Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Statements for
the Second Quarter of the Fiscal Year ending 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 Q2 Results of the FY Ending March 2020

1 - 102) Insight for Business Environment

11 - 133) Initiatives in the First Half of the FY Ending March 202014 - 26

4) Future Strategies

27 - 34

5) ESG Initiatives

35 - 426) Company Information and Reference Materials

43 - 46

November 12, 2019

Stock Code: 8934

Performance Summary
Financial Results for Q2 of FY Ending March 2020

Both Net Sales and Incomes in the First Half of FY Renewed the All-time High
Results

ProfitMarginFrom the Same Period of
the Previous FY

Growth Rate

Full-year Forecast

Progression Rate

Net Sales

40,635 million yen-+ 7,606 million yen+ 23.0%70,000 million yen

58.1%

Operating Income

11,192 million yen

27.5%+ 2,151 million yen+ 23.8%14,500 million yen

77.2%

Ordinary Income

11,042 million yen

27.2%+ 2,297 million yen+ 26.3%14,000 million yen

78.9%

Net Income *7,542 million yen

18.6%+ 1,565 million yen+ 26.2%9,500 million yen

79.4%*"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 24 buildings (6 more thanthose in the same period of the previous FY), and the segment income ratio was
further improved (from 32.1% to 34.3%). Net Sales and Incomes renewed the all-timehigh.
Our company’s unique business model to maximize the attractiveness of buildings isdeepened by bringing together the expertise of each division of the company throughall processes, including purchase, commercialization and sales, and by repeatedlyusing our ingenuity which has captured the sources of added values from the clients’point of view.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

•

1

In Hotel Operation Business, newly opened hotels contributed to earnings and
Net Sales rose as much as 33.4%. COURTYARD BY MARRIOTT Osaka Honmachi
officially opened in October, and 13 hotels with 1,818 rooms are in operation in
Japan as of today. 3 more new hotels (484 rooms in total) are scheduled to open
in the current period.
In Conference Room Rental Business, two new Vison Rooms have opened inAugust. The number of sites will increase to 18 (with 7,000 seats in total) as oftoday. We are aiming to expand the business further by launching a new brand.

Sun Frontier Fudousan Co., Ltd.

Consolidated Income Statement(Unit: 1 million yen)

FY ended March2019
Q2 (Apr. to Sept.)

FY ending March
2020
Q2 (Apr. to Sept.)

Net Sales

33,02940,635

Real Estate Revitalization Business

29,75035,615

Replanning Business(including Hotel Development)

27,75033,870Rental Buildings and Sub-leases

1,452

1,744

Real Estate Service Business

1,684

1,715

Operation Business

1,963

2,715

Other Business

563

1,141

Adjustment

▲385

▲551

Gross Profit

11,961

14,884

Real Estate Revitalization Business

10,294

13,158Replanning Business(including hotel development)

9,627

12,479Rental Buildings and Subease

666

679

Real Estate Service Business

1,048

1,105

Operation Business

285

321

Other Business

379

387

Adjustment

▲46

▲87

2,921

3,692

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

2

FY ended March2019
Q2 (Apr. to Sept.)

FY ending March
2020
Q2 (Apr. to Sept.)

9,040

11,192Non-operating Income

37

215

Non-operating Expenses

333

365

8,744

11,042--

Corporate Income Taxes

2,768

3,508

Non-controlling gain or loss

▲0

▲0

5,976

7,542

Operating Income

Ordinary Income
Extraordinary Gains (losses)

Net Income• RP Business has a gross profit margin of 36.8%, a higher level
than the same period of the last FY’s 34.7%.
• Steady growth was made in new business areas, such as
Operation Business and other business, etc. Total Net Sales
reported a year-on-year increase by 52.6% to ¥3.8 billion. On
the other hand, Gross Profit made a narrow increase by 6.6%
to ¥0.7 billion due to an increase in costs associated with the
opening of new hotels and unrealized losses on a part ofInventory Assets in Overseas Business.

Sun Frontier Fudousan Co., Ltd.

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

FY Ended
March 2018

FY Ended
March 2019

FY EndingMarch 2020
As of
End of Sept. 2019

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

97,149106,389+ 9,240

Cash and deposits

23,892

20,257

18,619▲1,637

Inventory Assets

54,59374,32985,120+ 10,792

Breakdown) RP

45,52562,143

71,164+ 9,021

Hotel

5,291

7,552

9,253

+ 1,701

Overseas, etc.

3,775

4,634

4,703

+ 69

1,687

2,562

2,649

+ 86

11,587

13,74917,731+ 3,982

8,565

9,339

11,825+ 2,486

474

863

796

▲66

2,546

3,546

5,108

+ 1,562

91,761

110,898

124,120+ 13,222

Current Assets

Other Current Assets

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

Total Assets

Inventory Assets increased by 10.8 billion yen in total due to the purchase of RP properties and others.
Among them ¥9 billion increased in RP Business projects while ¥1.7 billion increased in Hotel Business projects.

Property, Plant and Equipment increased about ¥2.5 billion due to progress in construction work related to hotel development.
Cash and deposits decreased by ¥1.6 billion, reflecting steady purchases in RP Business projects for the next FY.

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

3

Sun Frontier Fudousan Co., Ltd.

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

10,155

12,859FY Ended
March 2019
As of
End of Sept. 2019
16,636

Short-term Loans Payable, etc.

2,716

2,248

3,687

+ 1,439

Income Taxes Payable, etc.

3,178

2,661

3,897

+ 1,235

Other Current Liabilities

4,260

7,949

9,051

+ 1,10232,75642,17945,931+ 3,751

Long-term Loans Bonds Payable

30,86539,751

43,567+ 3,816

Other Noncurrent Liabilities

1,890

2,428

2,363

▲64

42,91255,03862,567+ 7,529

48,75055,90061,565+ 5,665

99

▲40

▲12

+ 35

Total Net Assets

48,84955,86061,553+ 4,855

Total Liabilities and Capital

91,761

110,898

124,120+ 3,650

FY Ended
March 2018
Current Liabilities

Noncurrent Liabilities

Total Liabilities
Shareholders’ Equity
OthersTransition of Equity Ratio
End of March 2018 End of March 201953.2%

End of Sept. 2019

50.3%

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

49.4%

FY Ended
March 2019

Increase/Decrease(Compared to
End of March 2019)+ 3,777

As purchases of RP properties progressed, borrowings increased by approximately 5.2
billion yen from the end of the previous fiscal year, and the balance of interest-bearing
debt was 47.2 billion yen.
Retained Earnings increased by 5.6 billion yen as a difference between current Net Income(+ ¥7.54 billion) and year-end dividend payment (▲ 1.87 billion yen).

4

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Replanning Business (Replanning (RP) / Hotel Development)
FY ended
March 2019
Apr. to Sept.

FY endingMarch 2020
Apr. to Sept.

Net Sales

27,75033,870+ 22.1%

Segment Income

8,904

11,615+ 30.4%30,000

32.1%

34.3%

+ 2.2% pt

25,000(Unit: 1 million yen)

(Note 1)

Profit Margin

Increase/
Decrease(1 million yen)

35,000Net Sales
Segment Income
Profit Margin

33,87060%

50%

27,75040%

Number of items
purchased

28 cases

30 cases+ 2 case

Number of properties
sold

18 cases

24 cases+ 6 cases

Number of stocks at
the end of Q2

62 cases

76cases(Note 2)20,00015,000◼ The average business period was 397 days (+ 46 days from the previous year). The cause of the
prolonged the average business period was to have extended the period of commercialization
due to having higher added values in some cases.
◼ Purchase progressed favorably, with 76 properties in term-end inventory (67 RP Businessrelated properties and 9 Hotel Business-related properties). ¥80.4 billion in inventories (¥71.1
billion for RP Business-related and ¥9.2 billion for Hotel Business-related).
*Excluding those related to Overseas Business*In addition to the above, there are 4 RP properties of ¥5.6 billion which were purchased, settled andcontracted by the end of October.

5

30%

32.1%
11,615+ 14 cases◼ Both Net Sales and Income surged. 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 profit margin
remained at a high level of 34.3%.

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

34.3%

10,000

20%

8,904
10%

5,000
0

0%
FY ended March
2019
April to Sept.

FY ending March
2020
April to Sept.

(Note 1) "Segment Income" is calculated by deducting specific costs of each segment,
including interest expenses, sales commission and goodwill depreciation expense from
Gross Profit.
(Note 2) Projects of Land Purchase and Development are included in RP inventory.

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Rental Building Business (Rental Buildings / Sub-leases)(Unit: 1 million yen)

Net Sales
Segment Income
Profit Margin

FY ended
March 2019
Apr. to Sept.

FY endingMarch 2020
Apr. to Sept.

1,452

1,744

+ 20.2%

666

677

▲1.7%

45.9%

38.9%

▲7.1% pt

Increase/
Decrease

Net Sales
Segment Income
Profit Margin(1 million yen)

2,000

100%
1,744

1,600
75%

1,452

1,200
50%

45.9%

◼ Net Sales increased by 20% from the same period of previous year
since Inventory increased as the purchasing of RP properties

38.9%

800

increased and Sub-leases rent increased due to newly opened

666

677

hotels.
◼ On the other hand, the period of vacancy due to replacing tenants in
RP properties commercialized process and increased proportion of

25%
400

sub-leases. Segment income slightly increased by 1.7% and profit
margin decreased by 7.1%pt from the same period of previous year.

◼ We aim to focus on purchasing properties for the medium and longterm RP projects to increase rent revenue.

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

6

0

0%
FY ended March 2019 FY ending March 2020
April to Sept.
April to Sept.
Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Real Estate Service Business(Unit: 1 million yen)

FY ended
March 2019
Apr. to Sept.

FY endingMarch 2020
Apr. to Sept.

(Property Management (PM) / Building
Maintenance (BM)/ Brokerage / Leasing)

Increase/
Decrease(1 million yen)

Net Sales
Segment Income
Profit Margin

2,000

1,684

Net Sales

1,715

100%

+ 1.8%

1,715

1,684
Segment Income

1,048

1,105

+ 5.4%

Profit Margin

62.2%

64.4%

+ 2.2% pt

1,600

80%

62.2%
1,200

<PM and BM Businesses>◼ In PM and BM businesses, we provide our clients with high added value
services by meticulously taking care of tenants, solving any and all problemsof our clients as well as improving revenues from building management. Thus,
our PM and BM businesses have expanded the tenant and business bases ofthe building owners in central Tokyo and contributed to the revenue of thewhole group.

1,048

64.4%
1,105

60%

800

40%

400

20%

0

0%

[Number of PM Managing Buildings and Occupancy Rate]
End of Sept. 2017
End of Sept. 2018
End of Sept. 2019

[Number of Managing Buildings][Occupancy Rate]

381 buildings
378 buildings
381 buildings

96.4%
97.2%
98.9%

<Brokerage and Leasing>◼ Both Net Sales and Income slightly decreased compared to the same period of
the previous FY. The brokerage business has contributed to the revenue of thewhole group, working as driving force to create high added values from theclients’ point of view in terms of the process of purchase, commercializationand sales.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

7

FY ended March 2019 FY ending March 2020
April to Sept.
April to Sept.
Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Operation Business(Hotel Management and Conference Room Rental Business)

FY ended
March 2019
Apr. to Sept.

FY endingMarch 2020
Apr. to Sept.

Net Sales

1,963

1,277

+ 38.3%

Hotel operation business

1,547

2,065

+ 33.5%

Conference room rental
business

415

650+ 56.3%

Segment Income

257

207

▲19.3%

Hotel operation business

159

77

▲51.5%

Conference room rental
business

97

130+ 33.3%

Profit Margin

13.1%

7.6%

▲5.5% pt

Hotel operation business

10.3%

3.7%

▲6.6% pt

Conference room rental
business

23.5%

20.0%

▲3.5% pt

(Unit: 1 million yen)

Increase/
Decrease(1 million yen)

<Hotel Operation Business>

2,715

40%

2,400

2,000

30%

1,963

1,600
20%
1,200
13.1%
800

◼ Net Sales saw a 33% increase. Sales of Tabino Hotel Sado which opened last year
were main reasons for the increase. On the other hand, Segment Income
decreased because of the start-up expenses of HIYORI Hotel Osaka Namba
Ekimae (opened in May) and Osaka Honmachi Hotel (scheduled to open in
October).
<Conference Room Rental Business>◼ Vision Center Shinjuku and Kanda newly opened in June. The number of thesites has expanded to 17 (+3) in total as of end of Sept.. Net Sales and income
steadily increased. We will further accelerate the pace of opening new facilities
especially in the five wards of central Tokyo.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2,800

Net Sales
Segment Income
Profit Margin

8

7.6%
400

257

10%

207

0

0%
FY ended March 2019
April to Sept.

FY ending March 2020
April to Sept.

Sun Frontier Fudousan Co., Ltd.

Operating Results by Business Segment

Others (Rent Guarantee, Construction and Overseas Business, etc.)
FY ended
March 2019
Apr. to Sept.

FY endingMarch 2020
Apr. to Sept.

Net Sales

563

1,141

+ 102.5%

Segment Income

372

346

▲7.1%

66.1%

30.3%

▲35.8% pt(Unit: 1 million yen)

Increase/
Decrease(1 million yen)

1,200

Profit Margin

Net Sales
Segment Income
Profit Margin
100%

1,141

75%
800

66.1%

<Rent Guarantee Business>◼ The number of new and renewed guarantees handled, remained steady,which has led to higher Net Sales and Income. With the major revision ofdebt-related provisions (to be enforced in 2020) by the civil code, as
demand for institutional guarantees is expected to increase, we enforced
seminars and other events for building owners, which would develop newopportunities to expand our client base and create new added values.

50%

563
30.3%
400

372

<Construction Business>

346
25%

◼ Both Net Sales and Income increased from the same period previous FY byadding the sales of "Kouwa Corporation," which became a consolidated
subsidiary through M&A in previous term.

<Overseas Business>◼ Unrealized losses of certain inventory assets we had held in Indonesia wererecognized, considering their current profitability.
◼ Interior finishing work is under way for completion of a condominium project,
HIYORI Garden Tower in Da Nang in November.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

9

0

0%
FY ended March 2019

FY ending March 2020

April to Sept.

April to Sept.

Sun Frontier Fudousan Co., Ltd.

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

■Changes in Equity Ratio(Unit: 1 million yen)

(Pursuing High-Value-Added Management)

70,00060,000

22.9%

22.0%

24.0%
22.7%

50,000 20.2%(Building a Stable Financial Base)

80%

純資産
Net Assets

27.2%
full-year forecast

Net Sales
売上高
Ordinary Income
経常利益
Ratio of ordinary
経常利益率
income30%
60,000Equity Ratio
自己資本比率50,00056.2% 55.7% 56.0%

70%

25%
53.2%

20%

60%
50.3%

49.4%

40,00050%

40,00015%

40%

30,000full-year forecast

20,00020%
20,0005%

10,00030%

30,000

10%

10%

0

0%
2015/3

2016/32017/3

2018/3

2019/3

10,0002019/92020/30%
2015/3

2016/32017/3

2018/3

2019/32020/3
2019/9Equity Ratio is temporarily below 50% due to move forward with its purchase plan for
the next FY. Year-End is expected to recover to the 50% level.
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10

Sun Frontier Fudousan Co., Ltd.

2) Insight for Business Environment

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

11

Sun Frontier Fudousan Co., Ltd.

Business Environment
1． Although the risk of its rapid decline has eased, the global economy as a whole is on a downward trend and the outlook remains uncertain.

◆The IMF has downgraded the outlook for the world economy 5 times in a row and the global growth rate is forecasted to slow down to 3.0% in
2019.
◆Amid a trend to follow the U.S. interest rate cuts, the global monetary easing is underpinning the economy.
◆Attention should be paid to future downward risks including a slowdown of the world economy influenced by the trade friction between the U.S.
and China and increasing geopolitical risks.
2． Although the Japanese economy continues to grow at a moderate pace, it has started to show clearer signs of a slowdown due to the impact of
the global economy.
◆While the Japanese economy continues to expand for the longest time after the end of World War II, its future outlook maintains a sense of
caution due to the slowing growth of the world economy.
◆The number of foreign visitors to Japan keeps renewing its record high. Although visitors from Korea decreased, the increasing trend remains asstrong as ever thanks to the positive effects of the Rugby World Cup and others.
◆Although the impact of consumption tax hike is limited, the impacts such as the stagnation of the world trade cast a shadow on a part of recent
corporate performance.
3． As for the office building market in central Tokyo, its vacancy rate is in the historically low level and the rising trend of room rents continues.
◆Demand for office space has been robust due to the increasing number of shared offices and workers as well as investments in recruitment.
◆The vacancy rate is in the lowest level for the first time in 28 years since 1991 and the shortage of office spaces still continues.
◆While financial institutions’ lending attitudes toward real estate have become cautious partly, willingness to invest in real estate remains firmamong funds and other financial organizations.

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12

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 October 2019
22,010 yen
Increase for 70 consecutive
months(+ 35.8% from the bottom)

Average vacancy rate (%)

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 the average
rent
16,207 yen
December 2013
Bottom of the average
rent
17,526 yen
October 2004

Bottom of the vacancy
rate
2.49%
November 2007

*Subjects are office buildings with a standard floor space of 100 tsubo
or more in the 5 wards in Central Tokyo.

The average vacancy ratein October 20191.63%
7.80% points improved in 7 years
Source: Prepared by our company based on Miki Shoji’s "Office
Reports".

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

13

Sun Frontier Fudousan Co., Ltd.

3) Initiatives in the First Half of

the FY Ending March 2020

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14

Sun Frontier Fudousan Co., Ltd.

Business Progress and Policies

We aim for solid growth while maintaining our highly profitable structure
The number of buildings sold in RP Business has been progressing the full-year sales plan ahead of
the schedule. Also, Net Sales and Incomes renewed the all-time high due to further improvement in
profit margin.
[Replanning Business] Changes return on cost

[Ordinary Income] Changes of Annual Forecast and 1H Progress(Unit: 1 million yen)

14,000

通期予想
Full-year Forecast

1H Progression Rate
上半期進捗率12,00010,000

1H Results

63%

79%

100%
90%

74%

53%
first half results

59%

8,000

56%
6,000

50%

70%

45%

50%

20%

2,000

10%

0

40%

2016/32017/3

2018/3

2019/3

45.0%

54.3%
50.6%
49.6%
44.8%
42.9%

38.4%

35%

37.3%
32.7%

30%
25%
20%

24.9%
1H

2H

2015/30%

2015/3

50.7%

40%
30%

4,000

55%

80%

60%

Return On Cost（after deducting sales commissions）

60%

1H

2H

2016/3

1H

2H

2017/3

1H

2H

2018/3

1H

2H

2019/3

1H
2020/32020/3

The results of the First Half are ahead of the full-year sales plan, preparing for possible market fluctuations.
We will concentrate on our management to realize both the growth and stability of our business by making boldchallenges and, at the same time, by managing risks while developing our capability not to grow in short-time but
to improve the values of real estate substantially for a long-term period.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

15

Sun Frontier Fudousan Co., Ltd.

To create differentiated added values

Consistent Office Building Business① In vertical real estate utilization business, we survey and solve difficulties by listening to our clients’ concerns.
② In horizontal real estate revitalization business, we put together our know-hows and our clients’ needs learned
from the process above, and apply this knowledge to transform the existing buildings that we purchased into higher
value products, and then to re-sell them.

Funding Advice

Asset Consulting

Rent Guarantee

Construction Planning

Property Management

Leasing

Brokerageacquisitionof property②
Real Estate
Revitalization
Value-added
products① Real Estate Utilization
To be a partner to solve difficulties from our clients’point of view

Clients (Building owners, Asset holders and Wealthy individuals)
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16

Sun Frontier Fudousan Co., Ltd.

- A whole building revitalization for monetization in Kanda -- Example of Replanning Business -We changed ordinary buildings to inspiring office spaces where up-and-coming
companies can make a dream come true for their bright future.
This property was originally an elegant granite-finished building. In its revitalization, we inherit the history andatmosphere of Kanda Kon’yacho, a town of textile industry lined with dyeing ateliers that engaged in indigo dyeing
as our revitalization concept and we renovated it to luxurious spaces which have a stylish “Japanese” taste. The
building is revitalized as office spaces where IT companies, our main target for tenants can envision their growth andsuccess, enjoying their comfortable working environments.
After

BeforeInterior decorations to encourage smoothcommunications among employees

After

BeforeElegant plastering decoration witha 'indigo dyeing' motif on the wall

▲Open space
After▲Entrance hallInterior decoration with rich tastes andhigh quality

After[Outline of property]■Address: Kanda Kon’yacho, Chiyoda-ku, Tokyo■Structure: Steel-framed reinforced concretea 10-story building with a deck roof and a basement■Original completion: 1993 (26 years old)
■Usage: Office spaces■Site area: about 496 ㎡ (150 tsubo)■Total floor area: about 3,950 ㎡ (1,195 tsubo)

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

A refined design welcomes clients.

▲EV hall▲Conference room

17

Sun Frontier Fudousan Co., Ltd.

- Example of Replanning Business -- A whole building revitalization for monetization in Shinjuku -We created spaces where both workers and visitors can relax naturally.
In the renewal of this property, we provided a large and full renovation over 1,000 tsubo spaces including extension.
The large lounge for a non-territorial office is designed to create a spacious interior space to encouragecommunication among employees. Offices furnished with wood-grain furniture and interior goods create acomfortable and relaxing atmosphere for both workers and visitors.
BeforeAfter

A spacious lounge in front of the EV▲Office space▲Lounge

AfterInterior with a high-quality and relaxing atmosphere

The top floor is renovated to a refreshing space.

In the renewal of this property, we extended
and renovated its double-height space which
had not been used after the tenant left, byapplying the extra building volume so that thebuilding increased its floor space by 45 tsubo
to improve its profitability. We will increase
the value of real estate by finding and utilizing
hidden potential of buildings.

[Outline of property]■Address: Daikyo-cho, Shinjuku-ku, Tokyo■Structure: Steel-framed reinforced concretea 9-story building with a deck roof and a basement■Original completion: 1986 (32 years old)

■Usage: Office spaces and a parking lot■Site area: about 1,078 ㎡ (326 tsubo)■Total floor area: about 5,481 ㎡ (1,658 tsubo)

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

▲Rooftop common space for refreshing (* Image drawing)

18

Sun Frontier Fudousan Co., Ltd.

Replanning example and Specified joint real estate ventures

Completion of sales of the first investment product in sub-divided real estate
Based on Act on Specified Joint Real Estate Ventures, we sold out the high-quality and highly profitable building wehave revitalized in Replanning Business (Product No. 1: Shiba Daimon Square) as our first investment product of subdivided real estate. We sell investors a safety and hassle-free real estate asset in kind as a sub-divided real estate
investment product for ¥1 million per unit to open up a new market.
BeforeAfter

Voluntary partnership
Joint investment
for equity

BeforeAfter

RentrevenueManaging Partner
Appearance

Dividends Building owners
for
Asset holders
investment
Wealthy
individuals(Key Points of a sub-divided real estate investment product)① It allows investors to invest in high-value real estate with a little capital and to have the same benefits as theyown real estate in kind.
② As a managing partner, our company handles the management and operation of the property thoroughly sothat the investors can own it without any trouble or worry.
③ As the investors need no borrowing, they have few interest-rate and bankruptcy risks but they can expect along-term and stable investment on real estate.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

19

Sun Frontier Fudousan Co., Ltd.

- Leasing Business -We have 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.
We meet tenant's needs by understanding their needs
and constantly changing our company according to their
voice.

Ueno
Akihabara

Ikebukuro

Kodenma-cho

Nihombashi
Tokyo

Kojimachi
Hibiya Head
OfficeAoyamaAkasaka

Toranomon

Ginza

Shimbashi
Opened in July

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

Kanda

Kudan

20

Appearance of the building where
Hamamatsucho Branch locates

Sun Frontier Fudousan Co., Ltd.

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

98.9%

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

98.2%

98%
96%

800,000(As of the end of Sep.2019)

700,000(As of Sep. 1, 2019)

Operating rate of our PM entrusted
properties

600,000

94%
92%

500,000
Averageoccupancy
rate of medium-sized
Averageof medium-sizedbuildings inbuildings
in23
in TokyoTokyo's 23 wards,wards
occupancy
rate

400,000

90%

Top Companies in Terms of Number ofContracted Owners*

88%
86%

300,000<2018 PM Client Rankings>

Our strength, “the abilities to solve comprehensive problems regarding realestate” is demonstrated when we are requested for consultations by ourclients on the renovation and replacement of their properties asapproximately 85% of the PM entrusted properties are more than 20 years
old.

84%

2018

2017

1

vortex

690

606

2

Xymax

495

422

3 Sun Frontier Fudousan Co., Ltd.

271

268

4

Japan Property Solutions

178

170

5

Ken Corporation

130

130

200,000

100,000

0

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
March 2009 March 2010 March 2011 March 2012 March 2013 March 2014 March 2015 March 2016 March 2017 March 2018 March 2019 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 2018 issue, "Monthly Property Management."*Operating rate: (Total operating area)/(Total lent available area).

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

21

Sun Frontier Fudousan Co., Ltd.

- Conference Room Rental Business -We will expand our business sites to achieve 45 sites in FY ending March 2023
We launched a new management brand “Vision Room” in August
Rental conference room (Vision Center)・・・ 11 sites

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

・・・ 4 sites

New

VO Kanda
VO Kanda ANNEX
New

New

・・・ 3 sites

Smart Conference Room (Vision Rooms)

VC Kanda
VR Nihombashi Kayabacho
VC Tokyo Nihombashi

New

Kanda

VC Shinjuku

VC Tokyo Ekimae

Nihombashi●VR Ginza 1-chome

VC Yaesu South Exit

VO Shinjuku
Shinjuku

VC Nagatacho

Tokyo

Nagatacho

Yurakucho

VR Yaesu Central Entrance
New

VR Ginza 1-chome
VW Tokyo Yurakucho

Hamamatsucho

VC Tamachi

VC Yokohama

VC Tokyo Yurakucho

ShinagawaTamachiYokohama

VC Hamamatsucho

Planning

VC Hibiya●VC Hibiya◆ The total number of sites is 18 sites (including one under planning) with 7,000 seats as of today.
*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 © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

22

Sun Frontier Fudousan Co., Ltd.

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

Tightening Requirements for
Personal Guarantees

Strengthening Seminars for Lessors[Result of seminars held]◆Number of seminars held
◆Cumulative number ofparticipants[Major Changes]
・Tightening confirmation of intention of individual third parties’guarantees concerning the business (confirmation with notarial
deeds).
・Limit of maximum amount of personal guarantees.

108 times
Approx. 1,600 people

・Clarification of the scope of personal guarantees.

・Addition of accountability of lessees to personal guarantors.
・Addition of accountability of lessors to personal guarantors.
->Lessors will have to bare a greater burden due to a trend ofprotecting of individual guarantors.

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

We remove anxieties 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 implementationof a fair and just leasing market.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

- Hotel Business “A warm-hearted Hotel” located 2-minute walk from Namba Station on the Nankai Line, convenient for both sightseeing and businessGrand opening of HIYORI Hotel Osaka Namba Ekimae
The hotel is located at the most convenient place for both sightseeing and business just in front of Namba Station on the
Nankai line, only a 38-minute train ride from Kansai International Airport on the Limited Express rapi:t. As many foreign
visitors come to Japan for the purpose of sightseeing in Kansai and Osaka areas, we have multilingual staff members to offer
our guests a comfortable stay at the hotel.
We also have many artistic decorations which express images of Japanese hospitality here and there in the hotel building.
The SAKURA Building has a path with a series of torii gates made of natural wood while the MOMIJI Building has a tastefulentrance decorated with natural stones in the motif of Mt. Fuji and the moon. In the outdoor garden there are natural stones
and trees which present the Japanese seasonal beauty, such as cherry blossoms, autumn leaves and so on. With this warm
and relaxing atmosphere, we welcome our guests to offer them the most comfortable stay.
SAKURA Building
MOMIJI Building

Our staff welcomes you with warmest hospitality.

An artistic decoration in the motif of Mt. Fuji and the moon

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

24

A path with the image of torii

All rooms feature tatami flooring (Family Twin).

Sun Frontier Fudousan Co., Ltd.

The hotel jointly operated with Marriott Brand, that is loved by guests from all over the world

Grand Opening of “COURTYARD BY MARRIOTT Osaka Honmachi”
Taking advantage of the location where the textile industry, such as textile wholesalers flourished, the hotel has thedesign concept inherited from the history of “textile” and welcomes guests with its appearance of lattice patterns
which represent fabrics woven by warp and woof and its entrance with beautiful plants with Japanese atmosphere.
1-minute walk from "Sakaisuji Honmachi" Station and a 5-minute walk from "Honmachi" Station, the hotel withtotal 193 rooms is located in the most convenient place both for business and sightseeing, which enables its guests
to visit major sightseeing spots on foot.
The entrance is rich in light and greenery with a classy
atmosphere.

Opening ceremony

A room of “Collaboration Double Double” typeA large public bath where our guests can enjoy its quiet
and relaxing atmosphere in the middle of a big city

Appearance featuring “textile” to represent thelocation and its history
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

- Hotel Business -List of hotels under operation and development
Ongoing Development to equip 5,000 guest rooms in FY Ending March 2023

Open (Plan)

In operation

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

Running or Leasing

In operation-

Sky Heart Hotel Hakata

159

Under construction in
Planning

In operation

April 2017

Hiyori Hotel Maihama

80<Domestic hotels>

Running

1,818 rooms

Under construction 1,027 rooms
Under Planning391 rooms

3,236 rooms

Total*As of November 12, 2019*"Running" is listed in the right table "In operation" and"Rental" in Total.

Sado (Chigusa)
Sado (Azuma)

May 2018

In operation-

In operation
In operation

Tabino Hotel Takayama

80

Sky Heart Hotel Shimonoseki

105

July 2018

Tabino Hotel Sado111

May 2019

Osaka Namba Ekimae

224
193

HIYORI Hotel Tokyo Ginza Higashi

135

Under
construction

February 2020

Tabino Hotel Kurashiki Mizushima

155

Under
construction

March 2020

Tabino Hotel Kakojima

194

Under
construction

october 2020

Onna, Okinawa

204

Under
construction

January 2021

Kyoto Nijo Kawaramachi

205

Koiwa

Under
construction

April 2022

Kyoto Shijo Kawaramachi

134

Ginza Higashi
Chuo-ku, Tokyo

Under
Planning

August 2021

Miyako-jima

111

Under
Planning

April 2022

Ishigaki Island

132

Under
Planning

May 2022

Tokyo Chuo-ku

148

MaihamaMiyakoIslandNaritaShimonoseki

Osaka Honmachi
Osaka Namba Ekimae

57

In operation

December
2019

Kyoto Shijo

Mizushima

210

Azuma Sado

Under
construction

Kyoto Nijo

HakataToyama-October 2019

Takayama

Tokoname-

COURTYARD BY MARRIOTT Osaka
HonmachiKashimaIshigaki
IslandRenting
In operation

Under
construction

ToyamaOnna, Okinawa

Hotel Name Location

No. ofRooms

StatusKawasaki*The schedule and scale are current plans and may change in the future.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

26

Sun Frontier Fudousan Co., Ltd.

4) Future Strategies
Our Belief~ Not for profit, but for trust ~Business is a competition of usefulness.
How many people can we be of service to?

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

27

Sun Frontier Fudousan Co., Ltd.

Medium-term Management Plan

We aim for steady achievements and sustainable growth.
we aim for not a temporal achievement but for“sustainable and steady growth”
and “steady achievements with profitability, safety and growth”<Basic policy>
Development of business focusing on urban areas and growth markets<Three Policies>① To deepen and expand “office building business in central Tokyo”
which has strong influences② To focus on growth markets of “hotels and Asia”③ To actively utilize “M&A” to accelerate a growth of our company<Quantitative Target>
Fiscal Year ending March 2023

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

To achieve stable growth over the medium to longterm, we will strengthen creation andmanagement of real estate value and build ourfirm revenue structure based on

40,000Changes over the Most Recent 7 Years and Targets for FY 2023

Net
売上高

Ordinary
経常利益

Sales

Income100,000

70,00053,29140,39447,46327,741 30,625

20,00017,772
14,00020,000 10,580
10,755 12,813
8,894
4,341 5,593 7,024
2,039
02023/32020/3
2013/3 2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 (Forecast)
2020/3 2021/3・・・・2022/3 (Forecast)
2023/328

Sun Frontier Fudousan Co., Ltd.

Growth Strategies of 'Four Arrows'
1) Expansion of Core
Business

office building business

2) Hotel BusinessTo develop accommodation hotels
for tourism and business3) Overseas
Development

To develop housing related businessTo deepen and expand

in Vietnam and Indonesia

To expand the existing businesses4) M&A
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

and invest in start-up business29

Sun Frontier Fudousan Co., Ltd.

1) Expansion of Core Business
To Deepen and Expand the Office Building Business

For Office Building Business, Net Sales target for FY ending March 2023: 80 billion yen<Replanning Business>
We aim to deepen and expand our Building Revitalization Business by specializing in small andmedium-sized office buildings in central Tokyo and improving our capacity to generate added values.
We will also challenge new construction business.
<Real Estate Service Business (Leasing, Property Management, etc.)>
Being kind and polite, contributing to building owners with specialized services unparalleled by ourcompetitors. By repeatedly delivering solutions to their small concerns, we deepen our bonds withthem to become a trusted real estate partner with whom our clients feel free to consult on any
topics.
Our strength lies in a client base of office building owners in central Tokyo.
<Conference Room Rental Business>
Leveraging our expertise and experiences to improve added values of office buildings, we are rapidly
expanding the sharing business, such as conference room rental business that utilize vacant spaces
and idle times.

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

30

Sun Frontier Fudousan Co., Ltd.

Expansion of Main Business

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 to make it
distinctive and highly profitable by listening to our clients’voice.

Smart
conference
room

20th
Anniversary

10th
Anniversary

Securitiza

RentalBuilding
RentalBuilding

Office Building
Business inCentral Tokyo

Replanning-tion of realestateBrokerage

PM

Building

Construction

OfficeBuilding
Business inCentral Tokyo

Brokerage

PM
sub

Sub
Leasing-tion

Rentalconference
room

OfficeBuilding
Business In
Central Tokyo

Rent
guaranteeAssetsconsulting

Rent
guarantee

Leasing

Acceleration
officePMBM

Leasing
Leasing

Brokerage

Leasing

Construc-tion ofreal estate

Rental

Early stage ofestablishment

Office furniture
RentalSecuritiza Replanning

Share
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 technology and others. We will improve ourstrengths in the business field of medium and small office buildings in central Tokyo.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

2) The Hotel Business
Proactive Expansion into Growth Markets<Theme> Warm-Hearted Hotels
1.
2.
3.

Hotels that grow by their employees
Hotels that grow by listening to their guests
Hotels that grow and fit in with the community

Self-reliance, Cooperation with Others andCorporate Social Responsibility
We will continue togrow every day withthese three important factors

Hotels provide a warm, high quality, comfortable and personal service by kind employees who
work from the guests’ viewpoint.

We are aiming to have 5,000 rooms in operation by FY ending March 2023.
Taking advantage of the increasing number of visitors to Japan, we are expanding into urban andregional tourism areas.
<Two Strategies to Increase the Number of Operating Rooms>
1 Our flagship hotel brand "HIYORI HOTELS & RESORTS" is developed from a vacant lot.
We are aiming to become a well-known brand among upper brands.
2) Utilizing revitalization, M&A, and brand change, we will increase the number of guest rooms in a
flexible way to respond to diverse needs and markets.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

32

Sun Frontier Fudousan Co., Ltd.

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

To be completed
in November 2019

Model Room (living room)

Night view of Da Nang

Model Room (bed room)

There are 7 direct flights a week from
Narita Airport to Da Nang and also 7 directflights a week from Kansai International
Airport and further 7 direct flights a weekfrom Haneda Airport as well.
There are 247 direct flights a week from
Korea.
There are 24 direct flights a week from
China.
This is the area where many companies
are willing to expand their business and aresort which attracts many visitors from
Asia.

Current Appearance without stages
Interior works are taking place for completion

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

33

Sun Frontier Fudousan Co., Ltd.

4) M&A
To Expand Existing Businesses And Invest in Start-up BusinessAccelerate the growth of peripheral businesses by expanding optimal services in line with changes in theenvironment through the introduction of human resources, technologies and platforms in our Group.

<M&A and Business Acquisition Results>
Year
①

2010

②

2012

③

④

2016

Company name and business nameSonomamma (just like that) Office !
Yubi(Currently known as SF Building Maintenance)

Hotel AU Tokoname(Currently known as Spring Sunny Hotel Nagoya
Tokoname)

Hotel

Sado Resort Hotel Azuma

⑦

2018

VIP Nangoku(Currently know as Sky Heart Hotel Shimonoseki)⑩

Conference
room rental
business
Relatedperipheralbusiness

Hotel
Long-established ryokan (Sado
Island)Facility

Hotel

Okesa Kanko Taxi

Taxi and sightseeing bus (Sado
Island)Kouwa Corporation

Interior finishing work for offices

Sado Biyori

Information site on Sado Island⑧⑨

Building maintenanceRental conference rooms and offices(Currently Known as Skyheart Hotel)⑥

Specialized sites for furnished offices

Vision Center and Vision Office

Sky Court Hotel⑤

Overview of business

Hoteloperation

Regeneration,
development,
construction
and operation ofreal estateArchitecture &construction
Residential
Management2019=> Raise employees’ spirit, motivate them, and revitalize the business by sharing and disseminating the Philosophy
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

34

Sun Frontier Fudousan Co., Ltd.

5) ESG initiatives

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

35

Sun Frontier Fudousan Co., Ltd.

Sun Frontier, a Company Managed by Its Righteous Philosophy
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.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

36

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 old buildings without destroying them. We develop the Real Estate Revitalization Business,
which grows in harmony with the environment.
(382 buildings were revitalized as of the end of September 2019.)
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. (Please refer to an example on P.37.)
We are promoting the use of Green Electricity (RE 100) in 4 buildings of our own.

SocialIn our Real Estate Revitalization Businss, we promote the revitalization of buildings for purpose of themost suitable utilization that meets the needs of local communities and society, such as nurseryschools, restaurants, etc.
Under the slogan, “Cheer up Japan!” we develop Regional Revitalization Business from the aspect of
tourism.
With a belief that cultivation of human resources who can help the society is the base for a sustainablegrowth and the first step for social contribution, we make a strong effort to train up our employees.
We have institutionalized various programs based on our philosophy education.

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

37

Sun Frontier Fudousan Co., Ltd.

ESG initiatives of Sun Frontier Fudousan GroupThrough the Property Management, we engage in environmental
contribution activities with our building owners [E]As part of our efforts to improve the value of buildings, we propose the owners the replacement of facilities
utilizing the Energy-saving Subsidy.
“Replacement to LED lights in a whole building”, “renewal to gas heat pump type air conditioning” and“introduction of energy management system” were adopted in the following case of a building renovation.
[Detailed works]
All 1,472 fluorescent lights in a building replaced with
LED lights.
Air conditioning system was replaced with GHP (Gas
Heat Pump).
All 78 air conditioners are now monitored 24 hours a
day with the introduction of an energy management
system.
They are automatically controlled for optimal energy
efficient operation.
In order to verificate of the effect of reducing energy
consumption and to further promote environmental
contribution activities, our energy consumption report
is submitted on a monthly basis.

Electricity usage

Appearance of the building(Before and after energysaving project)

Reducedby 21.9%

2015

2018

Taking advantage our position that we can propose and promote the replacement of facilities to ourclients through our management and revitalization work of many buildings, we will promote theefficient energy usage in business and introduce facilities that contribute to energy-saving, andthereby strive to enhance efforts to reduce CO2 emissions through our real estate business.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

38

Sun Frontier Fudousan Co., Ltd.

ESG initiatives of Sun Frontier Fudousan Group

Contribution to the Revitalization of Local Communities and Society [S]We promote the revitalization of buildings for the most suitable utilization thatmeets the needs of society
We rent the buildings to our clients who can support people’s life at all stages. We revitalize them to meet the needs of the region.
BeforeAfter

Originally, for office-use
Revitalization as a nursery school from the 1st basement floor to 4 th floor, as an after school forelementary students on the 5th floor and a support center for cancer patients on the 6 th floor.

In industry-government-academia cooperation we create a recreational waterfront space where local people can get together.
BeforeAfter

We changed the usage of the first floor from a parking lot to a restaurant and connected it with a boardwalk along thecanal, which creates an attractive waterfront scenery.
Copyright © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

39

Sun Frontier Fudousan Co., Ltd.

ESG Initiatives of the Sun Frontier Fudousan GroupRegional 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 springs, hospitality, etc.) that Japan is proudof, we will take on the challenge of regional revitalization projects that focus on the attractiveness and featuresunique 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
Businesstravel agency

Sado Biyori

Rental Car
Business

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

40

Sun Frontier Fudousan Co., Ltd.

ESG initiatives of Sun Frontier Fudousan Group

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 and our compliancewith 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 existing buildings which are disqualified, we
first make them qualified enough to meet legal compliance requirements and sell 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 © 2019 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

41

Sun Frontier Fudousan Co., Ltd.

ESG Initiatives of Sun Frontier Fudousan Group

Increase outside directors as board members (G)In this fiscal year we have added 1 outside director to our Board of Directors in order to enhance our corporate governance. Our
outside directors have been selected from those who have abundant experience and knowledge in various fields and who can fulfill
their roles and responsibilities in improving our corporate value over the medium to long term.

Takahara Toshio (Outside Director)
・He has a track record of business expansion and a wealth of experience as the manager of Unicharm Corporation.
・He supervises our management in details from an independent standpoint from our management team who actually executes the operation, and gives us his unbiased, shrewd andeffective advice in the decision-making process by the Board of Directors.

Kubo Yukitoshi (Outside Director)
・He is a former head of listing screening at the Tokyo Stock Exchange, a certified public accountant, and has extensive expertise and experience in the Financial Instruments andExchange Act, Companies Act and finance.
・He gives us his unbiased and shrewd advice and suggestions as a leading expert on governance and disclosure for a listed company, from an independent standpoint from ourmanagement team who actually executes the operation.

Okubo Kazutaka (Outside Director)
・As a certified public accountant, he is well-versed in corporate auditing and has held various posts, such as a manager of an auditing firm, a member of many civil service groups ofintellectuals, and an executive of several groups in the business community, and has a wealth of insight and experience in such fields as risk management, compliance, CSR and regional
revitalization.
・He gives us his useful advice and suggestions for the management of our company and supervises it for the sustainable improvement of our corporate value.

Moriya Koichi (Outside Auditor)
・As a lawyer, he has extensive experience in real estate and financial fields, and gives us his shrewd advice for the enhancement of our legal compliance system.
・He also has extensive experience as an outside director of Tamura Corporation and Samantha Thavasa Japan Limited.

Tanaka Hidetaka (Outside Auditor)
・He is a U.S. certified public accountant and has extensive overseas business experience.
・Utilizing his rich expertise in the financial industry, his experience as head of overseas subsidiaries of the Industrial Bank of Japan, and his deep insight in such fields as ESG, hegives us his objective and shrewd advice for our future overseas development and management in general, including ESG disclosure.

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

42

Sun Frontier Fudousan Co., Ltd.

6) Company Information and Reference Materials

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

43

Sun Frontier Fudousan Co., Ltd.

Vision and Policy
VisionClients
Core Business

PolicyStrategy

As “professionals of real estate utilization”
we aim to be “the real estate company” of the world’s most
loved, trusted and selected.
Building owners, asset holders, wealthy individuals
Real estate revitalization and utilization
・Not for profit, but for trustl
To solve problems from the clients’ point of view・To focus on people rather than property
・One-stop solutions to any and all problems
CentralTokyo

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

OfficeStrength44

Tenantmediation

Real estate
revitalization

Effective operation
Creativity
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)

70,000650

売上高
Net Income
60,000700600

Ordinary Income
経常利益53,291

Employees
従業員

48,15050,00047,463500

522

40,39440,00030,62530,00026,87027,741
206

20,0002

681

10,000
1
0

1,771
52
24

0 140

70

3,588
377 501

84
5,003
791

96

16,730134 125

7,760
1,437

152

141

142 139

8,289 6,346

10,580

4,289

3,474

541

329
300

276

14,000223

4,341 5,593

200

12,813

17,772

6,923(3,776)

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

199

181

14,469(10,000)(20,000)

400

380

35,254

7,024

8,894 10,755

100

799 2,039
0(forecast)(100)(17,794)

(200)

45

Sun Frontier Fudousan Co., Ltd.

Corporate Profile
Company Name

Sun Frontier Fudosan Co., Ltd.

Location of Head
Quarters

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

Date of Foundation

April 8, 1999

Date of Lsting

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

Capital Stock ※11,965 million yen

Representative

Tomoaki Horiguchi, President

Number of Consolidated
594 full-time employees (1,013 including part-timers and temporary workers)
Employees ※Average Age of
Employees※

33.9 years old(※ As of September 30, 2019)

Real estate revitalization

Business Profile:

Real estate Services

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

Hotel development and management
Accounting Month
Listed Market

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

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

46

Sun Frontier Fudousan Co., Ltd.

We will appreciate yourfurther supports.

Sun Frontier Fudousan Co., Ltd.

◆ 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,
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