Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Results for theSecond Quarter of the Fiscal Yearending March 31, 2017
Our goal is to be the real estate company

that customers love and choose the most in the world.

Company Overview

1

Executive Summary
Results for the Second Quarter of the FY ending Mar 31,
2017

2～12

Future activities
1) Business environment

13～152) Managerial policy and business model

16～253) Growth strategies

26～37

November 9, 2016

Stock Code：8934

Company Overview
Name
Head Office

Representative
Established
Stock Listing
Capital
Employees

Main Group
Companies: Sun Frontier Fudousan Co., Ltd.
: Toho Hibiya Building (Hibiya Chanter) 14F
2-2, Yurakucho 1-chome, Chiyoda-ku, Tokyo 100-0006: President, Tomoaki Horiguchi: April 8, 1999
: First Section of the Tokyo Stock Exchange
on February 26, 2007 (Stock code 8934): ¥8,387 million: 312 Consolidated (as of Oct 31, 2016): SF Building Support Inc.
: Sun Frontier Real Estate Investment Advisors Inc.
: Yubi Inc.
: Sun Frontier Fudousan Taiwan Co., Ltd.
: Sun Frontier Hotel Management Inc.

Businesses

1. Real Estate Revitalization Business
Replanning Business/ Rental Building Business

2. Real Estate Services Business
Rental Brokerage/ Property Management/ Building Maintenance/ Sales Brokerage/
Construction Solutions/ Delinquent Rent Guarantees

3.Hotel development and operation
Investment, development, operating
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

1

Sun Frontier Fudousan Co., Ltd.

Highlights of the results for the second quarter
Summary of the Second Quarter for Fiscal Year Ending Mar. 31, 2017

Quarterly profit increased steadily as planned
Resultsyr/yr change

increase rate

Forecast for FY 2017

Sales

18,906+6,049+47.1％

41,000Operating income

5,174+1,164+45.4％

8,500

Ordinary income

4,840+1,502+45.0％

8,200

+703

+25.9％

5,600（※）親会社株主に帰属する四半期純利益
Net income
3,420

Profit margin of Revitalization Business increased to 33%• By linking up and combining our specialties througheach process of acquisition, commodification and sales,with inventive approach, we have maximized the value
extracted from properties.
• Segment profit margin increased further to 33% (sameperiod last year of which is 30.1%).
As for the second quarterly consolidated financial results,
both ordinary income and net income has reached thehighest-ever level.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2

Procurement of hotel land and overseas development is
progressing well. "Space Rental“ Business is also contributing to
profit improvement.
••••

In Da Nang, Overseas No.1 hotel “The Blossom City"
opened in August. .
In Maihama Area, accommodation specialization type hotelwith 80 rooms will open in April.
In Shijo Kawaramachi, the biggest busy district in Kyoto,
we purchased a land to start the development of high-classflagship hotel.
As for "Space Rental" business , we opened 4 branch
offices, and is creating profit steadily.

Sun Frontier Fudousan Co., Ltd.

Summary of the results for the second quarter(¥ million)
Apr. to Sep.
in FY ended
Mar 31, 2016

Profit margin
to sales―Apr. to Sep. in
FY ending
Mar 31, 2017

18,906

Profit margin
to sales―Forecasts for
FY ending
Mar 31, 2017

Progress ratewith respect tothe initial
forecast

41,000

46.1％

Sales

12,857

Operatingincome

3,559

27.7％

5,174

27.4％

8,500

60.9％

Ordinary
income

3,337

26.0％

4,840

25.6％

8,200

59.0％

Net income

2,717

21.1％

3,420

18.1％

5,600

61.1％

Specializing in the small and medium-sized office buildings in central Tokyo and maintaining a high level ofprofitability. Achieved about 60% profit amount of whole financial year plan.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

3

Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary
Apr. to Sep. in
FY ended
Mar 31, 2016

Sales

Apr. to Sep. in
FY ending
Mar 31, 2017

Apr. to Sep.
in FY ended
Mar 31, 2016

Apr. to Sep.
in FY ending
Mar 31, 201712,857

18,906

Operating income

3,559

5,174

Real estate revitalization

9,771

15,656

Non-operating income

1010Real estate securitization

145－

Non-operating expenses

232

344

Rental building business

1,020

857

3,337

4,840

Brokerage

919

698

Extraordinary loss/income▲110

Property management

729

854

Corporate income tax, etc.

609

1,420

Other businesses

270

839

2,717

3,420

Gross profit on sales

5,199

7,236

Real estate revitalization

3,198

5,431

Real estate securitization

145－

Rental building business

551

465

Brokerage

817

553

Property management

342

368

Other businesses

144

417

1,639

2,062

Selling and generaladministrative expenses

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Ordinary income

Net income(¥ million)
Revitalization business sales increased by 60%, gross income
increased by 70%. Gross income rate also has risen greatly.

Space Rental and Hotel business established in the previous
year expanded well and enhanced performance.

Expanded profit cut down the tax loss carried forward,
and tax cost increased.
Income taxes-deferred 827 was added up.

4

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Assets(¥ million)
Increase/decrease(from the end of
Mar. 2016)

End of Mar. 2015

End of Mar. 2016

End of Sep. 2016

37,45251,365

51,113▲252

Cash and deposits

12,686

15,413

15,464+50

Inventory assets

23,48032,71433,611+897

Other current assets

1,285

3,237

2,036

▲1,200

2,971

2,718

7,886

+5,147

2,483

1,919

7, 065+5,146

Intangible assets

76

278

271

▲6

Investments and other assets

412

520

528

+7

40,42454,08458,979▲4,895Current assets

Noncurrent assets
Property plant and equipment

Total assets

Increased by 1.4 billion yen for acquisition of hotel land and cost of construction. On the other hand, decreased by
500 million yen as sales of comparatively big properties went well (Sales: 11 properties , acquisition: 16 properties.)

As loss carried forward was set off, there would be a reversal of 827 million yen in deferred tax asset.
As acquisition of hotel land for long-term hold, it increased by 5 billion yen.
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5

Sun Frontier Fudousan Co., Ltd.

Consolidated balance sheet-Liabilities/Equity(¥ million)
Increase/decrease(from the end of
Mar. 2016)

End of Mar.
2015

End of Mar.
2016

End of Sep.
2016

3,550

7,641

8,342

+701

Short-term loans payable, etc.

1,004

3,353

4,471

+1,117

Income taxes payable, etc.

221

973

688

▲284

Other current liabilities

2,324

3,314

3,182

▲131

14,172

16,29818,173+1,875Long-term loans and bonds
payable12,98815,055

16,894+1,838Other noncurrent liabilities

1,183

1,242

1,278

+36

17,72323,93926,516+2,576

22,69330,14432,496+2,351

8

▲0

▲33

▲33

Total net assets

22,70130,14432,463+2,318

Total capital and liabilities

40,42454,08458,979+4,895Current liabilities

Noncurrent liabilities

Total liabilities
Shareholders’ equity

OthersFor procurement progress of hotel business asset, interestbearing debt increased by 2.9 billion yen.

Changes in capital adequacy ratios
End of Mar. 2015

End of Mar. 2016

End of Sep. 2016

56.2%

55.7%

55.0%

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Retained earnings increased as difference of net income(＋3.42 billion yen) and dividend payment (▲1.06 billion yen).

6

Sun Frontier Fudousan Co., Ltd.

Performance of

Revitalization business
Apr. to Sep. in
FY ended
Mar 31, 2016

Apr. to Sep. in
FY ending
Mar 31, 2017

Sales

9,771

15,656+60.2%

Segment income (Note)

2,937

5,170

+76.0% 16,000

Profit margin

30.1%

33.0%

+3.0%p 14,000
12,000(¥ million)

Increase/decrease

sales
segment income
profit magin(¥ million)

18,00045%
15,656

40%
33.0%

35%

30.1%

No. of procuredbuildings

10

16

+6

No. of sold buildings

12

11▲1 10,000

No. of buildings instock as of the end of
the term

25

44

+19

30%

26.6%

9,771

25%

9,253

20%

8,000

■In order to create high added values, we take long project period to
do attractive commercialization which could be highly valued bypurchasers. Then we progress proposal type sales to specificcustomers.
■While making efforts on commercialization and procurement, direct
sales to repeat customers also increased. As a result, profit marginincreased to 33%■The average business period for selling a property is 312 days
(except for 1 middle-term project and 1 use transition project).
■The stocks of revitalization property at the end of the second quarterare 40 buildings(8 of which belong to hotel business). Properties
worth is 33.6 billion yen (6.6 billion of which are hotel business).

6,000

5,170

4,000
2,459

10%

2,937

2,000

5%

0

0%
2015/3 2Q

2016/3 2Q

2017/3 2Q※ Besides above, there are also 7 building worth 2.1 billion yen which are procured andcontracted at the end of October.

(Note) “Segment income” is calculated by subtracting various expenses of respective businesses from gross profit on sales. Various expenses include
interest paid, sales commission and goodwill amortization,
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7

15%

Sun Frontier Fudousan Co., Ltd.

Performance ofRental building business(¥ million)

Sales

Apr. to Sep.
in FY ended
Mar 31, 2016

Apr. to Sep.
in FY ending
Mar 31, 2017

1,020

857

Increase/decrease(¥ million)

1200

Sales
Segment Income
Profit Magin100%▲15.9%

90%

1020

Segment income

540

430

▲20.4%

1000

80%
869

Profit margin

53.0%

50.1%

▲2.8%p

857

70%

800
53.0%

 Utilization of comprehensive operation capability
make us be able to stabilize rent income from highoccupancy rate.

 Because medium-sized projects operated overmultiple years were sold as scheduled, both sales andprofits decreased (contributed a lot to revitalization
business).

600

60%
50.1%

50%

540
460

430

400

40%
30%
20%

200

10%
0

0%
2015/3 2Q

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53.0%

8

2016/3 2Q

2017/3 2Q

Sun Frontier Fudousan Co., Ltd.

Performance ofBrokerage business(¥ million)

Sales

Apr. to Sep. in
FY ended
Mar 31, 2016

Apr. to Sep. in
FY ending
Mar 31, 2017919

Increase/decrease

698 ▲24.0%(¥ million)

1,000
900

sales
segment income
profit magin

100%

919
88.7%
82.0%

90%

Segment income

815

553 ▲32.1%

Profit margin

88.7%

79.2% ▲9.5%p

700< Sales brokerage>■ Some financial institutions become cautious about lending
to real estate investment and because we didn’t makeenough effort to meet the needs of customers, compared toprevious year, both sales and profits decreased.

600

300

30%

< Rental brokerage> In respective area of each branch office, we dig deep tounderstand customers and work hard for them with thestrength of rental brokerage based on community sales incentral Tokyo. Both sales and profits increased fromprevious year.
 Tenant recruitment of revitalized and property management
properties become motive power for early high occupancy
rate and contributed a lot for the profit of whole company.

200

20%

100

10%

0

0%

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800

500
400

79.2%
698

80%
70%

553

498

60%
50%

408

2015/3 2Q

9

815

40%

2016/3 2Q

2017/3 2Q

Sun Frontier Fudousan Co., Ltd.

Performance ofProperty management business(¥ million)

Apr. to Sep. in
FY ended
Mar 31, 2016

Apr. to Sep. in
FY ending
Mar 31, 2017

Increase/
Decrease(¥ million)

900

Sales

729

854

+17.1%

Segment
income342

397+15.9%

sales
segment income
profit margin
44.9%

46.9%

50%

854
46.5%

800
729

40%

700
634

Profit margin

46.9%

46.5%

▲0.5%p

45%

35%

600

30%
<Property management business>Both sales and profit increased.

No. of managing properties : 350 (up by 44 compared to the same
period of the previous year)Occupancy rate: 95.8% (down by 0.8%)【Changes in the number of entrusted buildings and occupancy rate】
No. of properties Occupancy rate
End of Sep. 2014
243
96.8%
End of Sep. 2015
306
96.6%
End of Sep. 2016
350
95.8%

500

<Building maintenance business>Growth of PM entrusted properties has an effect on BM growth.
However, as personnel expenses are also increasing, sales got
increased but profits have hit a plateau compared to previous year.

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397

400
300

342

20%

285

15%

200

10%

100

5%

0

0%
2015/3 2Q

1025%

2016/3 2Q

2017/3 2Q

Sun Frontier Fudousan Co., Ltd.

Performance of Other Business(Delinquent rent guarantee, Construction solution, Space Rental, Hotel

Operation, etc.)(¥ million)

Sales
Segment
incomeProfit margin

Apr. to Sep. in
FY ended
Mar 31, 2016

Apr. to Sep. in
FY ending
Mar 31, 2017

270

839

Increase/decrease+210.2%sales(¥ million)

900

segment income
profit margin

90%

839

80%

800

144

417

+187.8%
700

53.6%

49.7%

▲3.9%p600< Delinquent rent guarantee business>
By holding seminar toward building owners and cooperative companies,
guarantee system got spread, new customer development also improved.
Thus, both sales and profit increased.

500<Construction solution business>
Due to commercialization specialized in revitalization business withincompany, sales decreased and profits increased.

300<Space rental business>
Users are increasing steadily based on repeaters and referrals. Both sales andprofits increased remarkably.

70%

67.3%

60%

53.6%
49.7%

50%

417

40%

400

30%

270
211

200
142

20%

144

100

10%

0

0%

(Apr. to Sep. in FY 2016, sales are 181 million yen, segment income is 68 million yen.)< Hotel Operations>“SPRINGSUNNY Hotel Nagoya Tokoname” opened in April as the firsthotel of collaborative brand with Shanghai Spring Group. Occupancy rate
remains at a high level over 96% and average daily rate is improving
remarkably as well.

2015/3 2Q

2016/3 2Q

2017/3 2Q(Apr. to Sep. in FY 2017, sales are 333 million yen, segment income is 80 million yen.)
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11

Sun Frontier Fudousan Co., Ltd.

Key Performance Indicators■ Ordinary income margin■ Capital adequacy ratio
Financial stability is being built.

A testament to the development of our high value-added business.
(¥ million)

45,000(¥ million)

Sales

35%

Ordinary income

Net asset

40,000

Profit margin to sales
40,00035,00035,00030%

24.4%

22.9% 25.6%
Forecast
for FY 2017

30,000

20.2%

19.3%

80%

Capital adequacy ratio

68.5%

56.2% 55.7% 55.0% 60%

30,000

25%

70%

53.7%
25,00050%

20,00040%

15,00030%

10,000

20%

5,000

10%

0

0%

20%

25,00020,00015%

Forecast
for FY 2017

15,00010,000

10%

5%

5,000

0

2013/3

2014/3

2015/3

2016/3 2016/9
2017/3Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

0%

2013/312

2014/3

2015/3

2016/3 2016/9
2017/3

Sun Frontier Fudousan Co., Ltd.

<Future activities>
1) Business environment2) Managerial policy and business model3) Growth strategies

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13

Sun Frontier Fudousan Co., Ltd.

Business environment
Global economy
maintains a moderate
recovery trend while
there remains risks.

U.S. economy growth led by personal consumer consumption is expanding moderately while a tiny pause
could be seen in economy deceleration of China. Focusing on developed countries, global economy is expected
to grow moderately.

As for sluggish growth of developing countries, anxiety about finance for Brexit and economy policy
uncertainty for U.S. election, future of global economy still remains unclear. Stock and foreign exchange
markets become easily affected by political events and geopolitical risks.
Aimed at increasing the country's nominal GDP to 600 trillion, Japan government bind "three arrows" toenhance economy. By developing "a strong economy bringing forth hope" including 28 trillion yen economy
stimulus policy, government is trying to strengthening the virtuous cycle of allocation and growth.

Financingenvironment remains
favorable.

As monetary easing policy of BOJ is continuing and long-term interest is declining, attitudes to lending to realestate business is still positive while transaction volume is gradually declining for lack of sales and fear for
price trend.

Against a background of graying of society and good financing environment, for small and medium-sizedbuildings in central Tokyo which our company is focusing on, the dynamism of purchase demand is still
growing as there are overseas investment, needs of inheritance countermeasure and asset management.
The number of foreign tourists to Japan reached about 20 million by Oct 30 and would exceed 24 million for whole year,
lack of accommodation become a socially urgent task. Surge of tourist is also showing a sign of spreading to provinces
instead of capital cities. Total overnight guests who visit provinces exceeded those who visit capital cities.

Demand-supply
balance in central
office building
market is tight.

Relocation, expansion and area increase is continuing due to business development and demand-supply
balance in the five wards of central Tokyo is tight. As market recovery will take long time and there is worry
about slowdown of corporate performance, it is predicted that the cycle of rental market would reverse in near
future.
Needs for office relocation of finance and insurance industry as well as information and communicationindustry is growing. Thus negotiation for raising rent of tenant recruitment and contract renewal is increasing.
But room for lowering cap rate of internal real estate is very small, prudence for investment decisions isrequired.

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14

Sun Frontier Fudousan Co., Ltd.

Changes in office rent and vacancy rate
in 5 wards of central Tokyo
Average rent [yen/tsubo]

Average vacancy rate [%]Average rent in Sep.
18,336 yen
increased for consecutive
33 months (+13.1% fromthe bottom value)

（％）

（Yen）

Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%
Peak of average rent

Average rent

Vacancy rate

Aug. 2008
22,901 yen

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

Vacancy rate in Sep.

3.70%
Improved 5.73% during thelast 4 years and 3 months

Bottom of average rent
Oct. 2004
17,526 yen

Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%

Bottom average rent
Dec. 201316,207 yen* Source: Produced by our company based on the “office report” of Miki Shoji. This researched the office buildings whose reference floor’s area is over 100 tsubo in 5 wards in Tokyo.
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15

Sun Frontier Fudousan Co., Ltd.

2. Managerial policy and business model“Not for profit, but for trust.”
We change ourselves and solve any real estate related difficulties
based on the viewpoint of customers.

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16

Sun Frontier Fudousan Co., Ltd.

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

Clients

Building owners, asset holders, and wealthy individualsCorebusiness

Real estate revitalization and utilization

Policies

Strategies

To focus on people rather than property
Solve any real estate related difficulties based on the viewpoint ofcustomers

CentralTokyo

Tenant finding
capability

Strength

OfficeReal estate
Revitalization
capability

Operation capability
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17

Sun Frontier Fudousan Co., Ltd.

Classification chart of our business
Office buildings
Real Estate Revitalization Business
Re-planning Business
Building Rental Business
Real Estate Securitization Business

Real Estate Services Business
Rental Brokerage Sales Brokerage
Property Management
Building MaintenanceConstruction Solutions
Delinquent Rent Guarantees
Space Rental, Small office

HotelOverseas

Hotel Possession and Operation
Development, Revitalization and Sales
Stock Holdings, Funding

Attract investment from Taiwan to Tokyo
Urban Housing and Serviced Apartment in Indonesia
Hotel and Housing Developments in Vietnam

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18

Sun Frontier Fudousan Co., Ltd.

Real Estate Revitalization and the Cycle of
Added Value① 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 link up unrivalled knowhow and grasped needs
through process above. Then we apply the linked up power to used buildings which we purchased in order totransform them into investable products worthy of trust. Then we sell the products of high added value tocustomers
Fund –Raising Consulting

Asset Consulting

Delinquent rent Guarantee

Construction Planning

Building Management

Rental Brokerage

Sales Brokerage

Acquisition ofproperty

Real estate
revitalization

Added value-linked products

To research how to solve clients’ troubles
at the site, and offer solutions

Clients (Building owners, asset owners, and wealthy people)
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19

Sun Frontier Fudousan Co., Ltd.

3 main functions of branch office net
focusing on central Tokyo
1. Specializing in central Tokyo
10 footholds in wards of Chiyoda, Chuo, Minato,
Shinjuku, Shibuya, and Yokohama City. Withrental team of 72 members and management
team of 79 members, we draw out the needs from
customers and excel at finding tenants for officebuildings by utilizing our familiarity with local
areas.
2. Building owners' preferred point of contact
We solve various problems of customers.
Not only do tenant recruitment but also listen
to customers and help them with internal
cooperation.

Key Areas

Ueno
Akihabara

Ikebukuro

Kanda

Kudan
Koujimachi

Nihonbashi
Imperial
PalaceShinjuku

Aoyama

HQ in
Hibiya

Tokyo

Ginza

Toranomon
Shimbashi

3. Promote “Efficient utilization of building
business”
As additional loans from financial institutions isconditional on sublease, we provide various
services from renewal construction to building
operation.
With powerful trinity of owners, banks and ourcompany, we revitalize the building.
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Shibuya

Akasaka
Hamamatsu-cho

Ebisu
Shinagawa

Yokohama(

20

indicate the main target areas of our branches.)
Sun Frontier Fudousan Co., Ltd.

Building operation capability is our strength“One price for one article" products of optimal location in central Tokyo.
We draw out buildings’ market values with excellent quality and attractive features,and sell buildings to asset holders and wealthy people at appropriate price.
Even after the sale, we have important earning opportunities.

Sales Brokerage

AssetsConsulting

RenewalConstruction

Plan & Design

Rental Guarantee

Building
Maintenance

Building
Management &Operation

Rental Brokerage

Sale of revitalized
property

Menu of after-sale services

Revitalization Business and Rental Building Operation Business
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21

Sun Frontier Fudousan Co., Ltd.

Entrusted area of PM and clients are
increasing steadily.
Changes in occupancy rate and area under our property management
100％

(㎡)

660,080

700,000

95.8％(As of Sep. 2016)

600,000

97.23％

Occupancy rate of PM entrusted buildings
500,000

95％
400,000

Entrusted area
300,000

95.3％

90％

(As of Sep. 2016)

200,000

100,000

Average Occupancy rate of middle-sizedbuildings in 23 wards in Tokyo
85％

0

'08/1

'08/7

'09/1

'09/7

'10/1

'10/7

'11/1

'11/7

'12/1

'12/7

'13/1

'13/7

'14/1

'14/7

'15/1

'15/7

'16/1

'16/7

※Source: the occupancy rate of middle‐sized buildings in 23 wards in Tokyo was produced by our company based on "Market Data Rent and Vacancy" of Sanko Estate Co., Ltd.
Note: Occupancy rate of buildings under management of Property Management Section
In the 4th quarter of fiscal year 2014, as important tenants moved to larger offices, some units become vacant. Thus
ccupancy rate declined temporarily at the end of the term.
Later, tenants have been moving in steadily, occupancy rate got recovered.
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22

Sun Frontier Fudousan Co., Ltd.

Participative management of all employees based on core principles― Change and Challenge ～Sun Frontier Management 3 Core Contents～ ―1. Mental management based on our ethos and philosophy• We have upheld “altruism” since the establishmentof our company.
• By cleaning our office and reading the philosophy
booklet every morning we become a group thatshare the value of “Feeling as happy as for others as
you do for yourself”.
• We aim to offer greater happiness to customers, andcontribute to the actualization of a rich society.

Businessmanagement
based on the
viewpoint ofcustomers

2. Management among all employees’ participation based on theaccounting for each section• By developing and diffusing the accounting systemfor each division (Amoeba management), we
enhance employees' profit awareness and promote
the business operation involving all employees withmanagement perspective.

Management among all
employees’ participation
based on the accounting
for each section

3. Business management based on the viewpoint of customers• We listen to customers’ requests carefully, handle
and solve even minor troubles, without being stingy
with time.
• We change ourselves from the viewpoint ofcustomers, making efforts to challenge, create andadvance.
• With internal collaboration of different sections, wecreate high added values that are linked to one
another.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Mentalmanagement
based on our
ethos andphilosophy

Employees play major roles.
Resonant business administration.

23

Sun Frontier Fudousan Co., Ltd.

～one profitable building in Gotanda～

Revitalization case

Revitalization of real estate which looking toward thefuture of local area
Appearance Ａｆｔｅｒ

Interior Ａｆｔｅｒ①Directly purchased the property②Use change after vacating intermediate floors
and then conversion.
③Utilize the location and recruit cabin hotel
as tenant which is TSE first section operator.
④Achieved high occupancy rate over 90%⑤Sold to repeat customers by having tenantcombined 30 years long term rental agreement

Desk space for all rooms

corridorInterior Ａｆｔｅｒ

Interior Before
Appearance Before

dressing room

Closet Station :Gotanda Station( 3 minutes walk away)【Property outline】
Location: Higashi gotanda, Shinagawa-ku, Tokyo
Structure: Steel reinforced concrete, flat roof, 8 storeys
above ground and 1 basement storey
Date of completion: 1987
Purposes of use: residence, officeLand area: 277.21 ㎡
Gross floor area: 1, 372.20 ㎡
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Big bathhouse with hinoki flavor

24

Sun Frontier Fudousan Co., Ltd.

Others

NEWS
October 21, 2016
President Horiguchi gave a lecture in the course
donated by our company in Graduate School ofManagement, Kyoto University

September 3, 2016
Sado International Triathlon which was sponsored by ourcompany was opened. 5 athletes of our company participatedin this race.

Under title of "Strong will can guide one's life", President Horiguchi gave
a lecture to 126 students most of whom are undergraduates of Kyoto
University. By focusing on "the Strong Will of Company President"
which is a critical element of management, history of our company andstory of President's early life was introduced to students. After thislecture, we got thankful impression statements from students. For
example, "Very moved by the thought of contributing to society byholding a clear will", "Very worthwhile time because though we study
abstract management theories everyday we seldom have chance to listen
to somebody who actually establish and develop a company."

Athletes and cheering party
after reached finish line

This year 5 athletes challenged
oppressive race Type A (Swim 3.8km, bike 190km, run 42km,
participants 990). All of themreached finish line successfully bytransforming the encouragement
around to internal power ofthemselves.

August 3, 2016
Our company is listed as one of "Asia's 200 Best
Under A Billion 2016" by business magazine "Forbes
Asia".

Uninhibited discussion in lecture

According to Forbes, they screened 17,000 publicly traded companies in the AsiaPacific region. Companies with revenues between $5 million and $1 billion passed
their criteria for profitability, growth, and modest indebtedness. The resulting 200
are un-ranked but comparatively produced the highest sales and earnings per
share growth for past three-year period. This year, 13 companies from Japan arelisted up. Sun Frontier is one them.
＜Forbes Site URL＞ http://www.forbes.com/asia200

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

３）Growth strategies
Aming at business model ofstanding up on two feet of
Flow and stock

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

26

Sun Frontier Fudousan Co., Ltd.

Three-pronged strategy for future growth
Development and expansion of
office business+
Hotel business forhigh demand of inbound1) Existing Business Expansion

Capital participation
Business alliance2) M&A

Indonesia
Vietnam3) Overseas Business Expansion

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

27

Sun Frontier Fudousan Co., Ltd.

Expansion of existing business～Rental Conference Room and Rental Office business～
Rental Conference Room （Vision Center）

Vision Center Tokyo

Rental Office（Vision Office）
Vision Office Kanda

One minute walk from Kanda Station
with designer furniture

Vision Office Shinjuku

July 2016
New Open！

One minute walk from Tokyo Station of JR Lines

After “Vision Center Tokyo” started in April
2015, it become profitable in just half a year andcustomers is increasing steadily. Under the
introduction from leasing section, subsequentcases in good location are also progressing well.
Fourth branch office opened in Kanda in July.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Vision Office Kanda ANNEX

One minute walk from Shinjuku Station
just in front of South Exit

28

One minute walk from
Kanda Station

Sun Frontier Fudousan Co., Ltd.

CONCEPT AND DEVELOPMENT OF HOTEL BUSINESS－INBOUND CITY-TOURISM HOTEL－“Heart-warming Hotel”＜List of Hotel in Japan＞
StatusOpen（Plan）

Location

Rooms

Rented

―

Iwaki

150

Rented―Numazu152

In operation

Apr. 2016

Tokoname

194

Under
construction

Apr. 2017

Maihama80

Underconstruction

Jul. 2017

Kofu

190

In plan

1st half of 2018

Higashi-ginza

137

Iwaki

In plan

1st half of 2018

Narita Airport

210

Maihama

In plan

2nd half of 2018

Honmach Osaka

195

In plan

1st half of 2019

Shijo Kawaramachi
Kyoto

189

１. Hotel which grow continuously with thestaffs’ efforts from customers’ perspective.
２. Hotel which can dig up and develop
local charm and Japan culture
３. Hotel which one is willing to stay

In operation
Under construction
In plan & preparation

496
270
1,375

2,141

Total

※Overseas: 45 in operation, 306 in preparation
Figures mean amount of rooms

Kofu
Shijo Kawaramachi
Kyoto

Honmach Osaka
NaritaAirport
Higashi-ginza
Tokoname

Together with collaborative brand “SPRINGSUNNY”,
original brand of our own which targets at upper middle classin central Tokyo is also in plan & progress.
Development is progressing under concept of“Inbound City-tourism Hotel”

Collaborative
brand

Original
brand

29

Numazu（Note）Schedule & scale are still being planned, may change in future.
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Sun Frontier Fudousan Co., Ltd.

SPRINGSUNNY Hotel Nagoya Tokoname

Changes of gross sales and occupancy rate
Appearance※Sales: benchmark index to 100 as Dec. 2015

Gross sales

100%

Occupancy rate

97.5% 350

【Occupancy Rate】
Oct. 2016
97.5％

90%

274

300

Apr 25, 2016
Open Ceremony

250

Family room on top floor

80%
200
70%
150
【Gross Sales 】
2.8 times of the
figure in operation
beginning

60%

56.8%
Dec. 2015
acquisition

50%

40%

1

2

3

4

5

6

7

8

100

100

9 10 11 12 1

50

2

2015年

3

4

5

6

7

8

9 10

0

Extended Restaurant＜Summary of the Hotel Building＞■Location： Shinkaichou, Tokoname, Aichi, Japan2016年（3 minutes by express train from the airport,
Meitetsu Airport Line, near Tokoname Station）

As the result of our efforts on operation aiming at “heart-warming”
hotel, the occupancy rate remains at a high level over 96%. Sales
increased up to 2.7 times after we started the operation.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

＜Main Renewal＞●Strengthened safeguard●Exterior Wall Repearing●Beds addition, convenient
headboard replacement●Redesign of entrance●Restaurant extension■The Number of Rooms：194（large bath of artificial hot spring）■Completion Date：January, 2008（8 years）

30

Sun Frontier Fudousan Co., Ltd.

Hotel Business

HOTEL PROJECTS IN PROGRESS
MaihamaPlanned toOpen in
Apr. 2017

Higashi-ginza

Honmachi Osaka

Planned toOpen in 1st
half yearof 2018

Planned toOpen in 2nd
half yearof 2018

Effect Drawing

Effect Drawing

Kyoto

Effect Drawing

Narita Airport

Planned toOpen in 1st
half yearof 2019

Planned toOpen in 1st
外観パース
half yearof 2018

Entrance
Project Land

Effect Drawing

Optimal location for sightseeing in Kyoto（注）写真は現状の完成予想図であり、今後変更となる可能性があります。

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

Hotel Business

Trends in the number of foreign visitors to Japan by country
The number of foreign tourists to Japan is increasing continuously in 2016, it tops 20 million in Oct. 30.
Considering ratio of total visitors to overall population, the number of Chinese visitors to Japan is expected to increasemore.
We will continue to expand our business by developing inbound city-tourism hotel targeting on visitors to Japan.
2014
visitors

Total visitors
ratio topopulation

increase rate

2016（Jan.-Sep.）

2015

2014-2015
visitors

Total visitors
ratio topopulation

visitors

Population

Total visitors
ratio topopulation（million)

1

China

2,409,158

0.18%

107.28%4,993,805

0.37%

5,007,173

0.49%

1,367.82

2

Korea

2,755,313

5.46%

45.25%

4,002,094

7.94%

3,719,412

9.84%

50.42

3

Taiwan2,829,821

12.08%

29.94%

3,677,065

15.69%

3,233,516

18.40%

23.43

4

Hong Kong

925,975

12.75%

64.61%

1,524,291

21.00%

1,343,026

24.67%

7.26

5

USA

891,668

0.28%

15.88%

1,033,239

0.32%

914,4520.38%

319.05

6

Thailand

657,570

0.96%

21.16%

796,708

1.16%

626,517

1.22%

68.66

7

Australia

302,6561.28%

24.28%

376,153

1.59%

322,895

1.83%

23.59

8

Malaysia

249,5210.82%

22.44%

305,502

1.01%

249,819

1.10%

30.26

9

Philippines

184,204

0.19%

45.67%

268,3390.27%

239,828

0.32%

99.43

10

Singapore

227,9624.17%

35.45%

308,777

5.64%

216,201

0.45%

64.51

－

others1,979,619

0.04%

23.83%

2,451,456

0.05%

2,104,824

0.06%

5,050.72

13,413,467

0.19%

47.15%

19,737,429

0.28%

17,977,663

0.34%

7,105.15

total

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

32

Sun Frontier Fudousan Co., Ltd.

Overseas expansion - Two directions -We will develop new investment
products, hone our operation ability
to operate hotels, and play an role ofreceiving investments from wealthypeople in Asia.

Produced by the Cartographic Research Lab University of Alabama
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

33

Sun Frontier Fudousan Co., Ltd.

Overseas development

Concept and Development of Outbound Business
Concept
Developing our outbound business in rapidly-growing cities in South-East Asia and contributing to thehappiness and prosperity of local people over there.

Projects in Vietnam
StatusOpen

Location /Use

Scale

In operation

Jul. 2016

Da Nang Hotel

45 rooms

In plan

1st half of
2019

Da Nang
Condominium
Residence

312 houses

In planUndecided

Da Nangcommercial complex

Hotel・ＳＡ156 rooms+Residence 229
houses+Shop

In planUndecided

Ho Chi Minh ＳＡ

41rooms

Projects in Indonesia
StatusOpen

Location /Use

Scale

For sale―

Jakartadetached house

5 housesUnder
construction

Undecided

Jakartadetached house

9 housesIn planUndecided

Jakarta Residence+ＳＡ

90 rooms(Note）”SA”･･･Serviced apartment. Fully furnished apartment available for monthly stay,providing all the hotel-like service.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Effect Drawing of No.3 project in Da Nang

34

Sun Frontier Fudousan Co., Ltd.

Da Nang, Vietnam-City Type hotel “The Blossom City” opened
Aug 1, 2016 opened
Taking advantage of its location for beautiful waterside view, we
provide a relaxing and clean space to customers with the concept
of “warm-hearted hotel” by “omotenashi” hospitality anddevoted smile of Vietnam staff.

Appearance Before

Appearance After

Property outline
Location: 147-149, Tran Hung Dao Street,
Son Tra District, Da Nang City, Vietnam
The Number of Rooms: 45 rooms
Maximum Accommodation Capacity： 90 people
Supplementary Amenities：
Restaurant Bar with 60 seats, provide breakfast（including
light Japanese meals), lunch and supper
Parking lot for 2 passenger cars and 10 motorbikes
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

the Guest Room (Han River could be seen)

the Opening Ceremony on August 1st

35

Entrance

Night View

Sun Frontier Fudousan Co., Ltd.

Da Nang, Vietnam, No.2 project～High-rise Urban apartment house project～
Da Nang is chosen to be the host of 2017 Asia-Pacific Economic Cooperation (APEC) summit. It also ranked
top among the popular travel destination cities in 2016, gaining attention of the world. We established “SunFrontier Vietnam” as an overseas subsidiary in December, 2015. Beside city-tourism hotel “The Blossom City”,
we are preparing for the high-rise apartment project as our 2nd project. No.3 and No.4 project are also inprogress.
No. 2 High-rise apartment building

Effect Drawing

Japanese spring holidays
ranking of popular destination city 2016

「Garden Tower」 PJ

Rank

y/y

1

Da Nang

389%

2

Macao

200%

3

Busan

181%

4

Kaohsiung

167%

5Sydney162%

5 direct flights per week from Narita,
Japan.
14 direct flights per day from China.
8 direct flights per day from Korea.
Gathering worldwide attention as afascinating resort area.
From Da Nang Airport to city center it
only takes 10 minutes by car, tobeautiful beach where are many hotels it
only take 15 minutes. Located at optimal
place with very convenient access.

Effect Drawing
High-rise condominium of 28 floors
with 312 apartments
Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

City

36

Sun Frontier Fudousan Co., Ltd.

Jakarta, Indonesia～ Urban House ＆ Serviced Apartment ～We established “Sun Frontier Indonesia” as an overseas subsidiary.
We are progressing projects in central Jakarta.
No.2 City Type Ready-built House「Gandaria」 PJ

No.3 Serviced Apartment「Kasira Residence」 PJ
Appearance

Internal pool

Effect Drawing
Appearance

Bed Room

Effect Drawing Pools areavailable for all houses.

Copyright © 2016 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Serviced Apartment with 90 rooms

37

Sun Frontier Fudousan Co., Ltd.

Sun Frontier Fudousan Co., Ltd.

Disclaimer
This reference material is intended for providing information, not for soliciting or promoting you topurchase 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 and Exchange Act, theBuilding Lots and Buildings Transaction Business Act, the regulations for the companies listed in Tokyo
Stock Exchange, etc.
This reference material mentions our future business performance, but it does not guarantee theperformance.
This reference material was produced carefully, but we do not guarantee the accuracy and certainty of its
contents.
In addition, the contents may be changed or deleted without notice.
We would appreciate your understanding.

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