Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Statements for
the Fiscal Year ended March 2020
We are aiming to be the real estate company of the world’s most
loved, trusted and selected by clients.

1) Overview of the Fiscal Year ended March 2020 Results

1-122) Impact of the Spread of the new coronavirus (COVID-19)
Infection and Immediate Management Policy

13-223) Specific Initiatives in Growth Strategies

23-364) Company Information and Reference Materials

37-46

May 11, 2020

Stock Code: 8934

Financial Summary for the Year Ended March 2020
Sales and incomes increased for 9 consecutive fiscal years.
Record-breaking profits and dividends.
Results

ProfitMarginYear-on-Year

Growth Rate

Full-year Forecast(Unit: 1 million yen)

(Announced on
May 9, 2019)(Revised on Feb 6,2020)

Progression
Rate

Full-year Forecast

Net Sales

73,218-+19,926+37.4%

70,00072,500101.0%

Operating Income

16,571

22.6%+3,266+24.6%

14,50015,900104.2%

Ordinary Income

16,12722.0%+3,313+25.9%

14,00015,500104.0%Net Income *10,666

14.6%+1,883+21.4%

9,500

10,200104.6%

Dividend pershare

39.5 yen42.0 yen-*“Net Income” represents net income attributable to shareholders of the parent company.

Performance Highlights
2) Steady growth in Operation Business

1) Significant increase of Net Sales and Incomes of RP Business•••

In RP Business, sales of buildings significantly increased to 43 buildings (12 more thanthose in the same period of the previous year), and the segment income ratio
remained high (31%). Net sales and incomes renewed the all-time high.
Our Company’s unique departmental collaboration business model to maximize theattractiveness of buildings is deepened by bringing together the expertise of eachdivision of the Company through all processes, including purchase, commercializationand sales, and by reflecting the knowledge and experience cultivated on-site in thecommercialization.

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

•

1

In Hotel Operation Business, newly opened hotels contributed to earnings andnet sales rose as much as 38% year-on-year. “Tabino Hotel Kurashiki Mizushima”
officially opened in February and “Tabino Hotel Kashima” opened in April. On theother hand, in terms of profits, the segment income decreased due to theexpenses for opening 5 hotels.
In Conference Room Rental Business, 8 sights opened in the current fiscal year
and the number of sites has increased to 21 (with 7,300 seats in total) as of theend of March 2020. Since March, cancellations have occurred one after anotherdue to the outbreak of the new coronavirus (COVID-19), but the impact on
business performance is limited due to new demand for satellite offices for BCP
measures and others.

Sun Frontier Fudousan Co., Ltd.

Changes in Consolidated Results
Operating income and ordinary income marked record highs for 4 consecutive fiscal years and net
income also marked record highs for 2 consecutive fiscal years.
Dividends increased for 8 consecutive fiscal years, ordinary income margin remained high at over 20%(Unit: 1 million yen)for 7 consecutive fiscal years.
ProfitMargin of
Net Sales

FY ended
March 2016

FY ended
March 2017

FY ended
March 2018

FY ended
March 2019

FY ended
March 2020

Net Sales

30,62540,39447,46353,291

73,218-Operating Income

7,387

9,380

11,23913,305

16,571

22.6%

7,024

8,894

10,755

12,813（22.9％）（22.0％）（22.7％）（24.0％）

16,127

22.0%

8,157

6,452

7,420

8,783

10,666

14.6%

Net Income per Share

190.78 yen

150.92 yen

167.62 yen

180.35 yen

219.03 yen

Dividends per Share

25.00 yen

30.00 yen33.50 yen

38.50 yen

42.00 yen

Ordinary Income(Ratio of ordinary
income)Net Income*-(Schedule)* “Net Income” represents net income attributable to shareholders of the parent company.
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2

Sun Frontier Fudousan Co., Ltd.

Consolidated Income Statement（Unit: 1 million yen）
FY ended March2019

FY ended March
2020

Composition
Ratio

Income Statement Points

Real Estate Revitalization Business

53,29145,49073,21860,061100％
82%

Replanning Business(including Hotel Development)

42,50756,12776%

Rental Building and Sublease

Real Estate Revitalization Business

2,983
3,179
3,898
1,508
-784
19,192
16,048

3,933
3,476
5,405
5,659
-1,38424,02820,314

5%
5%
7%
8%
－
100%
85%

Replanning Business(including Hotel Development)

14,712

18,83078%

Rental buildings and Sublease

1,336
1,898
476
829
- 60

1,484
2,253
- 41
1,615
-115

6%
9%
－
7%
－

5,886

7,456

sharply year on year. However, since its sales ratio is about 5%, the effect on

13,30563
555
12,8130-4,029-1
8,783

16,571
260
704
16,127-40-5,503
83
10,666the companywide performance is limited.

Net Sales

Real Estate Service Business
Operation Business
Other Business
Adjustment
Gross Profit

Real Estate Service Business
Operation Business
Other Business

Adjustment
Selling and general administrative
expenses
Operating Income
Non-operating Income
Non-operating Expenses
Ordinary Income
Extraordinary Gains (losses)
Corporate Income Taxes
Non-controlling gain or loss
Net Income

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

•

Replanning Business performance improved significantly and led theCompanywide performance.
Net sales increased by 32% from ¥42.5 billion in the previous fiscal year to¥56.1 billion.
Gross profit increased by 28% from ¥14.7 billion in the previous fiscal year to¥18.8 billion.

•

Performance of Other Businesses (Rent guarantee, Construction and Overseas
Business) expanded.
Total sales increased 275% from ¥1.5 billion in the previous fiscal year to ¥5.6
billion.
Gross profit increased by 95% from ¥0.8 billion in the previous fiscal year to¥1.6 billion.

Major impacts of COVID-19 on performance<Hotel Operation Business>•

Although the hotels in the industrial areas have captured business demand,the profits of the Hotel Operation Business have dropped significantly.
7 hotels have been temporarily closed since April, and sales is expected to fall

<Conference Room Rental Business>•

Since March, cancellations have occurred one after another and the operating
rate has dropped to around 20%. Despite catching new demand for satellite
offices, remote work, and others generated by BCP measures, sales is
expected to fall sharply from April onwards. However, since its sales ratio isless than 2%, the effect on companywide performance is limited.

3

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet – Assets (Unit: 1 million yen)

FY ended March2018

FY ended March2019

FY ended March
2020

Increase/Decrease(Compared to End of March 2019)80,174

97,149113,842+16,693

Cash and deposits

23,892

20,257

18,627-1,629Inventory Assets

54,59374,32991,766+17,436

Breakdown) RP

45,52562,14371,353+9,210

Hotel

5,291

7,552

17,019+9,467

Overseas, etc.

3,775

4,634

3,395

-1,239

1,687

2,562

3,448

+885

11,587

13,74916,450+2,701

8,565

9,339

10,413+1,074

474

863

712

-150

2,546

3,546

5,324

+1,777

91,761

110,898

130,293+19,394

Current Assets

Other Current Assets

Noncurrent Assets
Property, Plant and Equipment
Intangible Assets
Investments and other Assets

Total Assets

Inventory assets increased by ¥17.4 billion in total due to the purchase of RP properties and others.
Among them ¥9.2 billion increased in RP Business projects while ¥9.4 billion increased in Hotel Business projects (¥5.81 billion due toprogress in construction work, transfer from noncurrent assets and other was ¥2.5 billion, purchase was ¥1.14 billion).
Property, plant and equipment increased about ¥1 billion due to progress in construction work related to hotel development.
Cash and deposits decreased by ¥1.6 billion, reflecting steady purchase in RP Business projects for the next fiscal year and hotel development.
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4

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet – Liabilities/Equity (Unit: 1 million yen)

FY ended
March 2018
Current Liabilities

FY ended
March 2019

Increase/Decrease

FY ended
March 2019

(Compared to end of March 2019)10,155

12,85918,052+15,192

Short-term Loans Payable, etc.

2,716

2,248

4,463

+2,214

Income Taxes Payable, etc.

3,178

2,661

3,566

+904

Other Current Liabilities

4,260

7,949

10,022+2,07332,75642,17947,431+5,252Long-term Loans Bonds Payable

30,86539,75144,906+5,155

Other Noncurrent Liabilities

1,890

2,428

2,525

+97

42,91255,03865,483+10,445

48,75055,90064,690+8,789

99

-40

119

+159

Total Net Assets

48,84955,86064,809+8,949Total Liabilities and Capital

91,761

110,898

130,293+19,394

Noncurrent Liabilities

Total Liabilities
Shareholders’ Equity
OthersTransition of Equity Ratio
End of March 2018 End of March 2019 End of March 2020

53.2%

50.3%

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

49.6%

As purchases of RP properties progressed, borrowings increased by approximately ¥7.3
billion from the end of the previous fiscal year, and the balance of interest-bearing debt
was ¥49.3 billion.
Retained Earnings increased by ¥8.8 billion as a difference between current net income(+¥10.66 billion) and year-end dividend payment (-¥1.87 billion).

5

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Replanning Business (Replanning (RP)/ Hotel Development)(Unit: 1 million yen)

FY ended
March 2019

FY ended
March 2020

Increase/
Decrease

Net sales

42,50756,127+32.0%

Segment Income(Note 1)

13,625

17,371+27.5%

Profit Margin

32.1%

31.0%

-1.1%pt

Number of items
purchased

47

42

-5

Number of properties
sold

31

43

+12

Number of stocks at
the end of fiscal year

69

70

+1

(Note 2)

(1 million yen)

◼ Both net sales and income surgesed. The attractiveness of buildings was maximized by
identifying sources for added values through each process of purchase, commercialization andsales, and by repeatedly using our ingenuity to increase them. The segment income ratio
remained at a high standard of 31%, although an valuation loss of ¥0.75 billion was recorded
for RP Business projects overseas (NY).
◼ The average RP Business period was 409 days (+58 days from the previous year). The averagebusiness period was prolonged because we extended the period of commercialization in orderto create higher added values in some cases. 387 days excluding those cases.
◼ Purchase progressed favorably, with 70 properties in year-end inventory (57 RP Businessrelated properties and 13 Hotel Business-related properties). ¥88.3 billion in inventories (¥71.3
billion for RP Business-related and ¥17 billion for Hotel Business-related).
*Excluding those related to Overseas Business*In addition to the above, there are 7 RP properties of ¥5.3 billion which were contracted before
February and purchased, settled and contracted by the end of April.
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6

Net Sales
Segment Income
Profit Margin

60,00060%

56,12750,00050%
42,50740,000

40%
32.1%

31.0%

30,00030%

20,00017,371

20%

13,625
10,00010%

00%
FY ended March 2019 FY ended March 2020
(Note 1) “Segment Income” is calculated by deducting specific costs of each segment,
including interest expenses, sales commission and goodwill depreciation expense fromgross profit.
(Note 2) Including 2 properties transferred from noncurrent assets.

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Rental Building Business (Rental Buildings/ Sub-leases)
FY ended
March 2019

FY ended
March 2020

Net Sales

2,983

3,933

+31.9%

Segment Income

1,336

1,484

+11.0%(Unit: 1 million yen)

Increase/
Decrease(1 million yen)

4,500

44.8%

37.7%

50%

-7.1%pt
3,000◼ Net sales increased by 31.9% from the same period of the previous
year since inventory increased due to the increased purchasing of RP
properties and also sub-leases rent increased due to newly opened

60%
3,933

4,000
3,500

Profit Margin

Net Sales
Segment Income
Profit Margin

44.8%
2,983

37.7%

40%

2,500
30%
2,000

hotels.
◼ On the other hand, segment income increased by 11% and profit

1,500

1,336

1,484

20%

margin decreased by 7%pt from the same period of the previous

1,000

year affected by the period of vacancy for replacement of tenants

10%during the process of commercialization of RP properties and also

500

by the increased proportion of sub-leases.
◼ We aim to focus on purchasing properties for the medium and longterm RP projects to increase rent revenue.

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00%
FY ended March 20197

FY ended March 2020

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Real Estate Service Business
FY ended
March 2019

FY ended
March 2020

Net Sales

3,179

3,476

+9.3%

4,000

Segment Income

1,898

2,253

+18.7%

3,500

Profit Margin

59.7%

64.8%

+5.1%pt(Unit: 1 million yen)

Increase/
Decrease(Property Management/ Building
Maintenance/ Brokerage/ Leasing)(1 million yen)

<PM and BM Businesses>◼
In the PM Business, we provided highly profitable and highly occupied
building management by working to improve profitability by revisingconditions to achieve appropriate rents and reviewing electricity supply anddemand contracts. Both the number of PM managing buildings andoccupancy rate increased.
[Number of PM Managing Buildings and Occupancy Rate][Number of Managing Buildings]

100%
3,476

90%

3,179

80%

3,000
64.8%
2,500

59.7%
2,253

2,000

30%
1,000
20%
10%

0

0%
FY ended March 2019

8

60%

40%

1,500

500

<Brokerage and Leasing>◼ Net sales and income in both businesses increased by more than 10%.
Conscious day-to-day communication with clients serves as the driving
force to create high added values from the client’s point of view,contributing to the profits of the Group.

70%

50%

1,898

[Occupancy Rate]

End of March 2018372 buildings
95.7%
End of March 2019373 buildings
97.6%
End of March 2020
392 buildings
98.6%
In the BM Business, waterproofing work and exterior wall repair work increased.
We also received orders for disinfection work for office buildings and others. Net
sales were flat but profits increased.

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Net Sales
Segment Income
Profit Margin

FY ended March 2020

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Operation Business(Hotel Management and Conference Room Rental Business)

FY ended
March 2019

FY ended
March 2020

Increase/
Decrease

3,898

5,405

+38.7%

Hotel operation business

2,981

4,126

+38.4%

Conference room rental
business

916

1,279

+39.5%

Segment Income

412

-192

－

Hotel operation business

259

-370

－

(Unit: 1 million yen)

Net Sales

Conference room rental
business

6,000

40%
5,405

5,000

4,000
153

178

+16.5%

10.6%

－

－

Hotel operation business

8.72%

－

－

Conference room rental
business

16.7%

13.9%

-2.8%pt

Profit Margin(1 million yen)

Net Sales
Segment Income
Profit Margin

30%

3,898

3,000
20%

<Hotel Operation Business>◼ Net sales saw a 39% increase. Sales of “Tabino Hotel Sado” which opened 2018
contributed to the whole-year sales while the sales of 4 new hotels which opened in
the current fiscal year were also added. On the other hand, segment income decreased
due to the start-up expenses for 5 new hotels (including Tabino Hotel Kashima, which
opened in April) and the spread of COVID-19 infection after the end of February whichcaused some hotels to be closed and the occupancy rate to decline, resulting in anegative segment profit.

2,000

1,000

10.6%

0

<Conference Room Rental Business>◼ Vision Center Ginza 1-chome Annex and Vision Center Yotsuya newly opened. The
number of sites has expanded to 21 (+8 from the previous fiscal year) in total as of endof March. Both net sales and income steadily increased. From February, cancellations
have occurred one after another due to the outbreak of COVID-19, but the effects
were limited as we captured new needs for satellite offices and others generated by
BCP measures.
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9

10%

412

-192
-1,0000%
FY ended March 2019

FY ended March 2020

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Others (Rent Guarantee, Construction and Overseas Business, etc.)(Unit: 1 million yen)

Net Sales
Segment Income
Profit Margin

FY ended
March 2019

FY ended
March 2020

Increase/
Decrease

1,508

5,659

+275.2%

784

1,419

+80.9%

52.0%

25.1%

-27.0%pt(1 million yen)

6,000

100%

5,659

90%
5,000

The whole net sales and income increased significantly, profit margindecreased by 27%pt due to the increased ratios of sales of Overseas Business
and Construction Business.

80%
70%

4,000

60%
52.0%

<Rent Guarantee Business>◼ The number of new and renewed guarantees handled remained steady,which has led to higher net sales and income. As demand for institutional
guarantees increased, with the major revision of debt-related provisions(enforced in April,2020) by the Civil Code, we actively organized seminars
and other events for building owners and business partners.

3,000

50%

40%
25.1%

2,000

<Construction Business>◼ Both net sales and income increased as the positive results of Kouwa
Corporation(currently SF Engineering), which became a consolidated
subsidiary in January, 2019 were added.

30%

1,508
1,000

<Overseas Business>◼ The land for development in Da Nang was sold after we obtained all
approvals and licenses and its profit on sale was recognized.
◼ A condominium project in Da Nang, “HIYORI Garden Tower” was completed
in December. Its rooms are now being delivered one after another and one
fifth of the rooms were already delivered as of the end of December, which
contributed to the results of 4Q.

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Net Sales
Segment Income
Profit Margin

10

1,419
20%
784

10%
0

0%

FY ended March 2019

FY ended March 2020

Sun Frontier Fudousan Co., Ltd.

Trends in Key Management Indicator■Changes in Ordinary Income Ratio(1 million yen)

■Changes in Equity Ratio(Pursuing High-Value-Added Management)

80,000(1 million yen)

70,000

30%

売上高
Net
Income(Building a Stable Financial Base)80%
Net Assets
純資産

経常利益Income
Ordinary
Ratio
of ordinary income
経常利益率70,00022.9%

60,00022.0%

自己資本比率Equity Ratio

24.0%

22.7%
22.0%

56.2%

20.2%

50,00020%
50,00040,00070%

60,000

25%

15%

55.7%

56.0%
53.2%

60%
50.3%

49.6%

40,00040%

30,00030%
10%30,00020,00020%
5%20,00010,000

0

50%

10%

2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
2020/3Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

0%

10,00011

2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
2020/30%

Sun Frontier Fudousan Co., Ltd.

Basic Policy on Profit Sharing
Our Group's basic policy is : (1) strive to provide long-term and stable profit returns to shareholders, (2) secure
investment funds to proactively develop the hotel business and overseas business for future growth, and at thesame time (3) contribute comprehensively to shareholders' interests by taking into account the stability of financial
resources.
Although the outlook is difficult to forecast due to the impact of COVID-19, our financial stability is maintained
and the dividends per share for the fiscal year ended March 2020 are 42.00 yen, increasing for 8 consecutive fiscal
years, as planned.
FY ended March 2016 FY ended March 2017 FY ended March 2018 FY ended March 2019

Net Income per Share

190.78 yen

150.92 yen

167.62 yen

Cash Dividends per Share

25.00 yen

30.00 yen33.50 yen

Dividend Payout Ratio

13.1％（*19.3％）19.9％（*20.9％）20.0％

FY ended March 2020
(Forecast)180.35 yen
38.50 yen(including Commemorative
dividends of 2 yen)

21.3％

219.03 yen
42.00 yen
19.2％

*From FY ended March 2016 to FY ended March 2017, estimated calculation assuming that the effective tax rate for each business year was taxed,
excluding the effect of reducing tax burden due to tax loss carryforwards(Cash dividends per share)

50 yenCash Dividends per ShareNet Income per Share

Changes in Net Income and Dividends per Share

40 yen190.78 yen

150.92 yen

167.62 yen(Net income per share)

219.03 yen

240 yen
210 yen180.35 yen

180 yen
150 yen

30 yen120 yen
20 yen25.00 yen

30.00 yen33.50 yen

38.50 yen

42.00 yen

90 yen60 yen

10 yen30 yen0 yen

FY ended March 2016

FY ended March 2017

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FY ended March 201812

FY ended March 2019

FY ended March 2020(Forecast)

0 yen

Sun Frontier Fudousan Co., Ltd.

2) Impact of the Spread of the new coronavirus(COVID-19) Infection and Immediate
Management Policy

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13

Sun Frontier Fudousan Co., Ltd.

Impact on Main Businesses and Recent Movements
Business

Impacts➢ Requests for rent reduction and cancellations mainly from store-type tenants
such as restaurants, Japanese-style bars and others increased in April for
managed properties and properties for external subscription (approximately
14% of the total tenants requested for rent reductions in properties managed
by the Company).

・Leasing Business・Property Management Business・Building Maintenance Business➢ With the shift to remote work, companies are scaling down in office space(approximately 40% of the total number of cancellation applications). On theother hand, some companies have decided to relocate and expand theiroffices as planned because the transition to remote work did not go smoothly.
Some companies are making a successful transition, while others are not.
➢ Due to the outbreak of COVID-19, there have been increasing opportunities
to receive orders for disinfection of buildings and others in SF Building
Maintenance Inc.

・Replanning Business

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➢ Although the real estate sales market is currently in the wait-and-see mood,the sale of 4 properties in the real estate revitalization business wascompleted in April as planned. (Including the first composition of the secondcase of Act on Specified Joint Real Estate Ventures)➢ We continue the commercialization of renewal work and others byencouraging creativity on site, while making every effort to prevent infection.

14

Sun Frontier Fudousan Co., Ltd.

Impact on Main Businesses and Recent Movements
Business

Impacts➢ Since March, reservation cancellations have occurred one after another, andthe occupancy rate has declined. However, the impact on results for thecurrent fiscal year was limited as we have captured new needs for remote
offices, BCP satellite offices and others.

・Conference Room Rental

Business➢ The occupancy rate in April dropped from 80% to 20%. Although further
cancellations are expected after June due to the extension of the state of

emergency declaration, we will strengthen our response to changes in demandthrough with/after COVID-19.
➢ Temporarily closed 7 hotels (Maihama, Tokoname, Osaka (2 hotels), Sado (1hotel), Takayama and Hakata).
・Hotel Business➢ While the occupancy rate of operating hotels has fallen to approximately 35%,
the occupancy rates of hotels (Sky Heart Hotel Kawasaki, Tabino Hotel
Kurashiki Mizushima, Tabino Hotel Kashima ) that are capturing businessdemand has been steady.

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15

Sun Frontier Fudousan Co., Ltd.

Business Environment Awareness1. The Japanese economy has been severely affected by the spread of COVID-19 infection, and the future outlook
remains uncertain.
◆ Despite the largest-scale economic measures in history, some companies have fallen into bankruptcy, and theeconomic downturn seems to be prolonged.
◆ The state of emergency was declared in April and was extended until the end of May, and there is still no end insight for the COVID-19 outbreak.
◆ Even after the state of emergency is ended, it is expected that the “new normal” will start without returning to
how things used to be for a while.
◆ The number of foreign visitors to Japan in March decreased by 90% from the previous fiscal year. It is expected thatthe restrictions on overseas travel will continue in many countries for a prolonged period of time.
2．The world economy is decelerating rapidly. Each country was severely affected by the spread of COVID-19 infection
and is facing a serious recession.
◆ IMF predicts worst recession since great depression, downgrading its expectations for global growth to -3%.
◆ The timing of vaccine development by each country is difficult to predict, and the medium- to long-term responseto the spread of COVID-19 infection is necessary.
◆ Attention will be paid to trends in East Asian countries, such as China and Taiwan, where the spread of COVID-19
infection has been gradually ending.
3. The office building market in central Tokyo has been booming for a long time, but there are signs of peak out due to
COVID-19 infection◆ Demand for offices is expected to decline due to the forecast of economic recession and the scaling down of officespace by the spread of remote work.
◆ We are wary of the rising vacancy rate and falling average rents due to the business contraction and deteriorationof employment caused by the recession.
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16

Sun Frontier Fudousan Co., Ltd.

Immediate Management Policy(1) Prevent the Spread of COVID-19 Infection(2) Maintain and Continue Business
Four
PolicyInitiatives(3) Keep financial stability(4)Main Business is “Regeneration and Utilization of Real Estate”

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

17

Sun Frontier Fudousan Co., Ltd.

(1) (2) Specific Measures

Preventing the Spread of COVID-19 Infection
and Maintaining and Continuing BusinessThorough prevention measure of COVID-19 both inside and outside the Company➢ In order to ensure the safety of our clients and employees and to prevent COVID-19
infection, we have introduced various work styles such as telework and staggered
working hours depending on the situation of each business site.
➢ Under the state of emergency, we have gradually reduced the number of employees
coming to the office to around 10%, following the request from the Japanese
government and Tokyo Metropolitan Government➢ Avoiding the “Three Cs,” internal meetings have been thoroughly web conferences.
We maintain quick and accurate communication between members.
Ensuring business continuity through preventive and predictive management➢ The office floor has been divided and a two-team system has been promoted in eachorganization to secure a system that allows the business to continue even if
employees are infected with COVID-19.
➢ We prepare to proceed with the projects immediately after COVID-19, while limiting
contact between people, through such measures as video streaming using 360degree cameras and online viewing.
➢ We thoroughly control spending and aim for a leaner management. We also
thorough checks of cost and SG&A.
➢ We maintain close communication with teleworkers and perform work through teleteamwork.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

18

Sun Frontier Fudousan Co., Ltd.

(3) Financial Stability (Comparison with “the 2008 Financial Crisis”)

SG&A Coverage of Cash and Deposits
Changes over the Last 4 Years

The Financial Crisis(Unit: year)

25,0005.0

現金および預金
Cash and Deposits
20,000

4.5

SG&A
販管費

4.0

Coverage
カバー率

3.5
15,0003.0
2.5

10,000

2.0
1.5

5,000

1.0
0.5

0

FY ended
March 20082008年3月期

FY ended
March 20092009年3月期

FY ended
March 20172017年3月期

FY ended
March 20182018年3月期

FY ended
March 20192019年3月期

FY ended
March 20202020年3月期

0.0→We maintain cash and deposit balance that covers 2.5 to 4 years worth of SG&A (around 20 billion yen)
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

19

Sun Frontier Fudousan Co., Ltd.

(3) Financial Stability (Comparison with “the 2008 Financial Crisis”)

Comparison of financial constitution
FY ended March 2008
（before the 2008 financial crisis）

FY ended March 2020

Short-term Loans Payable

Long-term Loans Payable

Ratio of short-term debt
to interest-bearing debt*

Increase/DecreaseLong-term Loans Payable

Short-term Loans Payable-74.4%pt

83.4%

9.0%

Weighted averageborrowing period

1.9 years

5.1 years+3.2 years

Weighted averageborrowing rate

1.7%

1.0%

-0.7%pt

Capital adequacy ratio

45.5%

49.6%

+4.1%pt→The ratio of short-term loans payable to interest-bearing debt has dropped significantly.
Borrowing period was extended.
*Short-term loans payable includes long-term loans payables repayable within one year.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

20

Sun Frontier Fudousan Co., Ltd.

(4) Main Business is “Regeneration and Utilization of Real Estate”

Comparison with Revitalization Business Structureduring the 2008 Financial Crisis
The 2008 Financial Crisis

Changes over the Last 3 Years

FY ended
March 2008

FY ended
March 2009

FY ended
March 2018

FY ended
March 2019

FY ended
March 2020

47

30

35

31

43

42.6%

46.7%

90.9%

96.6%

85.4%

Percentage of officebuildings

72.3%

73.3%

97.0%

100%

100%

Gross Profit(Consolidated)

14.0%

-1.3%

31.9%

34.6%

33.5%

22.4%

2.6%

33.0%

34.7%

35.8%

Number of properties
sold
Concentration in 5
central Tokyo wards(Chiyoda-ku, Minato-ku,
Chuo-ku, Shibuya-ku andShinjyuku-ku)

Profit Margin(5 central Tokyo wards &Office buildings）

Properties were scattered
Properties concentrated in central Tokyo.
outside 5 central Tokyo wards.
FeatureAll asset types are office buildings
Asset types were diversified.
→We specialized in “office buildings in 5 central Tokyo wards,” for which there was strong demand evenafter the 2008 financial crisis. In addition, we changed to a structure that is resilient to recession
by focusing on profitability rather than sales.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

21

Sun Frontier Fudousan Co., Ltd.

(4) Main Business is “Regeneration and Utilization of Real Estate”

We create unrealized gains by increasing
the profitability of inventories
Utilizing the expertise cultivated in the real estate service business, we have made our own properties more
profitable than ever. Since our real estate can generate a high standard of stable rent income, we can expect
unrealized gains when it is difficult to forecast the future, and even if the profit margin declines sharply.
FY ended March 2017

FY ended March 2018

FY ended March 2019

FY ended March 2020

Net Sales of RP properties

38.6 billion yen

45.8 billion yen

56.1 billion yen

Sales Cost of RP properties

26.3 billion yen

27.8 billion yen

37.3 billion yen

RP Gross Profit(sales margin)
Acquired
during period +*Excluding hotel projects(32%)

Sold innext FY

Construction costs
and others

Year-end RP property inventorySoldduring14.7 billion yen periodSoldduring12.3 billion yen
periodSold innext FY

45.8 billion yen

26 billion yen

45.5 billion yen
Continuous
holding*Reference: Profit margin results for the current fiscal year
is approximately 34%

Sold innext FY44.5 billion yen
Hold
over
Continuous
holding[Unrealized gains on year-end RP inventory](35%)

62.1 billion yen

Soldduring18.8 billion yen period(34%)

46.5 billion yen
Hold
over

71.3 billion yen

Hold
over

Continuous
holding

Sales Margin: 15% as a premise

12.5 billion yen

Sales Margin: 30% as a premise

30.5 billion yen→We create value that allows for unrealized gains, even if the sales margin
declines by about 20% from the current fiscal year.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

22

Sun Frontier Fudousan Co., Ltd.

3) Specific Initiatives in Growth Strategies

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

Business Progress and Policy

We aim for solid growth while maintaining a high profitability structure
In RP Business, sales of buildings significantly increased, and the segment income ratio
remained at a high standard. As a result, net sales and incomes increased significantly
and renewed the all-time high.
[RP Business] Changes in Cost Margin55%

A business model that maximizes the attractiveness of buildings by creating added
value through the business chain

35%

30%

40.52%
40.25%

30.22%

25%

Funding Advice

40%

Asset Consulting

acquisitionof property

Rent Guarantee

45%Construction Planning43.85%

Leasing

50%

Brokerage

49.94%

Property Management

51.34%②
Real Estate
Revitalization
Value-added
products

Real Estate Utilization① To be a partner to solve difficulties from ourclients’ point of view

Clients (Building owners, Asset holders and Wealthy individuals)① Real Estate Utilization Business: We solve difficulties on site.
② Real Estate Revitalization Business: We bring together the expertise of each division of theCompany and reflect the knowledge and experience cultivated on-site in thecommercialization. Revitalize and sell buildings through our value chain.

By pursuing improvement in intrinsic real estate value rather than short-term growth,
we aim to raise the management objective of achieving “both growth andstability” in the long-term.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

24

Sun Frontier Fudousan Co., Ltd.

- Example of Replanning Business -- A whole building revitalization for monetization in Kanda -Creating a Office where Companies with Future Growth Potential Dream andCreate the Future
The property is a dignified building whose original design is “the granite upholstery.” In the revitalization process,we inherited the history and taste of Kanda-Konyacho, which was a town with numerous dyeing shops dealing withindigo dyeing, as a concept, and renovated it into a luxurious space where you can have a quality feeling of “theJapanese-Style”. Targeting primarily IT companies, we revitalized the property into spaces and offices where tenants
can envision growth and live vividly.
After

BeforeInterior that encourages
interaction between employees

BeforeAfter

The plasterer decoration on the wall has an elegant
design with “indigo dyeing” as the motif.

▲Entrance Hall

▲Open Space

After

Interior with richness and highquality feeling

After[Outline of Property]■Address: Kanda-Kon’yacho, Chiyoda-ku, Tokyo■Structure: Steel-framed reinforced concrete■Structure: a 10-story building with a deck roof and a basement■Original completion: 1993 (27 years old)
■Usage: Office spaces

Welcoming guests with sophisticated design■Site area: about 496 ㎡■Total floor area: about 3,950 ㎡

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

▲Elevator Hall

▲Meeting Room25

Sun Frontier Fudousan Co., Ltd.

- Leasing Business -We expanded our network of branches which focuses on local
communities to solve our clients’ problems
1.

2.

3.

4.

We specialize in small and medium-sized office buildings
in central Tokyo.
We opened a new branch at Hamamatsucho to extend
our network of branches to 12 locations.
We are good at careful tenant placement by having close
ties with the local communities and utilizing our local
knowledge.
Shinjuku
Courtesy extended to our clients have come to trust andwe have become “the partner for their real estate
management.”
Shibuya
We are their trustworthy point of contact to consult andEbisu
solve any of their problems.

Ueno
Akihabara

Ikebukuro

Kodenma-cho

Nihonbashi
Tokyo

Kojimachi
Hibiya Head
OfficeAoyamaAkasaka

Toranomon

Ginza

ShimbashiNEW

We meet tenants’ needs by understanding them andconstantly changing our Company according to thetenants’ voice.

MeguroHamamatsucho

GotandaThe network finds big hints for our Real Estate
Revitalization Business, which is the base for us to
improve the value of real estate further day by day.

Shinagawaare locations of the core branches.
Is a location of a new branch.

Yokohama

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Kanda

Kudan

26

Appearance of the building where
Hamamatsucho Branch is locatedSun Frontier Fudousan Co., Ltd.

- Property Management Business -We achieved stable and highly profitable building management
and expanded entrusted business
100%

98%

96%

(㎡)

98.6%

Entrusted floor area (Right Axis)
Occupancy rate of entrusted assets (Left Axis)
Occupancy rate in 23 wards of Tokyo (Left Axis)

800,000(As of the end of March 2020)

700,000

Operating rate of our PM
entrusted properties

600,000

94%

500,000

98.1%(As of Apr. 1, 2020)

92%

Average occupancy rate of medium-sizedbuildings in 23 wards in Tokyo

400,000

90%

Top Companies in Terms of Number ofContracted Owners*

88%

86%

84%

300,000<2019 PM Client Rankings>

Our strength, “the comprehensive abilities to solve problems
regarding real estate” is demonstrated when we are requested
for consultations by our clients on the renovation andreplacement of their properties as approximately 87% of the
PM entrusted properties are more than 20 years old.

2019

2018

1

Vortex

778

690

2

Xymax

510

495

3 Sun Frontier Fudousan

264

271

4

SHIMIZU COMPREHENSIVE DEVELOMENT

214

-

5

RIO HOLDINGS208-

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q…2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q…1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q…

200,000

100,000

0March 2009 March 2010 March 2011 March 2012 March 2013 March 2014 March 2015 March 2016 March 2017 March 2018 March 2010 March 2020
*Source: Our research based on “Monthly Office Market Research Report” by Sanko Estate Co., Ltd., for the average occupancy rates of medium-sized buildings in 23 wards in Tokyo.
*Source: As for PM Client Ranking, our research based on the November 2019 issue, “Monthly Property Management.”*Operating rate: (Total operating area)/(Total lent available area).
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

27

Sun Frontier Fudousan Co., Ltd.

- Conference Room Rental Business -We will expand our business sites to achieve 45 sites
in FY ending March 2023
Rental conference room (Vision Center)・・・ 11 sites

VO Kanda
VO Kanda ANNEX

Rental Office (Vision Office)Coworking Space (Vision Works)

・・・ 4 sites

VC Kanda

Smart Conference Room (Vision Rooms)

VR Nihonbashi Kayabacho
VC Tokyo Nihonbashi
VC Tokyo Ekimae・・・ 6 sites

VC Yaesu South Exit
Kanda

VC Shinjuku

Nihonbashi

New

VR Yaesu Central Entrance●VC Ginza 1-chome(Appearance of the building)

VR Yotsuya

VO Shinjuku

VR Ginza 1-chomeTokyo
Shinjuku

New

YotsuyaGinza

Nagatacho

VC Nagatacho
VC Yokohama
Yokohama

Yurakucho

VW Tokyo Yurakucho

Hamamatsucho

VC Tokyo Yurakucho

VC Tamachi
Shinagawa

VR Ginza 1-chome Annex

VC Hibiya

Tamachi

VC Hamamatsucho

VR Hamamatsucho

The total number of sites is 21 sites with 7,300 seats as of today. We are strengthening our internal system for thefurther expansion of sites.
*The seat number of rental conference rooms is calculated, using the school format (three-seat per desk.)
Seats allocated in a square shape are calculated for the rooms to which the school format cannot be applied.

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

28

Sun Frontier Fudousan Co., Ltd.

- Rent Guarantee Business -Strengthening Rent Guarantee Business,
Taking the Opportunity of the Revision of the Civil CodeThe requirements of personal guarantees were tightened due to major revisions of the Civil Code (Law of
Obligations) which became effective from April 2020. It will burden lessors (building owners) much andtheir needs for institutional guarantees are expected to increase and so we will strengthen seminars on the
major revisions of the Civil Code for them.

[Major Changes]•

Strengthening Seminars for Lessors

Tightening confirmation of intention of individual
third parties’ guarantees concerning the business(confirmation with notarial deeds).

•

Limit of maximum amount of personal
guarantees.

•

Clarification of the scope of personal guarantees.

•

Addition of accountability of lessees to personal
guarantors.

•

Addition of accountability of lessors to personal
guarantors.

[Number of seminars held]◆Number of seminars held
108 seminars◆Cumulative number of Approx. 1,600 participants
participants→ Lessors will have to bare a greater burden due to atrend to protect individual guarantors.

Every seminar is full of owners because of their great deal of interest.

We relieve concerns of building owners by throwing ourselves into a role of their building managementadvisor. As the most selected institutional guarantee company, we will contribute to the realization of afair and impartial leasing market.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Sun Frontier Fudousan Co., Ltd.

“Warm-Hearted Hotel” that Grows with the Community

GRAND OPENING OF “TABINO HOTEL KASHIMA” ON APRIL 2020
Tabino Hotel Kashima in Kamisu City, Ibaraki Prefecture opened as the forth hotel of “the Tabino Hotel Brand.”The hotel specialized in in accommodating guests who can use it casually as a foothold for sightseeing or business.
The hotel is located near the Kashima Coastal Industrial Zone, with good access from central Tokyo. The guest rooms
were designed with a focus on “comfort” so that our guests can feel like at home even when they stay for a longtime as a business base. In addition, the hotel has many attractions such as a large Yakuseki hot spring bath with an
open-air bath, a large flat parking lot, and a breakfast with local dishes.

Open-air bath for men only

Yakuseki Hot Spring, “Hamanasuno-YU”

Large 15㎡ room with Simmons bed, large table and sofa to relax

Dedicated washing machine and microwave oven for a long stayPursuing “Comfort”
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Warm-hearted staff welcomes ourguests with a bright smile

30

Large flat parking lot (4t truck parking available)

Sun Frontier Fudousan Co., Ltd.

- Hotel Business -List of Hotels under Operation and Development
At the operating hotels, we strive to improve profitability (review operating
expenses) and improve hygiene and safety, and focus on improving theoccupancy rate and establishing a system in preparation for resumption ofbusiness after temporary closing. Ongoing projects proceed as planned
toward opening.
<Domestic hotels>

Running or Leasing

2,302 rooms

Running

Under construction or
Planning

Under construction 830 rooms
Under Planning

280 rooms

April 2016

SSH Nagoya Tokoname

194

In operation-

Sky Heart Hotel Kawasaki

200

In operation-

Sky Heart Hotel Koiwa

105

In operation-

Sky Heart Hotel Narita

100

In operation-

Sky Heart Hotel Hakata

159

In operation

April 2017

Hiyori Hotel Maihama

80

Renting-Toyama210

In operation-

Azuma Sado

57

In operation

May 2018

In operation-

In operation

80
105

July 2018

Tabino Hotel Sado

111

In operation

May 2019

Hiyori Hotel Osaka Namba Station

224

In operation

October 2019

Courtyard by Marriott Osaka Honmachi

193

MatsumotoIn operation

December
2019

Hiyori Hotel Tokyo Ginza EAST

135

Kashima

In operation

February 2020

Tabino Hotel Kurashiki Mizushima

155

In operation

April 2020

Tabino Hotel Kashima

194

Under
construction

February 2021

Onna, Okinawa

204

Under
construction

February 2021

Kyoto Nijo Kawaramachi

205

Under
construction

August 2021

Miyako-Island

111

Under
construction

April 2022

Kyoto Shijo Kawaramachi

134

Under
construction

August 2021

Matsumoto

176

Under
Planning

April 2022

Ishigaki Island

132

Takayama

Onna, Okinawa

Kyoto Nijo
Ishigaki
IslandIn operation

Sky Heart Hotel Shimonoseki

Sado (Chigusa)
Sado (Azuma)
ToyamaOpen (Plan)

Tabino Hotel Takayama

3,412 rooms

Total*As of March 11, 2020*"Running" is the total of “in operation” and “Renting” inthe right table.

Hotel Name Location

No. ofRooms

Status

Maihama

Kyoto Shijo
MiyakoIslandNaritaKoiwa

Shimonoseki
Tokoname
HakataGinza Higashi
Chuo-ku, Tokyo

Osaka Honmachi
Kawasaki
Kurashiki
Osaka Namba Ekimae
Mizushima*The schedule, hotel scale and others are based on the current plan, which may change in the future.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Under
July 2022
Chuo-ku, Tokyo
Planning*The
schedule and scale are current plans and may change in the future.

148

Sun Frontier Fudousan Co., Ltd.

－Overseas Business (Da Nang, Vietnam)－“HIYORI Garden Tower” Completed in December 2019
High-rise condominium PJ<Philosophy of Overseas Business:“Providing comfort to the people of Asia, together with our partners.” >“HIYORI Garden Tower”

Providing high-quality housing with sophisticated quality and planning in accordance with theJapanese standards, we will contribute to the economic development in the region by meeting
the growing demand for housing there.
Local signboard

Completed
In December 2019

Entrance hall

Currently, there are restrictions on travel from Japan
to Da Nang, Vietnam.
Although it has been announced that the operationof domestic flights will be resumed gradually,
restrictions on entry from overseas are continuing.
Before the outbreak of COVID-19, there were 247
direct flights from Korea and 24 direct flights from
China per week, but the impact of COVID-19 is
expected to remain for prolonged period of time.

Delivery in progress
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

A View overlooking the city

32

88% of “HIYORI Garden Tower” has been delivered at
this moment.
The delivery after January will contribute to thebusiness results for the fiscal year ending March 2021.

Sun Frontier Fudousan Co., Ltd.

－M&A (To Expand Existing Businesses and Invest in Start-up Business)－

Additional Acquisition of SKY ESTATE’s Shares
By increasing shareholding ratio in SKY ESTATE, we further strengthen inspection
services by accurately assessing the state of aging of buildings through surveys of theirexterior walls to propose the best repair work to our clients.
Advantages of Exterior Wall Survey with a Drone
1.
2.
3.
4.
5.

It is possible to detect even 0.2 mm cracks and floating tiles
by using infrared rays.
High-rise buildings can be surveyed without scaffolding.
Operation can be conducted from the ground, thus ensuring
excellent safety.
With no scaffolding, gondola or rope inspection required,operation can be done faster with lower cost.
(costs can be reduced to about 1/3.)
Applicable to periodic reporting for specified buildings that
require regular exterior wall surveys

SKY ESTATE has the market-leading track record in theindustry••

About 140 drone surveys a year which is the market leading
track record.
By collaborating with SKY ESTATE, we aim to receive 200
orders for exterior wall surveys annually, including surveys ofoffice buildings, and others.

Specialized drones are used
for exterior wall andinfrastructure surveys

Infrared rays can identify
floating tiles[Outline of the Investee]■Name■Location■Major Services■Capital Stock■Established■ Number of
Shares Acquired: SKY ESTATE Inc.
: 1-5-4, Higashiyama, Meguro-ku, Tokyo: Drone school management,
exterior wall survey: 4.47 million yen: September 28, 2016
: 33.5% of Issued shares

Sun Frontier Fudousan, which manages approximately 392 office buildings in central Tokyo will
cooperate with SKY ESTATE which has cutting-edge drone piloting technology to create new values
that differ from the conventional building management by introducing new technologies andinnovative services for building management.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

33

Sun Frontier Fudousan Co., Ltd.

Medium-term Management Plan

We aim for steady achievements and sustainable growth
Although the business environment will change significantly due to the spreadof COVID-19 infection, we aim to achieve our goals for the final year, the fiscal
year ending March 2023 without revisions.
<Policy towards the post-COVID-19 era>

<Basic Strategy>
Without changing the basic strategy, we will actively
utilize M&A and others to expand existing businesses anddevelop peripheral services while further refining the
Office Building Business model in central Tokyo andstrengthening the financial base.
<Quantitative Target>
FY ending March 2023

(Unit: 1 million yen)

100,000

Net Sales

100 billion yen

80,000Ordinary Income

20 billion yen

60,000Net Income

14 billion yen

Equity Ratio

50% or more

Ratio of Ordinary
Income20% or more

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

With a view to “the new normal” with COVID-19
that will start after the resumption of economic
activities, we will research changes in the systems
of products and services and needs on-site fromthe client’s point of view. With the power ofchange as our greatest strength, we will adopt
and change flexibly and speedily in each business.
Changes over the Last 8 Years and Targets for FY ending March 2023

Net
売上高

Ordinary
経常利益

Sales

Income100,000

73,21853,29140,39440,00047,46327,741 30,625

20,00017,772
16,12720,000 10,580
10,755 12,813
8,894
4,341 5,593 7,024
2,039
02023/32020/3 2021/3・・・・2022/3 (Forecast)
2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
2023/334

Sun Frontier Fudousan Co., Ltd.

Deepen and Expand the Highly Influential “Office Building Business in Central Tokyo”

Focusing on the central Tokyo area and small and medium-sized office buildings,
we continuously keep refining our Company's unique strengths
We focus on the business area where we can exert
our influence and keep on refining our business tomake it distinctive and highly profitable by listening
to our clients’ voice.

20th
Anniversary

10th
Anniversary

Securitiza Replanning
Construc-tion of
Real
tion
EstateBrokerage

RentalBuilding
RentalBuilding

Office Building
Business inCentral Tokyo

Securitiza Replanning-tion ofConstrucRealEstate-tion
Rental

Early stage ofestablishment

PM

OfficeBuilding
Business inCentral Tokyo

Brokerage

Sub
Leasing

Leasing

Smart
Conference
Room

Building

Brokerage

PM
Sub

RentalConference
Room

OfficeBuilding
Business In
Central Tokyo
AssetsConsulting

Rent
Guarantee

Rent
Guarantee

Leasing

Drone
BusinessPM

BM

Leasing

Leasing

Office Furniture
RentalShare
Storage・・・・=> We will expand our existing business further and at the same time, we will challenge new andvarious fields of business by utilizing M&A, the IT and others. We will improve our strengths in thebusiness field of medium and small office buildings in central Tokyo.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

35

Sun Frontier Fudousan Co., Ltd.

Change of Representative Director (President)
Sun Frontier Fudousan Co., Ltd. made the decision to change the Representative Director (President) as of April 1, 2020.
1) Specifics of the change
Name
Tomoaki Horiguchi

Seiichi Saito

New title

3) Biography of the new president
Current title

ChairmanPresident

President

Executive Vice
President and Vice
President Executive
Officer

Name

Seiichi Saito

Biography 2005: Joined Sun Frontier Fudousan
2006: Director, General Manager of Administration Division
2008: Senior Managing Director
2012: Vice President and Vice President Executive Officer
2014: Executive Vice President
and Vice President Executive Officer
2015: General Manager of Asset Management Division

2) Reason for the change• We have devoted ourselves and worked as one to deliver our clients solutions concerned with real estate under our consistent motto,“Altruism” since our foundation on April 1999. Thanks to all of you, we celebrated the 20th anniversary last April, and now we are
steadily making progress to achieve the goals of the Medium-Term Management Plan which sets the final year in the FY ending March2023.
• Under these circumstances, we have worked on the development of the human resource for the next generation and the further
strengthening of our management base, and made this decision in order to improve the long-term and sustainable corporate value of
our Company.
• Tomoaki Horiguchi, the current President will keep the right of representation and continue to commit himself to help the Sun Frontier
Fudousan Group achieve further development as the Chairman.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

36

Sun Frontier Fudousan Co., Ltd.

4) Company Information and Reference Materials

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

Vision and Policy
Visionwe aim to be “the real estate company” of the world’s most
loved, trusted and selected

Clients

Building owners, asset holders, wealthy individualsCore Business
PolicyStrategy

Real estate revitalization and utilization
・-Not for profit, but for trustBusiness is about competing to be more helpful for
more clients.
・To focus on people rather than property
・One-stop solutions to any and all problems
CentralTokyo

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

OfficeStrength

Tenant mediation Effective operation
Real estate
revitalization

38

Creativity
Sun Frontier Fudousan Co., Ltd.

Sun Frontier, a Company of Philosophy-oriented management
Company policy

Philosophy is a source of
our ESG initiatives

Altruism

Management Philosophy
With a vision to protect all employees and to pursue both spiritual and material happiness,at the same time, we will contribute to the prosperity of humankind and society with aspirit of symbiosis.

Corporate Philosophy
We, the employees through our business improve our knowledge, technical skills andpersonalities with our strong enthusiasm and dedicate ourselves to utilization anddistribution of real estate stock, thereby we reduce the waste of non-reproducible
resources and contribute to permanent prosperities of mankind, flora and fauna on theearth.
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39

Sun Frontier Fudousan Co., Ltd.

Outlines of our ESG Initiatives
Through our initiatives heavily based on the viewpoints of ESG, we will achieve oursustainable growth and a long-term improvement in our corporate value.

Environment

 We revitalize dilapidated buildings without destroying them. We develop the Real Estate Revitalization
Business, which grows in harmony with the environment.
(400 buildings were revitalized as of the end of March 2020.)
 We operate a circulation market of furnished offices with an aim to reduce waste materials generated by
office relocation.
 We promote the reduction of energy consumption at the buildings we manage in Property Management
Business, utilizing the Energy-saving Subsidy and others.
 We have introduced the renewable electric power service to 5 buildings we own.

Social In our Real Estate Revitalization Businss, we promote the revitalization of buildings to meet the social
needs.
 Under the slogan, “Cheer up Japan!” we develop Regional Revitalization Business from the aspect of
tourism.
 We have supported the Japanese language courses at Da Nang University in Vietnam since 2016. Also,
we have started to employ 6 technical intern trainees from Vietnam in the aim of “human resources
development” which is the base of mutual development of Japan and Vietnam.
 We go ahead with the introduction of the drone technology to accelerate the innovation in the realestate industry.

Governance When we acquire properties, we clarify their possible risks, improve their legal compliance and correct
shoddy workmanship on them through the process of commercialization and then supply them to themarket. We turn the properties into a real estate stock with high social values and sell them.
 We have established “Nomination and Compensation Committee” as a voluntary advisory body to theBoard of Directors in order to improve objectivity and transparency of the procedures regarding
appointment and dismissal of the directors and their compensations.
 We have improved our monitoring function for the corporate management by appointing 5 independent
outside directors out of 10 directors.

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

40

Sun Frontier Fudousan Co., Ltd.

ESG initiatives of Sun Frontier Fudousan Group

Launch of Renewable Energy Power Services [E]
We started the first renewable electricity service for office building tenants in Japan, working with

JAPAN ENERGY & ECOLOGY which supports energy procurement for corporate clients.
Main Features of the Service•••

This is the first service in Japan that supports even building tenants to meet the requirements of environment
initiatives, such as “RE 100” and “RE Action” if they occupy more than one floor of the building.
By purchasing electricity cheaply, building owners can reduce costs in line with their environmental measures.
On behalf of the building owners, we take care of the whole cumbersome approval process for environmental
values (J-Credit).

Concept Diagram
コンセプト図Electric Power
Company

Building introduced
the service
JAPAN ENERGY &ECOLOGY

Sun Frontier
Fudousanenvironmentallyadvanced
Company

ForeignCompanies

Tenancy
Electricity
SupplyRenewable
Energy PowerRE100
certifiedelectricity

They take care of thewhole cumbersome
approval process forenergy procurement
and environmental
values (J-Credit)
Environmental
Values(J-Credit)

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Renewable
Energy PowerService

Entire Building
environmentallyadvanced
Company

Domestic
Companies

Environmentallyfriendly

Tenancy
Cost Reduction

One Floor Only41

Sun Frontier Fudousan Co., Ltd.

ESG Initiatives

Regional Revitalization Business ～Project in progress on Sado Island ～(S)<We will energize Sado Island through tourism!>
When rural areas are energized, so Japan as a whole will be. As the number of foreign visitors to Japan rapidly
increases, spurred by fascination (culture, history, nature, food, hot spring, hospitality and others) that Japan isproud of, we will take on the challenge of regional revitalization projects that focus on the attractiveness andfeatures unique to regions, in particular the regions that possess the “Wonderfulness of Japan.” The first will be
Sado, where we are familiar with. We have already created jobs for over 100 employees.

Sun Frontier Sado Inc.
Hotel
Business

Transportation
Infrastructure Project

Hotel AZUMAHighlight Finding
Project

Tourism and Travel
Business

Kanko
Oyasumidokoro

Okesa Kanko Taxi

Web Advertising
Business

Travel Agency

Sado Biyori

Rental Car
Business

Tabino Hotel
Sado
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42

Sun Frontier Fudousan Co., Ltd.

ESG initiatives

Our Initiatives for Governance (G)In our Company, we have an idea of “right humanity” as judgement criterion for all of our
executives and employees to execute business assignments. We endeavor to strengthen oursystem of governance to ensure the execution.

 We have established Nomination and Compensation Committee
We have established “Nomination and Compensation Committee” as a voluntary advisory body to the Board of
Directors in order to improve objectivity and transparency of the procedures regarding appointment and dismissalof the directors and their compensations.
The majority of the committee members are outside directors to ensure sound management of the Company.

 We have ensured our risk management at the time of acquisition of properties andour compliance with laws and regulations at the time of their sale.
When we acquire properties, we make a comprehensive business judgement, considering not only theirprofitability but also their key risks, environmental impacts, compliance and others. We have also established
our three-step checking system to identify risks in a broad context not only by our departments in charge but incooperation with legal and audit departments. As for sale of the pre-owned buildings which are disqualified, we
first make them qualified enough to meet legal compliance requirements and market them.

 We conduct a monthly training on compliance.
We give all the employees a monthly training on compliance in order to establish an efficient system of legal
compliance. The training has a broad range of themes, such as “prevention of insider trades,” “prevention of tradeswith antisocial forces,” “information management,” etc. We will devote ourselves to sound business operation.
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

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Sun Frontier Fudousan Co., Ltd.

Changes in Net Sales, Ordinary Income, andNumber of Employees
Both Net Sales and Ordinary Income remained strong.
The number of employees is steadily increasing.

(1 million yen)

70,000(number of people)

73,218

売上高
Net Income

612 600

Ordinary Income
経常利益60,000

Employees
従業員数

53,291
48,15050,00035,25430,00026,87020,0002

10,000

0

681
1

1,771
52
24

0 140

70

3,588
377 501

5,003
791

96

16,730134 125

7,760

152

27,741(20,000)
Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

206

14,469142 139

8,289 6,346

199

181

500

4,289

10,580(3,776)329
300
16,127223

17,772

6,923

541

30,625
276

400

381

200

12,813141

1,437 3,474(10,000)

522

47,46340,39440,000

84

700

799

2,039

4,341 5,593

7,024

8,894

10,755

100

0

(100)

(17,794)

(200)

44

Sun Frontier Fudousan Co., Ltd.

Trends in Vacancy Rate and Office Rents
in 5 Wards of the Central Tokyo
(%)

(yen)
Average rent (yen/tsubo)

The average rentin April 2020

Average vacancy rate (%)

22,820 yen(+ 226 yen from the previous month)

Peak of the vacancy rate
9.43%
June 2012
Peak ofthe average rent
22,901 yen
August 2008
Peak of the vacancy
rate
8.57%
August 2003

Bottom of theaverage rent
17,526 yen
October 2004

Bottom of thevacancy rate
2.49%
November 2007

Bottom of theaverage rent
16,207 yen
December 2013

The average vacancy ratein April 2020

1.56％（+0.06％pt from the previous month)*Source: Prepared by our Company based on Miki Shoji’s “Office Reports.” Subjects are office buildings with a standard floor space of 100 tsubo or more in the 5 wards in the Central Tokyo.

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

45

Sun Frontier Fudousan Co., Ltd.

Corporate Profile
Company Name

Sun Frontier Fudousan Co., Ltd.

Location of Head
Quarters

1-2-2, Yurakucho, Chiyoda-ku, Tokyo

Date of Foundation

April 8, 1999

Date of Listing

November 19, 2004 (Jasdaq Stock Exchange)
February 26, 2007 (First Section of Tokyo Stock Exchange)

Capital Stock ※Representative

11,965 million yen
Tomoaki Horiguchi, Chairman

Seiichi Saito, President
Number of Consolidated
612 full-time employees (1,037 including part-timers and temporary workers)
Employees ※Average Age of
Employees※

34.5 years old(※ As of March 31, 2020)

Real estate revitalization
Business Profile:

Real estate services

Real estate management, brokerage, construction
planning, non-payment guarantee, operation ofrental buildings, asset consulting

Hotel development and management
Accounting Month
Listed Market

March
Tokyo Stock Exchange, First Section (Code number: 8934)

Copyright © 2020 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

46

Sun Frontier Fudousan Co., Ltd.

Sun Frontier Fudousan Co., Ltd.

We will appreciate yourfurther supports.
◆ The purpose of this document is to provide information that can be used as a reference, not for soliciting or promoting you
to purchase a specific product. Please make your decision by your own discretion and responsibility when you make an

investment. If you want to purchase shares of our Company, please contact securities companies.
◆ The information provided in this document is not necessarily in compliance with the Financial Instruments and Exchange Act,
the Building Lots and Buildings Transaction Business Act, the Listing Rules for the Tokyo Stock Exchange and other related
laws and regulations.

◆ Forward-looking statements included in this document do not guarantee future performance.
◆ Although we have made every effort to ensure the contents of this document, we can not guarantee their accuracy or
certainty. Please note that they are subject to change or cancellation without notice.

<Inquiries about this document>
Sun Frontier Fudousan Co., Ltd. IR Desk
Phone : +81-3-5521-1551
URL : https://www.sunfrt.co.jp/
Mail : ir-contact@sunfrt.co.jp