.3 27.4 27.7
1.6
25.9
1.6
1.1
1.7
1.2
24.5 25.0 25.2 24.5 24.6 25.4 25.2
1.7
2.3
2.2
2.8
2.9
2.5
14.4
1.9
3.7
21.1 3.4
4.0
3.1
14.5 14.8
13.9
13.5 13.2
14.4 13.4
16.3 4.3
15.0 14.9
15.8 15.3
14.8
14.7
3.5
14.0 13.8 14.9 14.7
13.7 13.6

30
25
20
15
10

6.7

5
0
(JPYtn)

10.0

6.1

6.8

7.4

7.4

7.5

7.6

7.8

7.8

8.0

6/07

12/07

6/08

12/08

6/09

12/09

6/10

12/10

6/11

J-REIT

Private placement fund specialized in Japan

8.3

8.7

9.0

14.8 15.5 16.2 16.5
12.6 13.5 14.0
10.4 11.2 11.9

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

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-09Oct-10

Oct-11

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

Oct-12Oct-13Oct-14

Bank loans

Oct-15Oct-16Oct-1710-year JGB

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

Cap rate and yield spread (%)
6.0%

5.0%

4.0%

3.0%

2.0%

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08Apr-09Apr-10Capitalization rate: offices (Tokyo 23 wards)

Apr-11

Apr-12

Apr-13Apr-14Apr-15

Apr-16

Apr-17

Yield spread

Source: Shared Research based on ARES and Bank of Japan data

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Supply of investment condominiums in Tokyo metropolitan region
10,000
8,000

5,000

6,232

6,213
5,130

3,000
2,000

142

150

183

1,000

3,758
3,423
2,357

3,394

1,874
1,678
1,490
553
647
81
46

0

38

16 16

152

45 69

105

82

199 188

172

190

212 224

6,240
6,056
5,703

122

Sales of investment condominiums in the Tokyo area

350
300
250

4,121

3,222 200
150

172

108

400

7,028

6,966

5,298
5,101
4,583

4,591

4,000

450

7,006

7,238

7,000
6,000

500

8,983 8,548
9,210
8,939
8,616
8,387

9,000

105 100

143

120

135

120

143

100
83

50

60

0

Number of projects (right axis)

Source: Shared Research based on Real Estate Economic Institute data

Expected yields on one-room investment condominiums in Tokyo
7.5%
7.0%
6.5%
6.0%

7.0%

6.8%
6.4%

6.3% 6.3%

6.1%

6.5% 6.5%

5.8%
5.5% 5.5%

6.0%

5.5%

5.7%

5.0%

5.5%

5.3%

5.1%

4.5%
4.0%

6.2%

5.8%
5.3%

5.2%

6.0% 6.0% 6.0%

5.4%

6.0% 6.0%

5.8% 5.8%

5.5%

5.9%

5.7%

5.8% 5.8%

5.6%

5.5%

5.6%

5.4%

5.0% 5.0% 5.0%

5.5%

5.2%

5.4%

5.1%

5.2%

5.0%

5.1%

4.9%

5.0%

4.9%

4.7% 4.7%

4.8% 4.8%

4.6%

4.7%

4.5% 4.5%

Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct.
2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017

Expected yields (Jonan area)

Expected yields (Joto area)

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

Gross yield* on one-room investment condominiums in Tokyo
7.5%
7.0%

7.0%
6.3%

6.5%
6.0% 6.2%
5.5%
5.0%
4.5%
4.0%

6.2% 6.2%

6.0%
5.7%

6.0%

5.5%

5.5%
5.2%

5.6%

5.1%

5.3%
5.0%

5.0% 5.0% 5.0%

5.8%

5.9%

6.0%

5.8%

5.9%

5.8%

5.6% 5.6%

5.2%
4.8% 4.8%

4.7%

4.5%

4.7%

5.7%

5.5%

5.6%

5.4%

5.5%

5.3%

5.4%

5.1%

5.3%

5.0%

5.1%

4.9%

5.0%

4.8%

4.8%

4.6%

4.7%

4.6% 4.6%

4.5%

4.4%

4.5%

4.4%
4.3% 4.3%
4.2%
Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct. Apr. Oct.
2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017

Expected yields (Jonan area)

Expected yields (Joto area)

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 unit 25–30sqm, one-room condos with a total ofaround 50 units
Note: Jonan refers to an area in southern Tokyo, and Joto refers to an area in eastern Tokyo*Gross yield: The yield derived by dividing annual rental revenue by property price. Net yield is calculated by subtracting overheads (management
expenses and property taxes etc.) from annual rental revenue and dividing by sum of property price and overheads at time of purchase (registrationand license tax). In an investment, there are additional factors to consider: interest rates on loans, vacancy risk, and risk of loss on sale. According to acompany that sells investment condos, the main reason that investors invest in one-room condos, in addition to yield, is cash flow for retirement, tax
deductions (if rental revenue minus expenses during the initial investment period is negative due to building depreciation, interest, lower inheritancetax valuation), and life insurance (group credit insurance when borrowing).

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J-REIT transactions (JPYbn)
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

1,007.9

809.4(JPYbn)

2005

2006

2007

2008

529.7

2009

Transaction value

2010

367

804.2

2011

2012

300

2,286.5
1,595.8 1,597.1

710.8

400
247

83

57
246.6

2004

202

161
1,506.4

1,342.2

84

208

500

434

2013

2014

2015

1,769.2

200
1,339.4

2016

100
0

2017

Number of transactions (right axis)

Source: Shared Research based on ARES data

Bank loans outstanding to property sector
100
80

14.3%

70

20

14.4% 14.4% 14.3%

14.2%

14.0% 13.9%

15%

14.2%

14%

13.3%

50
30

14.8%

14.5%
13.9%

60
40

16%

15.3%

90

12.9%
12.5% 12.5%
12.3%
59.6
56.8
53.1

48.1
11.8%

51.3

53.1

2003

2004

2005

58.1

59.5

59.2

60.5

59.6

59.5

60.3

61.1

62.5

65.7

70.5

13%

74.8

12%

10
0
(JPYtn)

2000

2001

2002

2006

Outstanding loans for the real estate industry

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

11%

2017

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

Source: Shared Research based on Bank of Japan, loans by sector

Office building rents
According to the Office Rent Index jointly published by Sanko Estate and NLI Research Institute, in Q4 2017 (October toDecember), contracted rents for Class B buildings in Tokyo were JPY19,824/tsubo (+7.8% YoY, -4.8% QoQ). A gentle
appreciation in rents since bottoming out in Q3 2012 continues. Vacancy rates in Tokyo Class B buildings remain above 1%, at
1.1%. The downtrend since Q2 2011 continues, against a backdrop of the end of large increases of newly constructed officebuilding supply.

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

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

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

0

2.0%

Vacancy rate

Rent

1,000

0.0%

(JPY/sqm)

13Q1

13Q2

13Q3

13Q4

14Q1

14Q2

14Q3

14Q4

15Q1

15Q2

15Q3

15Q4

16Q1

16Q2

16Q3

16Q4

17Q1

17Q2

17Q3

17Q4

Rent

4,255

4,874

4,822

5,015

5,247

4,818

5,282

5,182

5,749

5,484

5,587

5,524

6,041

5,851

5,830

5,561

5,972

5,861

6,299

5,997

Vacancy rate

5.8%

5.7%

5.6%

5.4%

5.2%

4.5%

4.5%

4.5%

3.7%

3.6%

3.4%

3.2%

3.0%

2.5%

2.6%

2.2%

2.0%

1.6%

1.4%

1.1%

Source: Shared Research based on Sanko Estate Co. and NLI Research InstituteNote: rents are contracted rent and exclude Common Area Maintenance fee

HotelsIn 2017, there were 28.7mn overseas tourist arrivals in Japan (+19.3% YoY). Hotel vacancy rates have been on an uptrend sincebottoming in 2011 as the number of overseas tourists to Japan has increased.
Number of International Visitors to Japan (mn) and hotel occupancy rates (%)
Occupancy (nationwide; right axis)
Occupancy (Aichi; right axis)

Foreign traveler visiting Japan (mn)Occupancy (Osaka; right axis)

70

60.00

60
50
40
30
20
10
0

Occupancy (Tokyo right axis)

80.6%
72.7%
68.3%
65.0%

80.0%
70.9%

73.9%

69.6% 67.3%
62.3%

67.0%

82.7%

84.2%
83.2%

78.6%
69.5%

74.1%
72.1%

87.8%
86.3%
78.7%
74.2%

85.2%
83.3%
76.6%
74.4%

67.7%

60.1%

8.61

6.21

8.35

10.36

13.41

2010

2011

2012

2013

2014

19.73
2015

24.04
2016

95%
90%

84.8%
85.1%
79.0%

100%

85%

40.00

80%
75%

75.4%

70%
65%

28.69

60%
55%

2017

2020
Government
plan

2030
Government
plan

50%

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

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Historical performance
Historical financial statements
Full-year FY12/17 results (out February 14, 2018)
Summary
For full-year FY12/17, the company reported revenue of JPY13.1bn (+12.6% YoY), operating profit of JPY2.4bn (+101.3%),
recurring profit of JPY2.0bn (+128.6%), and net income attributable to owners of parent of JPY1.3bn (+112.6%). Progress toward
full-year forecasts was revenue 100.7%, operating profit 104.5%, recurring profit 105.4%, and net income attributable to ownersof parent 106.7%. All profit items overshot the upward revisions announced on November 28, 2017. Progress rates against theinitial forecasts are as follows: revenue 81.1%, operating profit 158.6%, recurring profit 170.1%, and net income attributable toowners of parent 160.1%.

*Because of the prospect of being able to secure larger profits than in the initial forecasts, the company pushed back the sale of a portion of the realestate for sale that had been scheduled in FY12/17 to FY12/18.

Revenue
Up 12.6％ YoY. Revenue was +10.1% in Real Estate Investment and Development, +66.4% in Real Estate Consulting, and -4.9%
in Real Estate Management. Real Estate Investment and Development and Real Estate Consulting drove revenue growth.
Quarterly revenue (JPYmn)
6,835
186
319

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 50Q2

1,070
209 71
791

30

Q3

2,391

684
214
139
330

Q4

Q1

1,781
202
323

3,248

5,143

2,021
198
374

Q2

Q3

2,725

993
197
317
478

Q4

Q1

Q2

Q3

FY12/16

Real Estate Investment and Development

6,329

1,449

1,257

FY12/15

3,249
257
267

Q4

FY12/17

Real Estate Consulting

Real Estate Management

Source: Shared Research based on company data

ProfitUp 101.3% YoY. Operating profit was +134.1% YoY in Investment and Development, +17.9% in Consulting, and -3.3% inManagement. The decline in Management was due to the consolidation of Viento Creation in 1H and costs stemming fromclosing the capsule hotel for renovations. Note that company-wide costs (corporate costs not allocated to individual segments)
are increasing.
Quarterly operating profit (JPYmn) and YoY (%)
1,800

27.4%

1,300
800
300
-200

107
88
25.1%

16.8%
12.8%

47
428
(108)
Q1

10.9%
0
118
41
109

62
3
-2
(98)-9.3% (88)
Q2

Q3

56

8.7%

9.3%
14

304
(87)
Q4

FY12/15

Real Estate Investment and Development

114
103
64
(94)
Q1

132

(105)
Q2

98
96
144

22

277

9.0%
114
125
505

(183)
Q3

FY12/16

Real Estate Consulting

(237)
Q4

96
172
(241)

(194)
Q2

30.0%
25.0%

119
97-11
(175)
Q3

15.0%
10.0%
5.0%

3.0%

132
Q1

1,713

122
50
482

35.0%

20.0%

14.2%
7.9%

40.0%

0.0%
(192)
Q4

-5.0%
-10.0%

FY12/17

Real Estate Management

OPM (right axis)

Source: Shared Research based on company data

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Real Estate Investment and Development segment
Segment revenue was JPY11.0bn (+10.1% YoY). The company sold 21 buildings (16 in FY12/16): 11 residential properties (eightin FY12/16), five office/retail buildings (five), three land lots (two), and two condo hotel blocks (one); average sale price perproperty was JPY523mn (-16.1% YoY).* The company purchased 22 properties (23 in FY12/16): 11 residential properties (eight in
FY12/16), four office/retail buildings (five), and seven land lots (including land for development; ten in FY12/16). By region, eight
were in Kanto (13), seven in Hokkaido (one), three in Kansai (three), and four in Kyushu (six).

*If bulk projects (an income-generating condominium and four other properties) are treated as a single item, the average sale price per property is
JPY625mn (+2.0% YoY).

Main properties sold** were predominantly as follows:◤ June 2017: Income-generating condominiums in Shinagawa, Tokyo (total floor space of 1,913.65sqm and registered lot size of

506.18sqm), and four other sites (sum of the five: total floor space of 3,363.28sqm and registered lot size of 2,074.77sqm).

◤ October 2017: Income-generating condominiums in Kin-cho, Kunigami, Okinawa (total floor space of 5,768.29sqm andregistered lot size of 5,796.01sqm). This is the first project sold in Okinawa. According to the company this project was worth

over JPY1.5bn. The company believes that this project marks the beginning of business development in the Okinawa area.
◤ November 2017: Hotel/retail space in Shinjuku, Tokyo (total floor space of 1,967.88sqm and registered lot size of 350.00sqm).

Sold to a domestic private fund. The company secured an asset management contract, and involvement continues after sale.

** Projects corresponding to over 10% of revenue and/or over 30% of net income in the immediately preceding fiscal year (FY12/16), publicly
announced as timely disclosure in the appropriate month.

The company is making steady progress in its plans to commercialize inventory properties from FY12/18 and beyond. It launched
two new hotels developed on the land lots in inventory, and has a steady stock of development projects in the pipeline. Note,the number of properties does not include lots for detached housing owned by Life Stage. The company’s real estate for saleincluded 27 items, and the inventory at end-FY12/17 (sum of real estate for sale and real estate for sale in process) was JPY11.4bn(-0.3% YoY). Average value per property was JPY421mn (-7.7% YoY). Number of properties by type was: land—including land fordevelopment—12 (12 at end-FY12/16); office/retail two (eight); residential nine (eight); hotel/accommodation three (one); andnursing care facility one (one). Of the 12 land items, nine were for development, and the breakdown by type was as follows:
office/retain two; residential three; hotel/accommodation four.
Segment profit was JPY2.3bn (+134.1% YoY).

Real Estate Consulting segment
Segment revenue was JPY1.3bn (+66.4% YoY). The company won consulting projects throughout Japan, and completed 29 deals(31 in FY12/16). The significant increase in revenue compared to the previous fiscal year was due to the full year contribution ofmarketing business (for newly built condominiums for subdivision) which began with the acquisition of Life Stage during FY12/16.
Of the completed deals, 18 were in Kanto (19 in FY12/16), five in Hokkaido (seven), four in Kansai (one), and two in Kyushu(four). The number of deals is increasing owing to the company’s Singapore subsidiary and collaborations with Life Stage. The
company is achieving continuing business with high net-worth customers. The company brokered 26 deals (27 in FY12/16),
obtaining revenue from fees of JPY252mn (+42.4% YoY).
Segment profit was JPY408mn (+17.9% YoY).

Real Estate Management segment
Segment revenue was JPY839mn (-4.9% YoY). The number of client-owned properties under management rose to 59 (48 in
FY12/16). By region, the company was managing 26 properties in Kanto (20 in FY12/16), 23 in Hokkaido (18), and eight inKyushu (nine).

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Segment profit was JPY443mn (-3.3% YoY). The number of cases in which the company retains involvement with the same
customer after a relatively new sale, by obtaining asset management or property management contracts, is increasing in relation
to capsule hotels and hotels. Revenue and profit fell despite an increase in the number of properties under management. Thiswas owing to lower rental revenue from the company’s own properties and costs associated with closing Viento Creation’s
capsule hotels for renovation.

Q3 FY12/17 results (out November 13, 2017)
Summary
In cumulative Q3 FY12/17, the company reported revenue of JPY6.3bn (+4.8% YoY), operating profit of JPY649mn (-2.8%),
recurring profit of JPY372mn (-24.6%), and net income attributable to owners of parent of JPY263mn (-18.5%). Progress towardinitial full-year forecasts (prior to revisions on November 28, 2017) was revenue 38.8% (51.4% of FY12/16 results in Q3 FY12/16),
operating profit 43.5% (56.9%), recurring profit 31.7% (56.4%), and net income attributable to owners of parent 33.7%(54.8%). The inventory of real estate for sale (including real estate for sale in process) was JPY13.4bn (+JPY2.0bn vs the start of
the fiscal year). The company planned to sell large properties in Q4 FY12/17, starting with a hotel (including retail space) in
Shinjuku, Tokyo.

Revenue
Up 4.8％ YoY (breakdown: Real Estate Investment and Development -3.8%, Real Estate Consulting +90.3%, and Real EstateManagement -0.6%). Consulting drove revenue growth.
Quarterly revenue (JPYmn)
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

Q1

3,508
240 202,646
204 50

376
130
216

1,070
209 71
791

30

Q2

Q3

2,391

684
214
139
330

Q4

Q1

1,781
202
323

3,248

5,143

2,021
198
374

Q2

Q3

2,725

993
197
317
478

Q2

Q3

1,449

1,257

FY12/15

3,249
257
267

Q4

Q1

FY12/16

Real Estate Investment and Development

Q4

FY12/17

Real Estate Consulting

Real Estate Management

Source: Shared Research based on company data

ProfitOperating profit was -2.8% YoY. Operating profit was +24.4% YoY in Investment, +44.9% in Consulting, and -2.2% inManagement. The decline in Management was due to the consolidation of Viento Creation in 1H and costs stemming fromclosing the capsule hotel for renovations. Note that company-wide costs (corporate costs not allocated to individual segments)
are increasing.
Quarterly operating profit (JPYmn) and YoY (%)
800

40.0%

700

27.4%

600
500
400
300
200
100
0
-100
-200

47

0

16.8%

56

12.8%

(108)

62
-2
(98)

Q1

Q2

3

-9.3%

98
8.7%
96

505

96

9.0%

172
7.9%

25.0%
20.0%

14.2%

15.0%

114

9.3%

304

103
64

277

(88)

(87)

(94)

(105)

(183)

(237)

(241)

(194)

97
-11
(175)

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

118

428

22

30.0%

122
50

125
132

14

35.0%

114

109

41

10.9%

FY12/15

Real Estate Investment and Development

144

FY12/16

Real Estate Consulting

482

119

132

10.0%
5.0%

3.0%

0.0%
-5.0%
Q4

-10.0%

FY12/17

Real Estate Management

OPM (right axis)

Source: Shared Research based on company data

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Real Estate Investment and Development segment
Segment revenue was JPY4.7bn (-3.8% YoY). The company sold 13 buildings (nine in Q3 FY12/16): eight residential properties(five in Q3 FY12/16), two office/retail buildings (two), two land parcels (two), and one condo hotel block (none). The company
purchased 13 properties (same as the previous year): six residential (four in Q3 FY12/16), two office/retail buildings (four), andfive land lots (including land for development; same as the previous year). By region, six were in Kanto (nine), two in Hokkaido(none), one in Kansai (two), and four in Kyushu (two).
As of end-Q3 FY12/17, the company’s inventory was 26 properties (22 as of end-Q3 FY12/16). Selling inventories wasproceeding smoothly. Following the opening of capsule hotel “nine hours Shinjuku North” in March 2017, the company opened
Imano Tokyo Ginza Hostel in September 2017, and Imano Kyoto Kiyomizu Hostel in October 2017, leading to three completed
hotels in FY12/17 (as of end-Q3).
Note, the number of properties does not include lots for detached housing owned by Life Stage.
Segment profit was JPY603mn (+24.4% YoY).

Real Estate Consulting segment
Segment revenue was JPY985mn (+90.3% YoY). The company won consulting projects throughout Japan, and completed 21
deals (20 in Q3 FY12/16). Of the completed deals, thirteen were in Kanto (fourteen in Q3 FY12/16), four in Hokkaido (four), three
in Kansai (none), and one in Kyushu (two). The number of deals is increasing thanks to the company’s Singapore subsidiary andcollaborations with Life Stage.
Segment profit was JPY320mn (+44.9% YoY).

Real Estate Management segment
Segment revenue was JPY652mn (-0.6% YoY). The number of client-owned properties under management rose to 58 (46 in Q3
FY12/16). By region, the company was managing 25 properties in Kanto, 23 in Hokkaido, and 10 in Kyushu.
Segment profit was JPY337mn (-2.2% YoY). Revenue and profit fell despite an increase in the number of properties undermanagement. This was owing to lower rental revenue from the company’s own properties and costs associated with closing
Viento Creation’s capsule hotels for renovation.

1H FY12/17 results
Summary
In 1H FY12/17, the company reported revenue of JPY5.3bn (+25.7% YoY), operating profit of JPY620mn (+20.7%), recurring
profit of JPY441mn (+12.3%), and net income attributable to owners of parent of JPY304mn (+11.4%). Progress toward full-year
FY12/17 forecasts was revenue 32.6% (36.1% of FY12/16 results in 1H FY12/16), operating profit 41.5% (43.7%), recurring profit
37.5% (44.9%), and net income 38.9% (46.4%). The inventory of real estate for sale (sum of real estate for sale and real estate forsale in process) was JPY11.3bn (-0.3% vs the start of the fiscal year). The company planned to sell major projects in 2H FY12/17.

Revenue
Up 25.7% YoY (breakdown: Investment +16.7%, Consulting +302.2%, and Management +0.1%). In addition to double-digit
growth in the key Investment business, revenue in Consulting was 4x revenue in 1H FY12/16. Revenue from Management was inline with the previous year.

Profits
Operating profit was +20.7% YoY. Segment profit was +80.3% YoY in Investment, +78.4% in Consulting, and -11.5% inManagement. The decline in Management earnings came from increased costs associated with the renovation of capsule hotels

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accompanying the consolidation of Viento Creation in 1H. Note that corporate costs not allocated to individual reporting
segments are increasing.

Investment segment
Segment revenue was JPY4.2bn (+16.7% YoY). The company sold 11 buildings (six in 1H FY12/16). By type, the company sold six
residential real estate buildings (two in 1H FY12/16), two office/retail buildings (two), two land parcels (two), and one condo
hotel block (none). The company purchased eight properties (five). By type, three were residential (none), one office/retailbuilding (three), and four land (including development land) (two). By region, four were in Kanto (three), one in Hokkaido(none), none in Kansai (two), and three in Kyushu (none).
As of end-1H FY12/17, the company’s inventory was 23 properties (17 in 1H FY12/16). Construction is proceeding steadily on
development land and the company planned to complete a series of projects in FY12/17, following the completion of “ninehours Shinjuku North” in March 2017.
Note: the number of properties does not include detached lots owned by Life Stage.
Segment profit was JPY614mn (+80.3% YoY).

Consulting segment
Segment revenue was JPY641mn (+302.2% YoY). The company acquired investment real estate brokerage deals and consulting
projects, primarily in the Kanto area, and completed 12 deals (11 in 1H FY12/16). Of these, eight were in Kanto (seven in
FY12/16), two in Hokkaido (three), one in Kansai (none), and one in Kyushu (one). The Singapore subsidiary was in its third year,
and contributed to group results as it steadily builds its overseas investor base and closes deals with repeat customers.
Segment profit was JPY222mn (+78.4% YoY).

Management segment
Segment revenue was JPY455mn (+0.1% YoY). The number of client-owned properties under management rose to 54 (45 at
end-1H FY12/16). By region, the company was managing 22 properties in Kanto (19), 22 in Hokkaido (16), and 10 in Kyushu(10).
Segment profit was JPY218mn (-11.5% YoY). The main factors were increased SG&A expenses due to the consolidation of Viento
Creation in 1H and costs associated with temporarily closing Viento Creation’s capsule hotels for renovation.

FY12/16 results
SummaryIn FY12/16, the company reported revenue of JPY11.6bn (+67.3％YoY), operating profit of JPY1.2bn (+46.9%), recurring profit of
JPY874mn (+33.4%), and net income attributable to owners of parent of JPY588mn (+46.9%). Revenue exceeded full-year
FY12/16 forecasts by 3.2%, operating profit by 20.6%, recurring profit by 19.0%, and net income by 22.1%. The inventory of realestate for sale (sum of real estate for sale and real estate for sale in process) was JPY11.4bn (+87.7％ vs the end of FY12/15).

Revenue
Up 67.3% YoY (breakdown: Investment +62.6%, Consulting +403.2%, and Management +37.3%). Each segment posted sharp
YoY growth.

ProfitOperating profit was +46.9% YoY. Segment profit was +17.8% YoY in Investment, +496.9% in Consulting, and +61.6% inManagement.

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Investment segment
Segment revenue was JPY10.0bn (+62.6% YoY). The company sold 16 buildings (13 in FY12/15). By type, the company soldeight residential real estate buildings (seven in FY12/15), five office/retail buildings (four), two detached lot parcels (one), andone hotel (one). One of the group’s key initiatives, targeting overseas investment into Japan, started to bear fruit. Three of theproperties sold were to overseas investors, customers of the company’s Singapore subsidiary.
The company purchased 23 properties (19). By type, eight were residential (nine), five were office/retail buildings (four), and 10
development land (four). There were no other purchases (two other purchases in the previous year). By region, there were 13
purchases in Kanto (11), one in Hokkaido (five), six in Kyushu (one), and three in Kansai (two). Some of the real estate purchased
was land for development acquired under the company’s target to grow in the medium-term plan. The company had hotel, retailfacility, and condominium projects, with five properties scheduled to be completed in FY12/17. Also, in FY12/16, the company’s
first condo hotel, “the kamui niseko,” was completed.
As of end-FY12/16, the company’s inventory was 25 properties (18 in FY12/15).
Note: the number of properties does not include detached lots owned by Life Stage.
Segment profit was JPY989mn (+17.8% YoY).

Consulting segment
Segment revenue was JPY862mn (+403.2% YoY). The company acquired investment real estate brokerage deals and consulting
projects, primarily in the Kanto area, and completed 31 deals (29 in FY12/15). Of these, nineteen were in Kanto (15 in FY12/15),
seven in Hokkaido (eight), and four in Kyushu (four). There was one other deal (two in the previous year). Sales contracts fromthe Singapore subsidiary and sales commissions on 440 sales contracts from Life Stage (consolidated subsidiary starting in
FY12/16) contributed to segment revenue and profit growth.
Segment profit was JPY346mn (+496.9% YoY).

Management segment
Segment revenue was JPY882mn (+37.3% YoY). The number of client-owned properties under management rose to 48 (40 at
end-FY12/15). By region, the company was managing 20 properties in Kanto (17), 18 in Hokkaido (14), and 10 in Kyushu (9). In
the Asset Management business, the company started asset management services under contract in September 2016 for a fundjointly invested in with Misawa Homes, LLC MB Investment 1.
Segment profit was JPY458mn (+61.6% YoY).

FY12/15 results
SummaryIn FY12/15, the company reported revenue of JPY7.0bn (+87.4％YoY), operating profit of JPY800mn (+111.5%), recurring profitof JPY655mn (+122.1%), and net income attributable to owners of parent of JPY401mn (+126.8%). Revenue exceeded full-year
FY12/15 forecasts by 28.7%, operating profit by 57.2%, recurring profit by 52.4%, and net income by 60.2%. The inventory ofreal estate for sale (sum of real estate for sale and real estate for sale in progress) was JPY6.1bn (+78.3％ vs the end of FY12/14).

Investment segment
Segment revenue was JPY6.1bn (+89.6% YoY). The company sold 13 buildings (22 in FY12/14). By type, the company sold sevenresidential real estate buildings (eighteen in FY12/14), four office/retail building (four), one detached lot (one), and one hotel(none). The hotel was the company’s first project to convert an office building into accommodation facilities. It was sold after its
launch as First Cabin Tsukiji, and made a significant contribution to results.

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The company purchased 19 properties (18 in the previous year). By type, nine were residential, four were office/retail buildings,
four were development land, one was residential land, and one was a nursing care facility. By region, there were elevenpurchases in Kanto, five in Hokkaido, one in Kyushu, and two in Kansai. One of the office/retail properties purchased was thesecond conversion project for accommodation facilities, which opened in November 2015 as Imano Tokyo. The company was
also building accommodation facilities on development land it purchased was accumulating revitalization projects to convert
properties into compact hotels.
As of end-FY12/15, the company’s inventory was 18 properties (12 in FY12/14).
Segment profit was JPY840mn (+ 80.8% YoY).

Consulting segment
Segment revenue was JPY171mn (-13.1% YoY). The company reported a solid build-up in investment real estate brokerage deals
in the Kanto region, and completed 29 deals (20 in FY12/14). Of these, fifteen were in Kanto (seven in FY12/14), eight inHokkaido (eight), and four in Kyushu (three). There were two other deals (two).
Segment profit was JPY58mn (-26.5% YoY).

Management segment
Segment revenue was JPY642mn (+133.2% YoY). The number of client-owned properties under management rose to 40 (36 at
end-FY12/14). By region, the company was managing 17 properties in Kanto (15), 14 in Hokkaido (12), and nine in Kyushu (9).
Segment profit was JPY284mn (+219.9% YoY).

FY12/14 results
SummaryIn FY12/14, the company reported revenue of JPY3.7bn (+66.3％YoY), operating profit of JPY378mn (+73.8%), recurring profit of
JPY295mn (+61.7%), and net income attributable to owners of parent of JPY177mn (+69.2%).

Investment segment
Segment revenue was JPY3.2bn (+70.6% YoY). The company sold 22 buildings (11 in FY12/13). By type, the company soldeighteen residential real estate buildings (eight in FY12/13) and four office/retail buildings (three). The company purchased 18
properties (20). As of end-FY12/14, the company’s inventory was 12 properties (16 in FY12/13).
Segment profit was JPY465mn (+49.6% YoY).

Consulting segment
Segment revenue was JPY197mn (+35.1% YoY). The company’s investment real estate brokerage deals in Hokkaido trended well,and it completed 20 brokerage deals (28 in FY12/13). Of these, seven were in Kanto (nineteen in FY12/13), eight in Hokkaido(seven), and three in Kyushu (none). There were two other deals (two).
Segment profit was JPY79mn (+36.8% YoY).

Management segment
Segment revenue was JPY275mn (+46.5% YoY). The number of client-owned properties under management rose to 36 (31 at
end-FY12/13). By region, the company was managing 15 properties in Kanto (14), 12 in Hokkaido (nine), and nine in Kyushu(eight).
Segment profit was JPY89mn (+94.0% YoY).

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Income statement
Income statement(JPYmn)
Revenue
YoY
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
YoY
RPM
Extraordinary gains (losses)
Income taxes
Implied tax rate
Minority interests
Net income
YoY
Net margin

FY12/09 FY12/10
ParentParent532
457-14.2%
123- 1,545.2%
0.3%
5.1%
2
15
702.6%
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
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
549
30.5%
1,251
112.6%
9.5%

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

Revenue and operating profit
The company’s revenue has been on a continuous uptrend other than a decline in FY10/12. Over the five years to FY12/17, 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%.
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 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%

10.9%
23.6%
1.9
3.6
100.3
578
512.3%
192.4%-309.6%-162.8%
-0.3
100.4
577.6

9.9%
29.4%
1.2
3.4
107.9
1,691
228.6%
185.5%-144.8%271.5%-0.4
108.0
1,113.6

7.6%
24.8%
0.9
1.7
211.0
3,407
162.5%
52.6%-88.1%
297.4%-0.4
211.2
1,716.0

8.6%
23.5%
0.9
1.2
300.3
6,093
454.3%
116.0%-68.3%
197.3%-0.2
301.0
2,685.4

6.6%
22.4%
0.9
1.1
332.2
11,502283.3%
73.2%-130.2%373.5%-0.3
334.3
5,409.8

11.2%
36.6%
0.7
1.0
355.9
11,476183.4%
106.0%
35.9%
223.0%
0.2
359.0
-26.4

Source: Shared Research based on company data

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

FY12/12
Parent
1,338
85
78
42
-

FY12/13
Parent
2,231
218
183
104
-

FY12/14
Parent
3,709
378
295
177
-

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

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

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

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 both FY12/15
and FY12/16, 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.

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Balance sheet
Balance sheet(JPYmn)ASSETSCash and deposits
Accounts receivable
Real estate for sale
Real estate for sale in process
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
ParentParentParentParentParent
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
Net assets
Working capital
Total interest-bearing debt
Net debt

-

-

320
1
21
556
4
19
921
60
60
157
2
159
0
20
21
239
1,160

567
0
1,292
399
8
36
2,303
52
4
56
157
1
158
0
25
25
240
2,543

1,009
4
596
2,807
14
585
5,014
47
4
51
157
0
157
1
45
45
254
5,268

2,107
23
6,070
144
8,343
167
644
10
822
659
0
659
1
150
151
1,632
9
9,985

2,467
110
1,070
10,323
136
14,105
177
642
13
832
659
144
10
813
1
834
835
2,479
41
16,626

4,855
118
4,716
6,643
430
16,761
164
418
13
596
659
156
10
825
104
794
897
2,318
31
19,110

160

281

-

-

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

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

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

FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17
ParentParentParent
Cons.
Cons.
Cons.
3,796.4
4,876.2
1,838.2
520.0
175.3
115.2
0.1
0.1
0.2
0.7
2.1
3.2
3.6
3.4
1.7
1.2
1.1
1.0
100.3
107.9
211.0
300.3
332.2
355.9
100.4
108.0
211.2
301.0
334.3
359.0

Source: Shared Research based on company data

AssetsMore than 80% of the company’s assets are liquid, of which real estate for sale (including real estate in progress) accounts forroughly 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 15% of total assets.

Liabilities
Liabilities account for approximately 80% of total liabilities and net assets, and interest-bearing debt accounts for over 90% of
liabilities.

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Shareholders’ equity
Net assets account for approximately 20% of total liabilities and net assets. As of end-FY12/17 the shareholders’ equity ratio was
21.0%.

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
Depreciation and amortization (A)Capital expenditures (B)Working capital changes (C)Simple FCF (NI + A + B - C)FY12/12 FY12/13 FY12/14 FY12/15 FY12/16 FY12/17
ParentParentParent
Cons.
Cons.
Cons.
-278
-859
-1,802-1,681-4,436
2,533
-225
-23
-220
-1,241
-922
-861
-503
-882
-2,023-2,922-5,359
1,671
722
1,129
2,463
4,019
5,717
719
20
13
68
79
65
1
1,114
1,716
2,685
5,410
-26
42
-990
-1,526-2,217-4,742
1,343

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

Cash flows from operating activities
The company is expanding 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.

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

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Other information
History
The company was established in October 2008, and all three founders had different areas of expertise and networks. President
Makoto Miyauchi had experience in real estate finance such as structured finance when he worked in a bank and securities firm.
Deputy President Shinichi Hasegawa’s expertise is in consulting for high net worth individuals and customer development, anddeputy president Masahiro Mochizuki is skilled in property revitalization (acquisitions and sales). The three founders previously
worked together managing a real estate company listed on the TSE First Section. In December 2014, the company listed on theTokyo Mothers market, just six years and two months after founding, a record high listing speed out of all real estate companies
established in the wake of in the global financial crisis. The company used its creditworthiness and fundraising ability following its
listing to support its growth driver, the Investment 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. (See Group companies.) B-Lot had a small elite team (around
50 employees in the parent company) at the time of its establishment. As of end-September 2017, including the companies it has
acquired, the group now has around 146 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

Acquires Life StageJul 2016

Establishes Osaka branch office

Jan 2017

Acquires all shares of Viento Creation

Feb 2018

Transfers its listing to TSE1

Source: Company materials

News and topics
February 2018
On February 2, 2018, the company announced that its listing was transferred to the First Section of the Tokyo Stock Exchange
from Mothers.

January 2018
On January 23, 2018, the company announced the launch of an after-hours share sale.

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Coverage

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp▷ Number of shares to be offered:

123,000 shares▷ Sale price:

JPY2,610 (Based on the closing price of JPY2,683 on January 23, 2018,▷ Launch date:

January 24, 2018with 2.72% discount)

On January 19, 2018, the company announced plans for an after-hours share sale.

▷ Number of shares expected to be offered:

123,000 shares▷ Sale price:

Based on closing price of day prior to the transaction or closing bid price▷ Timeframe:▷ Limit on purchase application:▷ Exchange where transaction will take place:
Purpose:January 24, 2018 through January 31, 2018

100 shares per individual buyer (trading unit: 100 shares)
Tokyo Stock Exchange

The company already submitted an application for a transfer of listing to the First Section of the Tokyo Stock Exchange

from Mothers. With this after-hours share sale, the company aims to meet the listing transfer criteria, improve its share
distribution, and increase liquidity of its shares. Note that the transfer to the First Section may not be approved if the company
does not satisfy the criteria for any reason.

Group companies (as of end-December 2017)
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 Corporation

Newly built condominium sales targeting family demographic

Consolidated subsidiary

Viento Creation Co., Ltd.

Ownership and operation of capsule hotels

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 of March 28, 2018)
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)

No more than 10 (no more than five directors to bemembers of the Audit and Supervisory Board)

Number of directors

9

Directors’ term of office (under Articles of Incorporation)

2 years

Chairman of the board of directors

President

Number of outside directors

3

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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 and employees

Disclosure of directors’ compensation

No individual disclosure

Policy to determine amount and calculation method of remuneration

Y

Corporate takeover defenses

None

Source: Shared Research based on company data

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

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Dividend policy
B-Lot considers the return of profits to shareholders to be an important management issue. The company’s basic policy is tostrengthen its financial position through adequate retained earnings while providing returns to shareholders that reflect its
performance. Distributions of profits are determined from a comprehensive viewpoint taking into full consideration corporate
performance and future business plans. For FY12/17, the company plans to pay a year-end annual dividend of JPY39 per share.

Major shareholders (as of end-December, 2017)
Sharesheld
647,000
557,000
409,500
276,500
137,700
79,00062,00060,00058,50054,0004,010,100

Top shareholders
Shinichi Hasegawa
Masahiro Mochizuki
M&M, Ltd.
Makoto Miyauchi
Mitsuru Otsuka
Fumie Mochizuki
Hokuto Mfg. Co., Ltd.
Bang-Joo Lee
Kwan-Young Kim
Taro Togawa
Shares issued

Shareholding
ratio
16.1%
13.9%
10.2%
6.9%
3.4%
2.0%
1.5%
1.5%
1.5%
1.3%
100.0%

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

Employees
ParentConsolidated

FY12/14
Cons.
24
24

FY12/15
Cons.
32
35

FY12/16
Cons.
35
134

Source: Shared Research based on company data

ProfileCompany Name
B-Lot Co., Ltd.

Head Office
Shimbashi Marine Bldg.8F
2-19-10 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

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

December

IR Contact

IR Web+81(3)-6891-2525

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

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