Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Statements for theThird Quarter of the Fiscal Year Ending
March 31, 2019
Our goal is to be the real estate company
that customers love and choose over any other worldwide.
1) Executive Summary Results for the Third Quarterof the Fiscal Year Ending March 31, 2019

1-10

2) Business Conditions

11-133）Third Quarter initiatives and Future Growth
Strategies

14-36

Reference

37-38

February 6, 2019
Stock Code：8934

Highlights of the Third Quarter
Summary for the Third Quarter of the Fiscal Year Ending March 31, 2019
Sales and income reached new record highs in the Third Quarter(¥ Million, except for per share figures. )Results

Profit margin

YoY change

Rate of
ChangeFull-year
forecast

Progress

Sales

45,196―+11,723+35.0%

58,00077.9%

Operating income

12,16226.9%+4,655+62.0%

12,30098.9%

Ordinary income

11,74626.0%+4,552+63.3%

11,80099.5%

Net income*

7,963

17.6%

+3,065+62.6%

8,200

97.1%

* Quarterly net income attributable to owners of parent

Highlights
1) High profit margins in the replanning business are driving
business performance2) The operation business showed steady growth.
• Sales in the operation business grew 1.3-fold year on year. Segment
income was up 1.4-fold.
• Our new hotels opened in the present term and the last term areexpanding the business steadily. Especially the hotels running more than
2 years increased their sales. As a result, their sales grew 1.4-fold and theirprofit grew 1.8-fold.
• With the October opening of “Vision Center Tokyo Station”, the rental
conference room business grew to a total of 14 sites, corresponding tocapacity for 5,440 people (compared to 10 sites with capacity for• At 32.5%, the segment profit margin remains high (vs. 27.6% in the FY
ended March 2017 and 29.7% in the FY ended March 2018).
• Progress is currently underway on procuring properties. The procurementof properties scheduled for sale in the fiscal year has been nearlycompleted. Current efforts seek to build up inventory through property
procurement for growth in rent.
• The stock of buildings associated with the replanning business stood at 59
buildings at the end of this quarter. The balance of inventory assets was¥57.7 billion, up 60.0% YoY compared to 42 buildings and ¥36.0 billion at
the end of December 2017.

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

approximately 3,000 people at the end of December 2017).

1

Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary(¥ million)
FY Ended March
2018
April-December

FY Ended March
2019
April-December

33,47345,196

Operating income

28,741

39,57227,00337,361

Rental Building, Sublease

1,737

2,086

Real Estate Service Business

2,345

2,483

Operation Business

2,170

2,967

Other Business

707

772

Adjustment

(490)

(599)

Gross Profit

11,03916,515

Net income

8,931

14,0738,220

13,070Rental Building, Sublease

710

1,002

• The replanning business showed 38.0% growth in sales
and growth of 59.0% in gross profits.
• The gross profit margin rose to 36.5% (compared to
33.0% in the same period last year).

Real Estate Service Business

1,424

1,538

Operation Business

308

412

Other Business

486

556

Adjustment

(111)

(65)

3,532

4,352

Sales
Real Estate Revitalization Business
Replanning Business(including Hotel Development)

Real Estate Revitalization Business
Replanning Business(including Hotel Development)

Selling and general administrative
expenses
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

FY Ended March
2018
April-December

FY Ended March
2019
April-December

7,507

12,162Non-operating income

1236

Non-operating expenses

325

452

7,194

11,746Extraordinary loss/income－

0

Corporate income tax, etc.

2,296

3,782

(7)

(0)

4,906

7,963

Ordinary income

Profit or loss of Non-controllinginterest• The operation business a stable revenue source, isgrowing steadily, recording 1.3-fold growth in both sales
and gross profits.
• Operating income grew by 63.3% thanks to growth of
49.6% in gross profits, which handily outpaced a 23.2%
increase in sales expenses.

2

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Assets(¥ million)

FY Ended
March 2017

FY Ended
March 2018

End ofDecember 2018

Increase/Decrease(Compared to theend of Mar. 2018)55,19580,174

93,602+13,428

Cash and deposits

16,24623,89222,502(1,389)Inventory assets

36,18654,59369,025+14,432

Breakdown)

26,0397,254
2,892

45,525
5,291
3,775

57,722
7,522
3,780+12,197+2,231
+5

2,762

1,687

2,073

+386

8,458

11,587

12,391

+804

7,288

8,565

9,042

+477

Intangible assets

562

474

422

(52)

Investments and other assets

608

2,546

2,926

+379

63,654

91,761

105,993+14,232

Current assets

RP
Hotel
Overseas, etc.

Other current assets

Noncurrent assets
Property, plant, and equipment

Total assets

Since we procured more than properties than we sold, the balance of inventory assets in the replanningbusiness grew by ¥14.4 billion.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

3

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Liabilities/Equity(¥ million)

FY Ended
March 2017

FY Ended
March 2018

End ofDecember 2018

Increase/Decrease(Compared to theend of Mar. 2018)

8,281

10,155

11,084

+928

3,438

2,716

2,754

+37

802

3,178

1,966

(1,211)

4,040

4,260

6,363

+2,102

19,68632,75639,882+7,125Long-term loans and bonds
payable18,62630,86537,735+6,869Other noncurrent liabilities

1,059

1,890

2,146

+255

27,96842,91250,966+8,05435,52848,75055,081+6,330

157

99

(53)

(152)

Total net assets

35,686

48,84955,027+6,177

Total liabilities and capital

63,654

91,761

105,993+14,232

Current liabilities
Short-term loans payable, etc.
Income taxes payable, etc.
Other current liabilities

Noncurrent liabilities

Total liabilities
Shareholders’ equity
OthersTransition of Equity Ratio
End of Mar. 2017

End of Mar. 2018

End of Dec. 2018

56.0%

53.2%

51.9%

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Due to progress with property procurement the replanning business, loans payable grew by¥6.9 billion compared to the end of the previous FY. The balance of interest-bearing debt at
the end of December stood at ¥40.4 billion.
Retained earnings, equivalent to the difference between quarterly net income (up ¥7.9
billion) and dividend payment of the previous term (negative ¥1.6 billion), rose by ¥6.3
billion.

4

Sun Frontier Fudousan Co., Ltd.

Performance ofReplanning Business(Replanning (RP)/ Hotel Development)(¥ million)

Sales
Segment income (Note1)

FY 2018
AprilDecember

FY 2019
AprilDecember

Increase/decrease

27,00437,361+58.2%

40,0007,734

12,126+56.8%

36,000

28.6%

32.5%

+3.9%pt

No. of procured
properties

31

37

+6

No. of sold properties

23

26

+3

(Note2)(Note2)

Profit margin

No. of properties in stock
as of the end Mar.

47

64

+17

 Both sales and profits grew significantly.
 The profit margin continues the higher level than 32% because ofincreasing the direct sales to our customers with keeping our creative
efforts for commercializing.
 The average business period is 339 days.
 Procurement progressed steadily. Our property inventory at the end of
the period stood at 64 properties (accounting for ¥65.2 billion).
(Breakdown)
Replanning business: 59 properties (¥57.7 billion)
Hotel business:
5 properties (¥7.5 billion)(¥ million)

537,361

28,00027,00424,00020,00060%

50%

32,000

40%

32.5%
28.6%

30%

16,00012,126

12,000* Overseas business is excluded.
* We also procured or contracted for 13 replanning properties through the end of January
worth ¥10.1 billion in addition to the above-mentioned properties.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Sales
Segment Income
Profit Margin

8,000

20%

7,734
10%

4,000
0

0%

FY 2018

April-December

FY 2019

April-December(Note1) “Segment income” is calculated by subtracting various expenses ofrespective businesses from gross profit on sales. Various expenses
include interest paid, sales commission and goodwill amortization, etc.
(Note2) Land procurement and development cases are also included in theinventory of replanning business.

Sun Frontier Fudousan Co., Ltd.

Performance ofRental Building Business(Rental Building / Sublease)(¥ million)

Sales
Segment
incomeProfit margin

FY 2018
AprilDecember

FY 2019
AprilDecember

Sales

Increase/decrease

1,737

2,210

+27.3%

710

1,002+41.1%

40.9%

45.4%

+4.5%pt(¥ million)
2,400

Segment Income
Profit Margin

100%

2,210

2,200
2,000

1,800

1,737

75%

1,600
1,400

 In the replanning business, income from rents
increased, due primarily to office buildings for which
commercialization has advanced.

 Income also grew from rents from the hotel business.

1,200
1,000
800

45.4%

40.9%

1,002

710

600

 To add to our sources of stable income, we aremoving forward with efforts to procure and build
office buildings suitable for long-term holding.

25%

400
200
0

0%

FY 2018

April-December

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

50%

6

FY 2019

April-December

Sun Frontier Fudousan Co., Ltd.

Performance ofReal Estate Service Business(Property Management(PM) / Building Maintenance(BM) / Sales Brokerage / Rental Brokerage)(¥ million)

FY 2018
AprilDecember

FY 2019
AprilDecember

2,345

Sales

2,483

+5.8%

(¥ million)
2,600
2,400

Segment
incomeProfit margin

Increase/decrease

1,424

60.7%

1,528

61.5%

+7.3%

+0.9%pt<PM Business/BM Business>
 We offer high-value-added services by providing meticulous tenant
management and solving customer’s troubles, as well as improving
revenue by modifying conditions to achieve fair rents. As a result, we
contributed to expand the customer base and the business base for theentire group.
[Number of managing properties buildings for
PM and occupancy rate]
No. ofmanaging properties
End of December 2016
End of December 2017
End of December 2018

356
369
377

2,483

100%

2,345

2,200
80%

2,000
1,800
1,600
1,400

60.7%
1,424

61.5%
1,528

60%

1,200
40%

1,000
800

Occupancy
rate

600

96.5%
95.5%
97.8%

20%

400
200

<Sales Brokerage Business/Rental Brokerage Business> While decreasing both sales and profit in sales brokerage, The brokerage
section contributes to the revenue of the entire corporate group by
driving the creation of high added value from the customer’s viewpoint in
the procurement, commercialization, and sale of RP real estate.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Sales
Segment Income
Profit Margin

7

0

0%

FY 2018

FY 2019

April-December

April-December

Sun Frontier Fudousan Co., Ltd.

Performance ofOperation Business(Hotel Management / Rental Conference Room)(¥ million

FY 2018
AprilDecember

Sales
Segment
incomeProfit margin

2,170

FY 2019
AprilDecember

2,967

264

374

12.2%

12.6%

Increase/decrease+36.8%+41.7%(¥ million)
3,000 Sky Heart Hotel, Hiyori Hotel Maihama and SPRING SUNNY Hotelsteadily increased the sales and the profit since Occupancy Ratio andAverage Daily Rate grew against the last same term.

<Rental Conference Room Business>
 The total number of facilities grew to 14 as of the end of January 2018
(nine rental conference room facilities, three rental office facilities, andtwo coworking space facilities).
 Vision Center Tokyo Station opened on October 29.
(April-December: total sales of ¥655 million, segment income of ¥117
million)Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

8

40%

2,400

2,170

30%

1,800
1,500

20%

 Tabino Hotel opened in Hida-Takayama in May and Sado Island in July.
1,200
Three new hotels are being constructed and will be opened in 2019.
 The number of hotels managed grew to 10 hotels as of the end of
December 2018.
(April-December: total sales of ¥2,322 million, segment income of¥221 million)

2,967

2,700

+0.4%pt 2,100<Hotel Management Business>

Sales
Segment Income
Profit Margin

900

12.2%

12.6%
10%

600
300

264

374

0

0%

FY 2018

FY 2019

April-December

April-December

Sun Frontier Fudousan Co., Ltd.

Performance of

Other Business(Rent Guarantee / Overseas Business, etc.)(¥ million)

Sales
Segment
incomeProfit margin

FY 2018
AprilDecember

707

FY 2019
AprilDecember

772

Increase/decrease(¥ million)

+9.2%

800

486

499

+2.7%

700

68.7%

64.7%

(4.0%pt)

600<Rent guarantee business>■ The owners having the worry about the tenant’s capacity to
pay the rent are increasing due to the trend of the rent
increasing by the less office supply. Since the number ofundertaking regarding to both the new rent guarantee andthe rent re-assurance are increasing, both sales and profit
are growing.
■ The revised Civil Code set to enter into effect in 2020 is
expected to strengthen demand for institutional guarantees.
In response, we plan to expand seminar activities targetingbuilding owners and to undertake other such efforts tocreate opportunities to deliver new added value.
<Overseas Business>■ Danang, the Largest City in Central Vietnam
Sale of units in HIYORI Garden Tower, a high-rise urban
apartment house of 28 floors (306 units), was completedin August 2018. Construction is slated for completion in
September 2019.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

500

Sales
Segment Income
Profit Margin

772

707

68.7%
486

75%

64.7%
499

400

50%

300
200

25%

100
0

9

100%

0%

FY 2018

FY 2019

April-December

April-December

Sun Frontier Fudousan Co., Ltd.

Variation of
Key Performance Indicators◆Transition of Equity ratio◆Transition of ordinary income ratio¥ million(We are promoting high added value management.)

60,000Full-year
forecast

売上高
Sales
Ordinary Income
経常利益

22.9%

30%

70%
純資産
Net Assets
Equity Ratio
自己資本比率60,00025%

22.7%(We are building a stable financial base.)

70,00026.0%

Ordinary Income Ratio
経常利益率50,000¥ million

56.2% 55.7%

56.0%

22.0%

20.2%
40,000

60%
53.2%

51.9%

50,00050%

40,00040%

30,00030%

20,00020%

10,00010%

20%

30,00015%

20,00010%
Full-year
forecast

10,0005%02015/3

2016/32017/3

2018/3
2018/3 2018/12
2019/3Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

0%0
2015/310

2016/32017/3

2018/3
2018/3 2018/12
2019/30%

Sun Frontier Fudousan Co., Ltd.

2) Business Environment

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

11

Sun Frontier Fudousan Co., Ltd.

Business Environment
1. The global economy did not recede, but its slowdown became clearer. The risk of economic
downturn is augmenting.
◆ The global economic growth rate in 2019 estimated by IMF has been revised downwardly twice by 0.4
indicating economic slowdown.
◆ It is necessary to pay attention to the risk of global economic downturn, due to the worsening of trade
the U.S. and China, the sluggish growth of Chinese and European economies, etc.
◆ It is also necessary to consider the risks of political and economic turmoil, due to the worldwide
Brexit, etc.
2. The Japanese economy is gently growing, but often affected by the global economy. Accordingly,
increasing.
◆ The Japanese economy is growing for the longest period in postwar history, but the sluggish growth of
evoked a sense of caution.
◆ In 2018, the number of foreign visitors to Japan dropped temporarily from the previous year, but theexceeded 30 million for the first time.
◆ It is necessary to consider the effects of a consumption tax hike in Oct. and the fluctuations in themarkets.
3. The urban office building market is thriving, thanks to the firm demand underpinned byenterprises.
◆ The demand for offices remains firm thanks to the steady economic growth, the popularization of sharedrents are expected to keep rising.
◆ Vacancy rate became below 2% for the first time in 27 years since the bubble period in 1991, andremain scarce.
◆ Financial institutions became partly cautious about offering real estate loans, and the transactions for
decreasing. It is necessary to pay attention to business prospects.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

12

Sun Frontier Fudousan Co., Ltd.

Changes in office rent and vacancy rate
in 5 wards of central Tokyo
（円）

（％）

Average rent [¥/tsubo]

Average vacancy rate [%]Average rent in Dec. 2018

¥20,887(+¥144 from last month)
Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%
Peak of average rent
Aug. 2008¥22,901 yen

Peak of vacancy rate
Aug. 2003
Vacancy rate: 8.57%

Bottom average rent
Dec. 2013¥16,207
Bottom average rent
Oct. 2004¥17,526 yen

Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%

Average vacancy rate
in Dec. 20181.88%

( (0.10%pt)from last month)※都心5区の基準階100坪以上のオフィスビルが対象

出所：三鬼商事「オフィスレポート」を基に当社作成※Source: Created based on Miki Shoji’s “Office Report.” Graph reflects office buildings within the 5 wards of Tokyo of which have a standard floor area of
100 tsubo (roughly 331 square meters) or larger.

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

13

Sun Frontier Fudousan Co., Ltd.

3) Third Quarter initiatives andFuture Growth Strategies－Not for profit, but for trust.－
Business is competition in being
helpful to customers.
We compete in helpfulness.

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

14

Sun Frontier Fudousan Co., Ltd.

Review of the Third Quarter: Factors Driving Business Growth

The Replanning BusinessContributed Most.

Further growth of high profit rate

60%

Profit margin vs. costs (after deducting
sales commissions)

53.0%

55%

1. Development capability, to live up to the ideals

49.6%

50.7%
50%

and true needs of customers with the ability toplan things from the viewpoint of customers, and

44.8%

45.0%

42.9%

45%

differentiate our services based on high quality

38.4%
40%

and excellent design
2. The interpersonal skills of PM managers, to35%

harmonize with existing tenants, talk about

37.3%
32.7%

30%

principles, and win the sympathy about ourbusiness perspective, to enhance the value of realestate.

25%

24.9%
20%

3. Capability of finding tenants, to increase the

H1

H2

FY 2016

profitability of buildings stably and swiftly, while※ Profit margin vs. costs: Gross Profit ÷ Cost of Sales
This indicates the ratio of profit to the cost of the replanning business

H1

H2

FY 2017

H1

H2

H1

FY 2018

H2

FY 2019

H1

H2

FY 2020

4. Speedy revitalization, which is realized byoffering services specializing in urban areas andspecialized sections with the same concept ofclosely communicating with local communities

values and based on teamwork

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

15

Sun Frontier Fudousan Co., Ltd.

3rd Quarter Initiatives

The Procurement for the Next Term Has Been NearlyCompleted. Fortification of Our Business Base
A building for investment in Shinjuku

Book value(¥ million)

Assets in inventory: trends in numbers of buildings
and ending book value

80,000

Book
簿価
value

70,000

Buildings
棟数

Buildings

80
69
70

58
60,00060

50,00050

44
3840,00040
69,02527

30,00020
20,00010,00032,7148
18,72930

54,59320

36,18623,480

10

6,425

0
End of2013/3

March 2013

End of
2014/3

March 2014

End of
2015/3

March 2015

End of
2016/3

March 2016

End of
2017/3

March 2017

End of
2018/3

March 2018

End of0

2018/12
December
2018

We are currently strengthening our management foundations. We see the second half as theperiod in which we will take action to bring our vision to fruition.
We will work on personnel development with a sense of crisis, and strengthen our management base,including the bases for business operation, finance, and business administration, with eye to the future.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

16

Sun Frontier Fudousan Co., Ltd.

Four-pronged Strategy for Future Growth
1) Existing
Business Expansion

Deepening and expansion of
Office Building Business

2) Hotel Business

Accommodation-focused hotels
for tourism and business3) Overseas
Business Development

Vietnam & Indonesia

Stock Acquisition,
Capital Participation, Business Alliance4) M&A

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

17

Sun Frontier Fudousan Co., Ltd.

1) Existing Business Expansion
Deeping and expansion of the office building business

Office building business sales target for FY ending March 2023:¥80 billion (approximately twice as much as the fiscal year
ended March 2018)<Replanning Business>

Seeking to deepen and expand the office building revitalization business, focusing
on small and medium-sized office buildings in central Tokyo<Real Estate Service Business (rental brokerage, property management, etc.)>

Contributing to office building owners through familiar and specialized services notoffered by competitors
Deepening ties by repeatedly delivering solutions to even minor issues and thereby
becoming a trusted “real estate partner” with whom clients feel free to consult on
any topic
Basing our business strength on a customer base of office buildings owners incentral Tokyo<Rental Conference Room and Coworking Space Facilities Business>

Rapidly expanding sharing businesses—for example, the Rental Conference RoomBusiness—using available spaces and available time and grounded in our
experiences, thereby adding to office building value

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

18

Sun Frontier Fudousan Co., Ltd.

To produce differentiated added values.

Business Structure of Office Buildings Business1. In vertical real estate utilization business, we survey and solve difficulties by listening to customers’ concerns.
2. In horizontal real estate revitalization business, first, we put together the know-how and customer needs
learned from the process above. Then we apply this knowledge to renovate used buildings we purchased andtransform them into high value-added products. After this, we sell the products to customers.

②

Fund –Raising
Consulting

Asset Consulting

Rent Guarantee

Construction
Planning

Building
Management

Rental Brokerage

Sales Brokerage

Acquisition of
Property

Real estate

revitalization
Added value
linked products① Real Estate Utilization

To be a partner to solve troubles from the customers’
perspectives

Customers (Building owners, asset owners, and wealthy people)
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

19

Sun Frontier Fudousan Co., Ltd.

－A building for investment in Akihabara－

Replanning Business

Development Capability, to Differentiate Our Services
Based on High Quality and Excellent Design
Classy buildings that have dynamic office spaces with high ceilings and granite-stone design
Development of buildings that can be used as the footholds of software/IT venture firms, etc.
Appearance

１Ｆ After

８Ｆ After

８Ｆ AfterInterior design that would propose a way of working

Enlargement of the terrace
on the 8th floor for housing
and an officeSpacious room with a ceiling height of 4 m
１Ｆ Before

Conversion of aparking area on
the 1st floor into an
officeCozy fashionable office that lets a great dealof daylight enter

Officehousing

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

OfficeOfficePremium Office

OfficePremium Office

OfficePremium Office

OfficePremium Office

Office【Real estate revitalization(replanning)】

20

Terrace

Premium OfficePremium OfficeClassy reception space

OfficePremium Office

Road

OfficeParkingarea

Road【When it was built】

Sun Frontier Fudousan Co., Ltd.

Replanning Business

Setup Office Spaces in Anticipation of
Changing Times“Setup Offices,” which are high-quality, functional, and comfortable while following trends

BeforeBefore

After

After

After

We created an open office space, with theceiling height of over 5m.

We created a highly designable space whichmakes tenants calm and convenient, functionaland stylish space .

We installed a meeting room with a reception
desk and glass partitions based on an
approach emphasizing both design andfunctionality.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Four types of value generated by setup offices:(i)
Design style, functionality, comfortable, and luxury(ii) Ease of use that minimizes necessary costs for entering.
(iii) Freedom from complexities such as the need toreconfigure interior construction(iv) Clients can move in and start business swiftly.
(v)
Increased employee vocation , motivation andproductivity(vi) Very effective for recruiting personnel

21

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Rental brokerage –Enrichment of a Network of Footholds Specializing in Urban
Areas While Closely Communicating with Local Communities
1. To specialize in small to midsized office buildings locatedin the central Tokyo

Ueno
AkihabaraNew

Ikebukuro

We operate 11 locations, with a focus on central Tokyo.
Their strengths are the ability to find tenants through afamiliarity with local information and community ties.

2. To be a trusted real estate
partner with whom clients canconsult on any topic
Serving as a contact point for solutions
based on the perspectives of building owners

3. To grasp the needs of thetenants significantly
contribute no vacancy of ourreplanning buildings
4. To serve as a contact point for
procuring real estate for therealestate revitalization
business

Some consultations received from our customers about
their inheritance or the aging of their building
sometimes lead them to sell their properties to us.

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Kanda

Kodenmacho

Kudan

Nihonbashi

Shinjuku
Koujimachi

Tokyo

Imperial
PalaceRelocated

ShibuyaHibiyaHeadquar
ters

Ginza

AoyamaEbisu

Toranomon

Hamamatsucho

Akasaka

GotandaShimbashi

Shinagawa

Yokohama

Exterior of Shibuya
office22

represents the major area
covered by a branch
New offices

Exterior of
Kodenmacho office

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Rental brokerage –Trends in numbers of properties handled by therental brokerage business(Properties)

Properties handled by the rental brokerage business

220
200
180
160
140
120
100

1Q

2Q

3Q

4Q

1Q

2015/3期
FY ended
March 2015

2Q

3Q

4Q

1Q

2016/3期
FY ended
March 2016

2Q

3Q

4Q

1Q

2017/3期
FY ended
March 2017

2Q

3Q

2018/3期
FY ended
March 2018

4Q

1Q

2Q

3Q

FY ended
2019/3期
March 2019

* Includes our own properties handled by the rental brokerage business, such as replanning properties.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Property management –Area and occupancy rates of buildings
managed by PM

100%

98%

96%

97.7%

管理受託面積（右軸）
Areaof buildings managed by PM (right axis)

800,000(As of end of Jan. 2019)

Occupancy rate for buildings managed
管理受託物件の稼働率（左軸）byPM (left axis)
Occupancy rate of medium-sized東京２３区の稼働率（左軸）buildings
in 23 wards of Tokyo(left axis)

700,000

Occupancy rate of real estate
managed by PM

600,000

97.8%

94%

500,000(As of end of Dec. 2018)

Average occupancy rate of
medium-sized buildings in 23
wards of Tokyo

92%

400,000＜ Number of PM clients ranking 2018＞

90%

Number of entrusted owners, top companies(company)※

88%

86%

84%

As about 84% of real estate managed by PM are over 20
years old, we received inquiries about repair andreplacement of assets, meaning we are exerting thecomprehensive capability of solving problems, which is ourstrength.

2018

2017

1 Vortex

690

606

2 XYMAX495

422

3 Sun Frontier Fudousan

271

268

4 Japan Property Solutions

178

170

5 Ken Corporation

130

130

300,000

200,000

100,000

0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY ended March FY ended March
2010
2009

FY ended March2011

FY ended March FY ended March
2012
2013

FY ended March FY ended March FY ended March FY ended March FY ended March
2014
2015
2016
2017
2018

FY endingMarch 2019

※Source: The average occupancy rate of medium-sized buildings in 23 wards of Tokyo was calculated by our company with reference to “Monthly Report on Office Market Surveys” by Sanko Estate.
※Occupancy rate: Total Area Occupied / Total Area for Rental; Occupancy rate and managed area include those of real estate subject to our RP.
※Source: The ranking of the PM client’s number was calculated by us based on “Monthly Property management magazine” of Nov. 2018.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

24

Sun Frontier Fudousan Co., Ltd.

Fortification of Our Business Base－Property Management Business

Increase of Building Owners Who Entrust Us
with Management(companies/owners)

280

No. of building owners who entrust us with management

240

200

160

120
To concentrate on and specialize in the fields where ourcompany can exert our strengths
We focus on the deepening of relationships with owners who
can agree with our business purpose of “creating good
products and bring happiness to people, towns, and society.”
We specialize in the “urban office” field, where we can exert ourstrengths.

80

40

0

1Q

2Q

3Q

FY ended
March 20142014/3期

4Q

1Q

2Q

3Q

FY ended
March 2015
2015/3期

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

4Q

1Q

2Q

3Q

FY ended
March 20162016/3期

25

4Q

1Q

2Q

3Q

FY ended
March 20172017/3期

4Q

1Q

2Q

3Q

FY ended
March 20182018/3期

4Q

1Q

2Q

3Q

FY endingMarch 20192019/3期

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Rent guarantees –Number of rent guarantees(Properties)
4500
4000
3500

Cumulative total
number of contracts

4,121contracts

Performance of the guarantee business: Cumulative total number of guarantee contracts: 4,121
 Number of cases of litigation upon vacating buildings (since2005): 110 (2.6%)(including 25 cases of compulsory execution (0.6%) )

3000
2500
2000
1500
1000
500
0

FY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ended MarchFY ending March

2008/3期
2009/3期
2010/3期
2011/3期
2012/3期
2013/3期
2014/3期
2015/3期
2016/3期
2017/3期
2018/3期
2019/3期
2008
2009
2013
2014
2019
2010
2011
2012
2015
2017
2018
2016

As of the end of
Dec. 2018

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

26

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value －Building Maintenance and Construction Solutions

To Improve Quality and Grow
Our Specialized Domain■ SF Building Maintenance■ Construction solutions

An employee of our corporate group won first place at thewindow glass cleaning competition.

M&A with an interior finishing company that has a historyof 32 years and advanced technologies
On Jan. 11, 2019, we acquired all outstanding shares of “Kohwa Industry
Co., Ltd.” to reorganize it into a subsidiary, for the next growth stage.
We plan to develop a high value-added business by fusing the advanced
technologies of Kohwa Industry based on 32 years of experience as theprimary subcontractor of leading general contractors and ourdevelopment capability based on the viewpoint of clients.

Mr. Sugahara of
SF Building
Maintenance,
won first place【Corporate Profile】■ Name: Kohwa Industry Co., Ltd.
■ Location: 1-17-6 Ryogoku, Sumida-ku, Tokyo■ Major businesses:
Interior finishing and sale of floor materials for apartments,
condominiums, public facilities, office buildings, etc.

Scene of thecompetition■ Capital: 20 million yen(100% injected by Sun Frontier Fudousan Co., Ltd.)■ Established in: March 1987

Became a building maintenance company that
employs the best window glass cleaning engineer inJapan.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

We aim to improve our interior finishing businessin cooperation with the construction department.

27

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Rental conference room –Expanding the sharing business using space
The rentar conference room business grew to a total of 14 sites , corresponding to capacity for 5,440 people.
Rental conference rooms (Vision Center)・・・ 9 locations (3,650 seats)●Vision Office Kanda●Vision Office Kanda ANNEX

Rental offices (Vision Office)・・・3 locations (19 rooms)●Vision Center Tokyo Nihonbashi●Vision Center Tokyo Station

Kanda
Nihonbashi

Co-working (Vision Works) ・・・ 1 locationNEW

1 min. on footfrom Tokyo station

Tokyo
Nagatacho●Vision Office
Shinjuku

Shinjuku

Yurakucho

Hamamatsucho●Vision Center Yokohama

Shinagawa

Yokohama

Tamachi●Vision Center
Hamamatsucho●Vision Center Tamachi●Vision Works Tokyo●Vision Center Yaesu minamiguchi●Vision Center Yaesu Chuoguchi●Vision Works Tokyo Yurakucho◆ Vision Center Tokyo Station opened at the end of October 2018 turned into surplus in the second
month from the opening.
◆ Expanding our business floor space of the existing base is also progressing steadily.
◆ We will increase the number of locations to 45 by the end of March 2023.

●Vision Center Tokyo Yurakucho※ The number of seats in a conference room is calculated according to the school seating arrangement (three-person seat). For the rooms where school type is not possible, the number ofseats in the quadrilateral arrangement was added.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

28

Sun Frontier Fudousan Co., Ltd.

2) Hotel Business
Aggressive Business Operation in the Growing “Hotel” Market＜List of Domestic Hotels＞＜Domestic Hotel＞
In operation
Under construction
In plan & preparation
Total No. of Rooms

1,401
756
859

3,016

Sado (Chigusa)
Sado (Azuma)※ As of February 6, 2019
※ Hotels “in service” include hotels “in operation,”“rented,” and “being renovated” in the redframe of the right table.

ToyamaHida-Takayama
Oike, Kyoto
Shijo, Kyoto
Namba, Osaka
Honmachi, Osaka

Okinawa

MaihamaIshigaki

NaritaKoiwa
Ginza-higashi

HakataTokoname

Kawasaki

Shimonoseki(Note) Schedule & scale are still being planned, may change in future.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

No. ofRooms

StatusOpen (Plan)

Brand

In
operationIn
operationIn
operationIn
operationIn
operationIn
operation

Apr. 2016

Collabora
Spring SunnyTokoname
tive―

Original Sky Heart Hotel Kawasaki

200―

Original Sky Heart Hotel Koiwa

105―

Original Sky Heart Hotel Narita

100―

Original Sky Heart Hotel Hakata

159

Apr. 2017

Original Hiyori Hotel Maihama

80

Rented―Other
Company Toyama

210

In
operationIn
operationIn
operationIn
operation―

Original Sado (Azuma)

57

May. 2018

Original Tabino Hotel Hida-Takayama

80―

Original Sky Heart Hotel Shimonoseki

105

Jul. 2018

Original Tabinohotel Sado (Chigusa)

111

Jun. 2019

Original Nanba, Osaka

224

Under
Construction

Hotel Name Location

3 HotelsWill open
In 2019

194

UnderConstruction

Oct. 2019

Original Honmachi, Osaka

Under
Construction

Dec. 2019

Original Ginza-higashi

Under
Construction

Jul. 2020

Original Onnason, Okinawa

204

In planDec. 2019

Original Mizushima, Kurashiki155

In planFeb. 2020

Original Kashima, Ibaragi

190

In planDec. 2020

Original Oike, Kyoto

200

In planApr. 2022

Original Shijo, Kyoto

134

In PlanDec. 2022

Original Ishigaki

180

193
135

Sun Frontier Fudousan Co., Ltd.

Aggressive Business Operation in the Growing “Hotel” Market

Steep Increase of Foreign Visitors to Japan
Since the number of foreign visitors to Japan exceeded 10 million in 2013, it has been skyrocketing
due to the easing of requirements for issuing visas, the improvement in income level, etc. In 2018, thenumber of foreign visitors exceeded 30 million. The government aims to increase it to 40 million in2020 and 60 million in 2030.
(10,000 people)
6,000

6,000

Variation in the number of foreign visitors to Japan
Over 30 million
per year for
the first time

5,000

4,000

2,869

3,000

4,000

3,119

2,403
1,973

2,000

1,341
1,000

0

622

2011

836

2012

1,036

2013

2014

2015

2016

2017

2018
2018

…

2020
2020

…

2030
2030

Source: reference material released by Japan National Tourist Organization
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

30

Sun Frontier Fudousan Co., Ltd.

Aggressive Business Operation in the Growing “Hotel” Market

Large-scale hotel will be open
one after another in 2019
Honmachi,
Osaka

Namba,
Osaka

Will open in
Oct. 2019

Will open inJun. 2019

Appearance image

Appearance image

COURTYARD BY MARRIOTT
Osaka Honmachi
Overseas-brand hotel in the heart of Osaka.
【Property Outline】
 Location: Chuo-ku, Osaka-shi, Osaka Structure: a 17-story steel-framed (partiallyreinforced concrete) building with one
basement
 To be opened in Oct. 2019
 Number of guest rooms： 193 rooms Land area: 754.75㎡ (228.31 tsubo) Gross floor area: 8,194.32㎡ (2,478.78 tsubo)

Hiyori Hotel
Namba
Twin-tower hotel 1 min. on foot from “Namba
Station” of the Nankai Line
【Property Outline】
 Location: Naniwa-ku, Osaka-shi, Osaka Structure: (Northern premises) 10-story steelframed building with one basement,(Southern premises) 9-story steel-framed building
with one basement
 To be opened in Jun. 2019
 Number of guest rooms： 224 rooms Land area: 1,281.4㎡ (387.62 tsubo) Gross floor area: 6,784.41㎡ (2,052.28 tsubo)

A restaurant with a famous chef, gym, largebath and open-air bath are equipped.

There are various types of restaurants andcool café-type bar in the Twin Tower.

Ginza-higashi
Tokyo

Will open in
Dec. 2019

Appearance image

Hiyori Hotel
Ginza-higashi
Our first hotel in Ginza【Property Outline】
 Location: Chuo-ku, Tokyo
 Structure: 11-story reinforced concretebuilding
 To be opened in Dec. 2019
 Number of guest rooms： 135 rooms Land area: 551.38 ㎡ (166.79 tsubo) Gross floor area: 3,725.00 ㎡ (1,126.81
tsubo)
An open-air bath and a large bath fromwhich Ginza and the Skytree can beviewed are equipped on the top floor.

(Note) Schedule & scale are still being planned, may change in future.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

In the Annual Word-of-mouth Ranking of OZmall Award 2019

“Hiyori Hotel Maihama” Ranked First.
“Hiyori Hotel Maihama,” the 1st hotel of our brand opened in 2017, ranked first in the annual word-ofmouth ranking in the casual hotel section of “OZmall Award 2019” announced by “OZmall,” a website
targeted at women. With the aim of becoming a familiar hotel filled with warm gentleness, this hotel has
pursued meticulous services from the viewpoint of female guests, including Ryukyu straw-matted guest
rooms and enriched amenities.
“Hiyori Hotel Maihama,” the 1st hotel of our brand

Ryukyu matts that allow hotel
guests to walk aroundbarefoot

Surprise events for customers on theirrespective birthdays

Rental of cribs and baby goods

Rigorously selected cozy twin beds

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Selectable additional amenity services(HIYORI Happy Presents)

32

Sun Frontier Fudousan Co., Ltd.

Resort Hotel in Onna-son, Okinawa, The Nearest to Naha Airport“Hiyori Ocean Resort Okinawa”
Project in Progress

Perspective
illustration of the
hotel

Located on a hill from which hotel
guests can view the beautiful sea

To be opened in Sep. 2020
Condo hotelwith 204 guest rooms

Guest room forpreview

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Basin extending from thelobby to the sea

33

All rooms are suites andboast an ocean view anda terrace

Sun Frontier Fudousan Co., Ltd.

Hotel Business

Goals and Themes in the Hotel Business
The target number of rooms in operation for the Hotel Business(FY ending March 2023): 5,000 rooms (approximately 4.5 times thenumber in FY ending March 2018)<Theme: Warm-hearted Hotels>① Hotels that are grown by the employees② Hotels that are grown by the customer’svoice③ Hotels that grow with the community

The power of self,
the power of others, thepower of community
We will grow on a daily
basis with 3 types of power

High-quality and personalized hotels offered
warm-hearted workers from the customer’s point of view

<Growing the number of rooms managed through various methods toreach the target of 5,000 rooms>• Our core hotel brand, Hiyori Hotels & Resorts, will establish premium brand status throughdevelopment on vacant sites.
• Deploying a flexible range of brands (Hiyori, Springsunny, Sky Heart, etc.) for different guest
classes and increasing the number of rooms through various methods, including in-housedevelopment, leasing, revitalization, and M&As
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

Sun Frontier Fudousan Co., Ltd.

3) Overseas Business Development
Project in progress in Da Nang, Vietnam
Bldg. No. 2
High-rise urban apartment house

Image(Da Nang night view)

In January, completed raising the framework with noaccident in 623 days from the construction start.

“HIYORI Garden Tower"
Effect Drawing (Appearance)
High-rise urban apartment house with
28 floors

Construction willcomplete in
Sep. 2019

Direct flights from Narita/Kansai Airport to
Da Nang went into service (Narita: 5 flights
per week / Kansai: 11 flights per week.)

Mockup (Living Room)
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

35

60 direct flights per week from China.
134 direct flights per week from Korea.
Da Nang is an area that many companies
want to help develop, while gathering
worldwide attention as a fascinating resort
area.

Sun Frontier Fudousan Co., Ltd.

Progress on the Medium-termManagement Plan
Overview of the mid-term 5 years management plan till the fiscal year
ending March 2023

Basic policy:
Expansion of the business that are specialized in central Tokyo and growth market

Three policies① Intensification and expansion of the highly influential“urban office building business”

As a result, establishing a businessstructure thatto achieve stable growthover the medium and long term

② Focusing on “hotels and Asia” as growth markets③ Making proactive use of “M&As” to accelerate growth<Quantitative targets>
FY ending March 2023

¥100 billion

80,000Ordinary
income¥20 billion

60,000Net income¥14 billion

40,000

Sales

Equity ratio

50% or better

20,000Ordinary profit
margin20% or better0

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Trends over the past five years andtargets for FY ending March 2023(¥ million)

100,000

Ordinary
経常利益
incomeSales
売上高100,000

Net income
当期純利益47,40040,30027,70030,60017,7004,300
4,000
2014/3期
FY 2014

36

5,500
5,000
2015/3期
FY 2015

2,000

20,000
8,100

8,800
6,400

10,7007,400

2017/3期
FY 20172018/3期
FY 2018

14,000・・・

2016/3期
FY 2016

FY2023(forecast)

Sun Frontier Fudousan Co., Ltd.

Sun Frontier’s Vision and Policies
VisionAs professionals in real estate utilization, our goal is to be “thecompany that customers love and choose the most in theworld.”

Customers Building owners, asset holders, and wealthy individualCore
Business

Real estate revitalization and utilization

Policies Not for profit, but for trust.

To focus on people rather than property
Solve any real estate related difficulties from the perspective of
our customers

Strategies

CentralTokyo

OfficeStrength

Tenant Finding
Capability

Real Estate
Revitalization
Capability

Operation Capability
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

Company Overview
Name

Sun Frontier Fudousan Co., Ltd.

Head Office

1-2-2 Yurakucho, Chiyoda-ku Tokyo

Established

April. 8, 1999

Date of listing

November 19, 2004 (JASDAQ Securities Exchange)
February 26, 2007 (The first section of the Tokyo Stock Exchange)

Capital*Representative¥11,965 million
President: Tomoaki Horiguchi

Employees*

Full-time employees: 498 (Including part-time employees: 812)

Average Age*33.2 years old(* As of the end of December 2018)

Revitalization of real estateBusiness

Real Estate Service

Management, brokerage, construction planningfor real estate, compensation for rent in arrears
Rental building operation, consultancy for assets

Hotel Development and operation

Settlement Month March
Listed in

The first section of the Tokyo Stock Exchange (Code Number: 8934)

Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

38

Sun Frontier Fudousan Co., Ltd.

Disclaimer

Sun Frontier Fudousan Co., Ltd.

This reference material is intended for providing information, not for soliciting or promoting you
to purchase a specific product. When you invest, please do so based on your own judgment
and responsibility. If you want to purchase the shares of our company, please contact securities
companies.
The information included in this material may not follow the Financial Instruments andExchange Act, the Building Lots and Buildings Transaction Business Act, the regulations for thecompanies listed in Tokyo Stock Exchange, etc.
This reference material mentions our future business performance, but it does not guarantee
the performance.
This reference material was produced carefully, but we do not guarantee the accuracy andcertainty of its contents. In addition, the contents may be changed or deleted without notice.
We appreciate your understanding.

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