Sun Frontier Fudousan Co., Ltd.

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

1-10

2) Business Conditions

11-133) Results of Real Estate Revitalization (Replanning)
Business

14-164) Background Supporting the Foundations of theReplanning Business

17-31

5) Introduction to Newly Opened Hotels

32-346) Reference

35-38

August 8, 2018
Stock Code：8934

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

Profit margin

YoY change

Rate of
ChangeFull-year
forecast

Progress

Sales

18,211―+9,302+104.4%58,00031.4%

Operating income

4,839

26.6%

+2,738+130.4%

12,30039.3%

Ordinary income

4,747

26.1%

+2,731+135.5%

11,80040.2%

Net income*

3,258

17.9%

+1,890+138.1%

8,200

39.7%

* Quarterly net income attributable to owners of parent

Highlights
1) The replanning business is driving
business performance2) Steady progress on procuring
properties to sell

3) The operation business showedsteady growth.

• Thanks to sales of multiple mid-sized buildings,
sales and income both more than doubled in
the replanning business.
• The segment profit margin in the replanningbusiness (including hotel development) thisquarter remained high at 30.5% (vs. 27.6% in
the FY ended March 2017 and 29.7% in the FY
ended March 2018).

• Progress is underway on procuring properties tosell in the next period.
• Procurement of ¥8.6 billion was completed in
Q1. In addition to this procurements concluded
and contracted stood at ¥6.1 billion at the endof July.
• The stock of buildings associated with thereplanning business stood at 53 buildings at theend of this quarter. The balance of inventory
assets stood at ¥45.1 billion (not including hotel
development), compared to 43 buildings and¥36.4 billion at the end of June 2017.

• Further growth in Hotel Sky Court contributed tobusiness performance in the hotel managementbusiness.
• Tabino Hotel Hida-Takayama and Tabino Hotel
Sado opened in May and July, respectively. The
openings increased the number of hotels
managed to 10 hotels with 1,191 total rooms.
• The space rental business grew to a total of 13
sites. The Tamachi location completed its
expansion in July.

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1

Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary
FY Ended
March, 2018
April-June

FY Ended
March, 2019
April-June

8,909

18,211

Operating income

7,308

16,394

6,780

15,636

Rental Building, Sublease

527

757

Real Estate Service Business

848

788

Operation Business

657

903

Other Business

225

303

Adjustment

(131)

(177)

Gross Profit

3,200

6,221

2,430

5,424

2,202

5,047

Rental Building, Sublease

227

376

Real Estate Service Business

556

463

Operation Business

115

144

Other Business

171

199

Adjustment

(73)

(7)

1,099

1,382

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

Real Estate Revitalization Business
Replanning Business(including Hotel Development)

Selling and general administrative
expenses
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

FY Ended
March, 2018
April-June(¥ million)
FY Ended
March, 2019
April-June

2,100

4,839

Non-operating income

319Non-operating expenses

88

111

2,016

4,747

Extraordinary loss/income--

Corporate income tax, etc.

652

1,489

(4)

(0)

1,368

3,258

Ordinary income

Profit or loss of Non-controllinginterest

Net income

 The replanning business saw growth of 2.3-fold in both sales
and gross profit.
 The gross profit margin was 32.3%, exceeding last year’s fullyear profit margin of 31.9%.
 In the stock businesses, the Rental Building and Operation
Businesses are expanding smoothly.
 Total sales for both businesses grew 1.4-fold year on year.
Gross profit increased 1.5-fold year on year.

2

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Assets(¥ million)
Increase/Decrease(Compared to theend of Mar. 2018)

FY Ended
March, 2017

FY Ended
March, 2018

Current assets

55,19580,174

79,632(541)

Cash and deposits

16,24623,89222,854(1,038)Inventory assets

36,18626,039
7,254
2,892
2,762

54,59345,525
5,291
3,775
1,687

55,43945,149
6,747
3,542
1,337

+846
(375)
+1,455
(234)
(350)

8,458

11,587

11,864

+277

7,288

8,565

8,942

+376

Intangible assets

562

474

450

(24)

Investments and other assets

608

2,546

2,471

(75)

63,654

91,761

91,496(264)

Breakdown)

RP
Hotel
Overseas, etc.

Other current assets

Noncurrent assets
Property, plant, and equipment

Total assets

End of June,
2018

Despite sales of multiple mid-sized buildings in the replanning business in Q1, the balance of inventory assets fell by amere ¥300 million, due to progress in procuring properties to sell. Since one hotel was acquired, the hotel inventory
assets of the hotel business grew by ¥1.4 billion.
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3

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Liabilities/Equity(¥ million)
Increase/Decrease(Compared to theend of Mar. 2018)

FY Ended
March, 2017

FY Ended
March, 2018

8,281

10,155

8,975(1,180)

2,716
3,178
4,260

Noncurrent liabilities

3,438
802
4,040
19,68632,756

2,657
1,400
4,916
32,300(58)(1,778)+656(456)

Long-term loans and bonds
payable18,62630,86530,342

(522)

1,059
27,968

1,890

1,957
41,275+66(1,636)+1,625(253)+1,371(264)

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

Other noncurrent liabilities

Total liabilities

42,912

Total net assets

35,528157
35,686

48,84950,375(154)
50,221

Total liabilities and capital

63,654

91,761

91,496

Shareholders’ equity
OthersTransition of Equity Ratio

48,75099

End of June,2018

End of Mar. 2017

End of Mar. 2018

End of Jun. 2018

Due to progress on sales of properties in the replanning business, loans payable fell by¥500 million compared to the end of the previous FY. The balance of interest-bearing debt
at the end of June stood at ¥33 billion.

56.0%

53.2%

54.9%

Retained earnings, equivalent to the difference between quarterly net income (up ¥3.2
billion) and dividend payment of the previous (negative ¥1.6 billion), rose by ¥1.6 billion.

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Sun Frontier Fudousan Co., Ltd.

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

FY 2018
April-June

FY 2019
April-June

Increase/decrease

Sales

6,780

15,636+130.6%

Segment income (Note1)

2,089

4,769

+128.2%

Profit margin

30.8%

30.5%

(0.3%pt)

16

13

(3)

6

8

+2

49(Note2)

58(Note2)+9

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

 Sales and profit both grew substantially.
 Thanks to repeated creative commercialization efforts, increased
direct sales to our customers, and other factors, segment margins
remained quite high, above 30%.
 The average business period is 351 days.
 Procurement progressed steadily. The number of properties ininventory at the end of the period was 58 (¥51.8 billion).
(Breakdown) Replanning business: 53 properties (¥45.1 billion)
Hotel business:
5 properties (¥6.7 billion)* Overseas business is excluded.
* We have also procured or contracted nine replanning properties through theend of July worth ¥6.1 billion In addition to the above mentioned.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

5(¥ million)

18,000

Sales
Segment Income
Profit Margin60%

15,63615,00050%

12,000

40%

9,000

30.8%

30.5%

30%

6,780
6,000

3,000

4,769

20%

10%

2,089

0

0%

2018/3期
FY 2018

2019/3期
FY 2019

April-June

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

Sun Frontier Fudousan Co., Ltd.

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

FY 2018
April-June

FY 2019
April-June

Increase/decrease

Sales

527

757

+43.5%

Segment
income227379+66.6%

Profit margin

43.2%

50.1%

+7.0%pt In the replanning business, we pursued high margin andminimized the number of selling the properties, and, built up
replanning businesses for which commercialization iscomplete increased both sales and income thanks to growth
in income from rents.
 Income from rents in the hotel business also contributed to
growth in sales and income.

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

6(¥ million)

800

Sales
Segment Income
Profit Margin

757

100%

75%

600

527

400

43.2%

50.1%
379

50%

227
200

25%

0

0%
2018/3期
FY 2018

2019/3期
FY 2019

April-June

April-June

Sun Frontier Fudousan Co., Ltd.

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

FY 2018
April-June

FY 2019
April-June

Increase/decrease(¥ million)

Sales

848

788

(7.1%) 1,000

Segment
income556459(17.5%)

Profit margin

65.6%

58.2%

(7.3%pt)<PM Business/BM Business>
 We offer high-value-added services by delivering meticulous tenant
management and solving customer issues. We improve revenue by
modifying conditions to achieve fair rents. This approach has helped
expand the customer base and the business base for the entire group.
【Variations in the number of managing properties buildings for PM andoccupancy rate】
No. of managing properties Occupancy rate
End of June 2016
345
95.3%
End of June 2017
369
95.9%
End of June 2018
381
95.9%

Sales
Segment Income
Profit Margin

848

100%

788

800

80%

65.6%
600

556

58.2%

60%

459
400

40%

200

20%

0

0%

<Sales Brokerage Business/Rental Brokerage Business > While sales and profits in the brokerage business itself declined, thebrokerage business helps create high added value from the customer
viewpoint in the procurement, commercialization, and sale of RP realestate. The brokerage business also contributes to the revenue of theentire corporate group.
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7

2018/3期
FY
2018
４～６月
April-June

2019/3期
FY
2019

４～６月
April-June

Sun Frontier Fudousan Co., Ltd.

Performance ofOperation Business(Hotel Management / Space Rental)(¥ million

FY 2018
April-June

FY 2019
April-June

Increase/decrease

Sales

657

903

+37.4%

Segment
income100133+32.7%

15.3%

14.8%

(0.5%pt)

Profit margin(¥ million)

1,000

Sales
Segment Income
Profit Margin

40%

903

30%

750

657

<Hotel Management Business>
 Hotel Sky Court’s business grew further. Strong occupancy rates andaverage daily rates per room at Hiyori Hotel Maihama and
SPRINGSUNNY Hotel increased both sales and income.
 Tabino Hotel opened in Hida-Takayama in May and Sado Island in
July. As of the end of July 2018, the number of hotels managed roseto 10 locations.
(April-June in FY ending March 2019: total sales of ¥683 million, segment
income of ¥55 million)

15.3%(April-June in FY ending March 2019: total sales of ¥219 million, segment
income of ¥77 million)
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8

14.8%
10%

250

<Space Rental (Rental Conference Room) Business>
 As of the end of July 2018, we operate a total of 13 facilities (eightrental conference room facilities, three rental office facilities, and two
coworking space facilities).
 Vision Center Tamachi completed an expansion of its floor space on
July 23.

20%

500

100

133
0%

0
2018/3期
FY
2018

2019/3期
FY
2019

April-June

April-June

Sun Frontier Fudousan Co., Ltd.

Performance of

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

FY 2018
April-June

FY 2019
April-June

Increase/decrease

Sales

225

303

+34.5%

Segment
income171192+12.0%

Profit margin

76.0%

63.3% (12.7%pt)(¥ million)

400

300

 We achieved steady growth in numbers of new and renewed guarantees
through efforts to increase name recognition for our guarantee system amongbuilding owners and partner companies, which increased both sales and200
income.
 The most significant and comprehensive revision of the claims-related
provisions in the Civil Code since its enactment in 1896 is set to enter into effectin 2020. This is expected to strengthen demand for the guarantee business. In
response, we plan to expand seminar activities targeting building owners andundertake other such efforts.
 Accelerating business development in Southeast Asia, which continues to grow
1) Danang, the Biggest City in Central Vietnam
・ Owning and operating our first overseas hotel “The Blossom City”
・ Construction of HIYORI Garden Tower, a high-rise urban apartment house of
28 floors (306 units) began in June 2017 and remains underway today.
2) Jakarta, Capital of Indonesia
・ Promotion of construction of urban condominiums
・ Owning and operating Serviced Apartment “Kyo Serviced Apartment”

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9

76.0%

100%

303

75%

63.3%

<Rent guarantee business><Overseas Business>

Sales
Segment Income
Profit Margin

225
171

192

50%

100

25%

0

0%
2018/3期
FY 2018

2019/3期
FY 2019

April-June

April-June

Sun Frontier Fudousan Co., Ltd.

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

60,000

30%

売上⾼
Sales
Ordinary Income
経常利益

26.1%

Ordinary Income Ratio
経常利益率50,000

22.9%

22.0%

70,000Full-year
forecast

20.2%
40,000Equity Ratio
⾃⼰資本⽐率60,000

25%

22.7%

70%

純資産
Net Assets

56.2%

55.7%

56.0%

53.2%

54.9%

60%

50,00050%

40,00040%

30,00030%

20,00020%

10,00010%

20%

30,00015%

20,00010%
Full-year
forecast

10,0005%02015/3

2016/32017/3

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

2018/3
2018/6
2019/30%0

10

2015/3

2016/32017/3

2018/3

2018/62018/3
2019/30%

Sun Frontier Fudousan Co., Ltd.

2) Business Environment

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11

Sun Frontier Fudousan Co., Ltd.

Business Environment
1. The global economy has recently proceed in a pattern of recovery. Growth of 3.9%, up 0.1 percentage
points from the previous year, is projected for 2018.
 According to the IMF, economic growth accelerated broadly around the world in 2017. Similar growth is also projected for2018.
 Nevertheless, a cautious approach is advisable for future developments. The US interest rate increased in June, and the paceof such increases is expected to accelerate in the future.
 Another concern is the potential for slowing economic growth due to the rise of protectionism worldwide and intensificationof trade frictions between the US and China.

2. As employment and income environment continue to improve, the Japanese economy is projected toexperience gentle recovery.
 The real rate of growth in the Japanese economy remains in a growth trend, underpinned by strong capital investment andforeign demand.
 At ¥1trillion 123.3 billion yen, foreign visitors’ to Japan consumption amount in April-June 2018 set a new record for a given
quarter.
 Uncertainties in overseas economic environment, trends in financial and capital markets, and the rising trend in crude oil
prices all suggest the need for caution.

3. The urban office building market is still thriving, because demand is healthy thanks to good corporate
performance.
 Average rent is slightly rising. Vacancy rate remains low. Steady demand can be expected to continue.
 Vacancy rates are approaching their previous lows. Favorable conditions are expected to continue with regard to the balance
between supply and demand.
 Despite an excess outflow of funds from investment trusts that pay monthly distributions, the performance of individual JREITs remains generally strong.
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12

Sun Frontier Fudousan Co., Ltd.

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

(%)

Average rent in June 2018

¥20,108

Increased for 4 years and 6
months(+24.1 % fromthe bottom value)
Peak of vacancy rate
Jun. 2012
Vacancy rate: 9.43%
Peak of average rent
Aug. 2008¥22,901 yen

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

Bottom average rent
Oct. 2004¥17,526 yen

2003

2004

2005

Bottom average rent
Dec. 2013¥16,207

Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%
2006

2007

2008

2009

2010

Average rent [¥/tsubo]

2011

2012

2013

2104

Average vacancy rate inJune 2018

2.57%

Improved by 6.86
percentage points over 6
years
2015

2016

2017

2018

Average vacancy rate [%]※Source: Created based on Miki Shoji’s “Office Report.” Graph reflects office buildings within the 5 wards of Tokyo of which have a standard floor area of
100 tsubo (roughly 331 square meters) or larger.

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13

Sun Frontier Fudousan Co., Ltd.

3) Results of Real Estate
Revitalization (Replanning) Business

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14

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization businessResults of the revitalization business, specializing insmall and mid-sized offices in central Tokyo
Small and mid-sized offices in the central Tokyo

Revitalization
performance
Number of
Revitalization
projects
Gross sales

No.1
334

¥320.4billion(based on our estimates)

Active in the real estate revitalization
business for 18 years
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15

(¥100
million)

400

Transition of in gross sales and numbers ofproperties in the revitalization business(Properties)

40

Gross sales
販売総額
Number of
再生件数

350

Revitalization projects

35

300

30

250

25

200

20

150

15

100

10

50

5

0

0

2013/3 2014/3 2015/3 2016/3 2017/3 2018/3

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization businessProfit margins in the real estate
revitalization businessTransition of profit margins in the real estate revitalization business

100%

Profit margin vs. costs
対原価利益率

90%

88.6%

80%

76.5%

70%
60%

52.3%

46.8%

50%

58.0%

20%

31.6%

48.1% 47.0% 48.7% 47.7%

39.6%

40%
30%

52.4%

41.3%
36.4%

35.5%

29.7% 28.8% 26.7%

45.3%
30.3%

31.0%

10%
0%

1Q

2Q

3Q

4Q

FY ended
March 20142014/3期

1Q

2Q

3Q

4Q

FY ended
March 2015
2015/3期

1Q

2Q

3Q

4Q

FY ended
March 20162016/3期

1Q

2Q

3Q

4Q

FY ended
March 20172017/3期

1Q

2Q

3Q

4Q

1Q

FY ending
FY ended
March 20182019/3期
2018/3期
March 2019

* Profit margin vs. costs: Calculated as (gross profit)ൊ(cost of sales) to indicate the level of profit margins vs. costs in the replanning business* The real estate revitalization business includes the real estate securitization business and the hotel development business in addition, to the replanningbusiness
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16

Sun Frontier Fudousan Co., Ltd.

4) Growth Assets Supporting theFoundations of theReplanning Business

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17

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value

Four factors with which we demonstrate strengths inconnection to the revitalization business

Rental brokerage
Number of businessfacilities

10

Property management
Number of buildings
under management381

buildings

locations

Sales staff

81

Management staff

105

persons

Rent guarantee
Number of guarantee
contracts (cumulative)

3,925
contracts

Vacating litigation
rate*

2.6

persons%

Construction planning
Construction to maintain building function

Construction intended to increase building value

Safety, peace of mind, andconvenience after purchase

Design planning with an eye
toward future societal changes* Vacating litigation rate: (Number of cases of litigation upon vacating properties)ൊ(number of guarantee contracts)
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18

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value

A Business Structure Based on Connecting andIntegrating Individual Businesses for Use in Revitalization
1. In vertical real estate utilization business, we survey and solve difficulties by listening to customers’ concerns.
2. In horizontal real estate revitalization business, first, we put together the know-how and customer needs
learned from the process above. Then we apply this knowledge to renovate used buildings we purchased andtransform them into high value-added products. After this, we sell the products to customers.

②
Fund –Raising
Consulting

Asset Consulting

Rent Guarantee

Construction
Planning

Building
Management

Rental Brokerage

Sales Brokerage

Acquisition of
Property

Real estate
revitalization
Added value
linked products① Real Estate Utilization

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

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

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value: Rental brokerage

An ability to find tenants using familiarity with local
information and community ties
Target regions

1. To specialize in small to mid-sized officebuildings located in the urban center

Ueno

We operate 10 locations, with a focus on central
Tokyo.
Their strengths are the ability to find tenants througha familiarity with local information and community ties.

Akihabara
Ikebukuro
Koujimachi

2. To contribute to high-added-valuecommercialization in the revitalization business

Drawing on our ability to find tenants, focusing onTokyo’s five central wards, we contribute to the
Shinjuku
commercialization of revitalized buildings.
We also contribute to rental productdevelopment by identifying tenant needs and societal
Shibuyachanges.

3. To procure real estate for Real Estate
Revitalization Business

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Nihonbashi

Imperial
PalaceAoyamaToranomon
ShimbashiNew
Akasaka20

GotandaYokohama

Tokyo

HibiyaHeadquarters

Ginza

Ebisu

In certain cases, as a contact point for solutions basedon the perspectives of building owners, we buy
buildings directly when owners acquire properties byinheritance, their buildings deteriorate, or they lose
interest in managing the buildings.

Kanda

Kudan

Hamamatsucho
Shinagawa

represents the major area
covered by a branch
New offices

Sun Frontier Fudousan Co., Ltd.

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

Properties handled by the rental brokerage business
賃貸仲介件数

220
200
180
160
140
120
100

1Q

2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
March 2017 FY ended
March 20182019/3期
FY endingMarch 2016 FY ended
FY ended
March 2014 FY ended
March 2015 FY ended
2014/3期
2015/3期
2016/3期
2017/3期
2018/3期* Includes our own properties handled by the rental brokerage business, such as replanning properties.
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21

March 2019

Sun Frontier Fudousan Co., Ltd.

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

100%
98%

(㎡)
800,000

97.3%

Area of buildings managed by PM (right axis)(As of end of June 2018)
Occupancy rate for buildings
managed by PM (left axis)

Occupancy rate of medium-sizedbuildings in 23 wards of Tokyo(left axis)

700,000

Occupancy rate of real estate
managed by PM

96%

600,000

94%

500,000

95.9%(As of end of June 2018)

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

92%

400,000

90%

300,000

88%

200,000

86%

As about 75% of real estate managed by PM are over 20
years old, we received inquiries about repair andreplacement of assets, meaning we are exerting thecomprehensive capability of solving problems, which is ourstrength.

100,000

84%

0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY ended
March 2009

FY ended
March 2010

FY ended
March 2011

FY ended
March 2012

FY ended
March 2013

FY ended
March 2014

FY ended
March 2015

FY ended
March 2016

FY ended
March 2017

FY ended
March 2018

FY endingMarch 2019

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

22

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Property management –Increase in numbers of building
owner clients(Companies/i
ndividuals)

300

Transition in numbers of building owner PM clients
Number of building owner PM clients
Our ranking by number of clients amongproperty management firms focusing on
multipurpose and office properties: No. 3(Source: Property Management, Nov. 2017)

250

200

150

100

50

0

1Q

2Q

3Q

4Q

FY ended March 20142014/3期

1Q

2Q

3Q

4Q

FY ended March 2015

2015/3期

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

1Q

2Q

3Q

4Q

FY ended March 20162016/3期

23

1Q

2Q

3Q

4Q

FY ended March 20172017/3期

1Q

2Q

3Q

4Q

FY ended March 20182018/3期

1Q

FY ending

2019/3期
March 2019

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value – Property management –Growing tenant numbers
Transition in numbers of tenants in buildings managed by PM(Companies/
individuals)

Number of buildings managed by PM

3500
3000
2500
2000
1500
1000
500
0

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

FY ending
FY ended
March 2014 FY ended
March 2015 FY ended
March 2016 FY ended
March 2017 FY ended
March 20182014/3期
2015/3期
2016/3期
2017/3期
2018/3期
2019/3期
March 2019
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

24

Sun Frontier Fudousan Co., Ltd.

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

4000
3500
3000

Transition in numbers of guarantees (cumulative)
Performance of the guarantee business:

Cumulative total numberof contracts

 Cumulative total number of guarantee contracts: 3,925
 Number of cases of litigation upon vacating buildings (since2005): 104 (2.6%)(including 21 cases of compulsory execution (0.5%) )3,925 contracts

2500
2000
1500
1000
500
0
2008/3

2009/3

2010/3Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2011/3

2012/3

2013/325

2014/3

2015/3

2016/32017/3

2018/3
2018/6Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value — Construction planning —The power to maximize a building’s value[Sun Frontier’s construction]
1. Repair construction to maintain value (functionality) (1) Exterior wall repairs (fixing leaks, beautification), (2) air-conditioning, (3) elevator renovations, etc.
These repairs eliminate the need for large-scale work for 5-10 years after the property purchase.
We repair any defects discovered within three months after the sale and handover, at our own
expense, as part of our suite of after-sales services.
2. Renovation construction to improve value (functionality, comfort) Full renovations include raising the ceilings in restrooms, elevator lounges, and offices, installing
terrace gardens on rooftops, and renovating entrances and other facilities. We handle constructionin areas not actively addressed by other companies due to cost.
 This approach helps differentiate one property from another from the tenant perspective,
contributes to stable occupancy rates and rapid leasing at rates above market rents, andsidesteps the disadvantages of price competition.
FacadeCopyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Elevator hall

Rooftop terrace garden

26

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business Sources of added value — Construction planning —Planning ability from the tenant’s perspective based ona keen identification of societal changes[Setup offices]

Drawing on community ties and constant study of tenant needs, we anticipate societal changes.
The style and convenience we achieve in our building interiors based on the tenant perspective aredecisive factors in leasing these offices.
These flexible offices achieve earnings and high occupancy over the long term free of undue effects
related to economic cycles.
BeforeBefore

After

After

After

We installed a meeting room with a reception
desk and glass partitions based on an
approach emphasizing both design andfunctionality.

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

We achieve a design that reflects the Japanese
outlook, incorporating luxurious touches all theway to the ceiling.

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Four types of value generated by setup offices:(1) Designs that combine style, functionality, andluxury(2) Ease of use that minimizes moving costs(3) Freedom from complexities such as the need toreconfigure interior construction(4) Increased employee motivation and productivity

27

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business: Factors supporting the revitalization business

Based on hidden growth assets
The real estate revitalization business generates strong sales profit.
The real estate revitalization business is based on the accumulation of
hidden growth assets that do not necessarily appear on the balance sheet.

<Hidden growth assets>(1) Our ability to find tenants based on community ties
(2) Peace of mind through track record of high occupancy rates(3) Customer base (numbers of tenants and building owners)(4) Problem-solving building management capabilities(5) Rent guarantees that deliver stability and peace of mind
(6) Planning abilities based on the tenant perspective(7) A fund of expertise in making the most of a building’s attributes
Our customer service represents the foundations of the revitalization business.
The hidden growth assets accumulated with our experience making the most ofeach property gives us the understanding needed to increase added value from amultifaceted approach.
Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

28

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business case study (1)Hirakawacho: Revenue-generating building

Revitalization achieved by taking full advantageof the spacious entrance facing Aoyama-doriFirst floor interior After

Exterior After

Taking advantage of the location through use of the firstfloor as a showroom and the basement as offices

B1 AfterRooftop After

Roof garden offers views of
the city and landscaping

Entrance

After

LocationSupreme Court

Nagatacho
NambokuLine
Nagatacho
HanzomonLine

Nagatacho
YurakuchoLine

A maximum ceiling height of 7 m creates anopen, airy space filled with natural light

Akasakamitsuke
Ginza Line
Marunouchi Line

Entrance Before

Diet Building[Property overview] Use:
Hirakawacho, Chiyoda-ku, Tokyo
Steel-frame, steel-reinforced concrete flat-  Site area:
roofed structure with one basement floor
 Total floor area:and eight aboveground floors
 Completed: 1982(36 years)
 Location:
 Structure:

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Remodeled into an elegant space thatdelivers comfort and reliability

29

Office266.79 sq m
(80.70 tsubo)
1,915.68 sq m
(579.49 tsubo)

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business case study (2)Shibaura Riverside: Revenue-generating building

Revitalized into a relaxing building thatconnects people to the canalFirst floor After

Exterior After

Seismic strengthening tocreate peace of mind

Parking lot converted to restaurant

New stepped benches installed along
canalside waterway

First floor Before

Rear of building Before

Exterior Before[Property overview]
 Location:
 Structure: Completed: Use:
 Site area:
 Total floor area:

Tamachi
JR LineShibaura, Minato-ku, Tokyo
Steel-frame, steel-reinforced
concrete flat-roofed
structure with seven floors
1976(42 years)
Office, residential, retail306.55 sq m (92.73 tsubo)1339.99 sq m (405.34 tsubo)

Location

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Rear of building After

30

Rear of building AfterCreating a relaxing space that connects people in theneighborhood to the canal

Sun Frontier Fudousan Co., Ltd.

Real estate revitalization business case study (3)Conversion to a daycare center
which is socially significant

Exterior After

Ningyocho: Licensed daycare center building

Entrance Before

Interior After

Converted to location for a daycare operator
solicited as tenant to help meet local needs
Location

HamachoSinjuku Line

Abundant use of Japanese cypress creates awarm atmosphere on the floor for infants.

Entrance After

Interior After

Ningyocho
Asakusa Line

Ningyocho
Hibiya LineInterior Before[Property overview]
 Location: NihonbashiTomizawacho, Chuo-ku,
Tokyo Structure: Steel-reinforced
concrete, one basement
floor, four abovegroundfloors1986(31 years)
 Completed:
Office, garage, warehouse Use:
306.94 sq m (92.84 tsubo) Site area:
 Total floor area: 852.46 sq m (257.86 tsubo)

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Sun Frontier Fudousan Co., Ltd.

5) Introduction to
Newly Developed Hotels

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32

Sun Frontier Fudousan Co., Ltd.

The first hotel in our Tabino Hotel brandGrand opening of Tabino Hotel Hida-Takayama
The grand opening of Tabino Hotel Hida-Takayama, the first hotel in Hiyori Hotels & Resorts’ casual Tabino Hotel brand,
was held on May 2, 2018.The remarkably convenient location will serve as a base for access to a wide range ofsightseeing and recreational outdoor activities.
Envisioned as a hotel with warm hearted staffs, surrounded by natural wood, it incorporates a wide range of
specifications throughout that stress the perspective of its guests. Amenities include a free breakfast buffet and alarge bath fed by a natural hot spring.
Tabino Hotel Hida-Takayama, the first hotel in the Tabino Hotel brandTwin room

May 2nd, 2018
GRAND OPEN

A Japanese-style entrance
welcomes guests

The hotel exterior: A hotel with warm hearted
staffs, surrounded by natural wood

Open-air bath

Breakfast buffet madewith local ingredients

Spotless, spacious bathrooms

Copyright © 2018 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

The traditional Japanese-style
entrance evokes the ancient capital.

33

Sun Frontier Fudousan Co., Ltd.