Sun Frontier Fudousan Co., Ltd.

Consolidated Financial Statements for theSecond Quarter of the Fiscal Year ending
March 31, 2018
Our goal is to be the real estate company
that customers love and choose over any other worldwide.
Executive Summary Results for the Second Quarterof FY ending Mar 31, 20181 – 10Future activities

1) Business environment

11 – 132) Business policy and model

14 – 223) Growth strategies

23 – 32

Reference/Company Overview

November 9, 201733 - 38

Stock Code：8934

Summary of the Results for the Second Quarter
Summary of the Second Quarter for Fiscal Year Ending March 31, 2018

Achieved a record-high profit for the cumulative second quarter
Sales andProfit Ratio

Results

Year on Year
Change(¥ million)

Rate of
ChangeForecast of
FY2018/3

Achievement
Rate－+5,579+29.5%

50,00049.0%

Operating income

24,486
5,534

22.6%

+359

+7.0%

10,50052.7%

Ordinary income

5,341

21.8%

+500

+10.3%

10,00053.4%

Net income※

3,649

14.9%

+229

+6.7%

7,000

52.1%

Sales

(※) Net income attributable to owners of parent

Highlights
1) The business performance goes asplanned• For the 2nd quarter, we earned recordhigh sales and profit.
• The progress rate toward the full-year
earnings forecast is as healthy as over50%.
• The replanning business contributed tothe overall results, keeping ordinary
income ratio over 20%.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2) Procurement is progressing well.
•••

Procurement for properties to sell in FY2019/3 hasbeen almost finished.
Furthermore, we will procure buildings for rental toincrease the revenue from the rental building business.
Number of buildings in inventory related to replanningbusiness at the end of this quarter is 41. Balance of
inventory assets increased to 36.5 billion yen.
(increased 36.9% compared to the same period ofprevious fiscal year.) (Number of buildings at the endof September 2016 is 36, worth 26.7 billion yen)

13) Operation business is steadily growing.
•••

Operation business grew 2.7 times in sales and1.7 times in profit as compared with the same
period last year.
“Hiyori Hotel Maihama,” the first hotel under our
original brand began full operation in July, which
increased the total number of our operating
hotels to 8 (6 in domestic, 2 in overseas.)
In space rental business, we newly opened 4
branches in 6 months, which increased the total
number of branches to 10 in 2 years.

Sun Frontier Fudousan Co., Ltd.

Revenue/Profit Summary(¥ million)

Apr. to Sep. in
the FY ended
Mar 31, 2017

Apr. to Sep. in
the FY ending
Mar 31, 2018

Apr. to Sep. in
the FY ended
Mar 31, 2017

Apr. to Sep. in
the FY ending
Mar 31, 2018

18,90624,486

Operating income

5,174

5,534

Real Estate Revitalization Business
Replanning Business(including Hotel Development)
Rental Building, Sublease

16,655

21,348Non-operating income

10

6

15,65620,199Non-operating expenses

344

199

998

1,149

4,840

5,341

Real Estate Service Business

1,662

1,600
1,392

0

0

Operation Business

514

Extraordinary loss/income

450

1,420

1,691

Other Business

344

Corporate income tax, etc.

Adjustment

(270)

(306)

3,420

3,649

Gross Profit

7,236

7,863

5,898

6,431

5,414

5,993

484

438

Real Estate Service Business

984

1,006

Operation Business

99

203

Other Business

286

325

－

(103)

2,062

2,329

Sales

Real Estate Revitalization Business
Replanning Business(including Hotel Development)
Rental Building, Sublease

Adjustment

Selling and general administrative
expenses
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2

Ordinary income

Net income• Gross profit ratio of the second quarter of replanningbusiness (including Hotel Development) is 29.7%(gross profit ratio of last fiscal year was 29.9%.)• Operation business and other new businesses are all
expanding smoothly. Total sales grew two times year
on year to 1.84 billion yen. Gross profit increased 1.4
times year on year to 520 million yen.

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Assets(¥ million)

Increase/Decrease(Compared to theend of Mar. 2017)

End of Mar. 2016

End of Mar. 2017

End of Sep. 2017

51,365
15,41332,71455,195
16,24636,186

63,94016,08645,621+8,744(159)+9,43527,1895,525－

26,0397,254
2,892

36,5685,522
3,530+10,529(1,731)
+637

3,237
2,718

2,762
8,458

2,232

9,371

(530)
+912

1,919

7,288

8,158

+869

Intangible assets

278

562

517

(45)

Investments and other assets

520

608

696

+88

54,08463,65473,311+9,657

Current assets
Cash and deposits
Inventory assets
Breakdown)

RP
Hotel
Overseas, etc.

Other current assets

Noncurrent assets
Property, plant, and equipment

Total assets

While the sale of properties for replanning business progressed, procurement andcommercialization progressed too. As a result, the balance of inventory assets of RP real estate
grew 10.5 billion yen.
As one hotel was sold, the balance of inventory assets dropped 1.7 billion yen.
For the purpose of increasing the revenue from rents, we acquired one hotel (about 700 million
yen) as noncurrent assets.
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3

Sun Frontier Fudousan Co., Ltd.

Consolidated Balance Sheet-Liabilities/Equity(¥ million)

End of Mar. 2016

End of Mar. 2017

End of Sep. 2017

Increase/Decrease(Compared to theend of Mar. 2017)

7,641
3,353
973
3,314
16,29815,055
1,242
23,93930,144(0)30,14454,084

8,281
3,438
802
4,040
19,686
18,626
1,059
27,96835,528157
35,68663,654

7,782
1,979
1,895
3,907
27,60826,091
1,516
35,39037,89525
37,921
73,311(499)(1,458)+1,092(132)+7,921+7,464+456+7,421+2,367(132)+2,235+9,657

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

Noncurrent liabilities
Long-term loans and bonds payable
Other noncurrent liabilities

Total liabilities
Shareholders’ equity
OthersTotal net assets
Total liabilities and capital
Transition of Equity Ratio
End of Mar. 2016

End of Mar. 2017

End of Sep. 2017

55.7%

56.0%

51.7%

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Because of the progress of the procurement of properties for replanning business, loans
payable increased by 6.0 billion yen compared the end of previous fiscal year and balance ofinterest-bearing debt of the end of Sep. 2017 became 28.0 billion yen.
Retained earnings increased by approx. 2.4 billion yen as difference of net income (+3.64
billion yen) and dividend payment (-1.28 billion yen).

4

Sun Frontier Fudousan Co., Ltd.

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

Apr. to Sep. in
the FY ended
Mar 31, 2017

Apr. to Sep. in
the FY ending
Mar 31, 2018

15,65620,199

Increase/
Decrease

5,172

5,640

+9.0%

Profit margin

33.0%

27.9%

(5.1%pt)

No. of procuredbuildings

15

24

+9

No. of sold buildings

11

17

+6

43(Note2)

46(Note2)+3<Replanning Business/ Hotel Development>
 Sales and profit grew year on year As we are keeping on making ingenious efforts towards procurement,
commodification and sales, as well as direct sales to our customers, profit
margin of Replanning Business excluding Hotel Development maintains at
a high level of 30.6%.
 The average business period for selling revitalized properties is 339 days
(Hotel development excluded)
 Procurement progressed substantially, and the number of properties ininventory is 46 (41 for replanning business and 5 for hotel business.)
 Balance of inventory assets is 42.0 billion yen (36.5 billion yen of which is
replanning business, 5.5 billion yen of which is hotel business.)※Overseas business excluded.
※We have also procured 9 pieces of RP real estate worth 5.7 billion yen as of the end of Oct.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

24,000+29.0%

Segment income (Note1)

No. of buildings instock as of the end Sep.

(¥ million)

5

20,00016,000

Sales
Segment Income
Profit Margin

33.0%

40%
20,19927.9%15,656

12,000

30%

20%

8,000
5,172

5,640

10%

4,000

0

0%
FY2017/3

April to September

FY2018/3

April to September(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)
Apr. to Sep. in
the FY ended
Mar 31, 2017

Apr. to Sep. in
the FY ending
Mar 31, 2018

Sales

998

1,149

+15.1%

Segment income

484

438

(9.6%)

48.5%

38.1%

(10.4%pt)(¥ million)

Profit margin

Increase/
Decrease(¥ million)

1,500＜Rental Building Business＞

1,200

100%

80%

1,149
998

900

 Sales increased in accordance with an increase of the number ofbuildings in inventory
 Most of newly procured buildings have many vacant rooms, which
is suited for commercialization in the replanning business. As
depreciation, etc. augmented, the growth of cost of sales
exceeded that of sales. Consequently, profit declined.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Sales
Segment Income
Profit Margin

6

60%
48.5%
38.1%

600
484

40%

438

300

20%

0

0%
FY2017/3

FY2018/3

April to September

April to September
Sun Frontier Fudousan Co., Ltd.

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

Sales
Segment income
Profit margin

Apr. to Sep. in
the FY ended
Mar 31, 2017

1,662

Apr. to Sep. in
the FY ending
Mar 31, 2018

1,600

Increase/
Decrease(3.7%)

984

1,006

+2.3%

59.2%

62.9%

+3.7%pt＜Sales Brokerage Business＞
 Both sales and profit were nearly unchanged from the same period of theprevious year. Sales Brokerage Business is, as part of real estate consultancy
services, the starting point of procuring and selling properties for replanningbusiness. It also creates transactions in other business sections.
＜Rental Brokerage Business＞
 As we concentrated on the increase of tenants for properties for replanningbusiness , the number of external brokerage cases decreased, and then bothsales and profit dropped.
 In the process of commercializing properties for replanning business , highplanning ability from the tenant’s perspective become a driving force for
improvement of added value and early full occupancy. As a result, It contributed a
lot for the profit of the whole company.
＜Property Management Business＞
 In addition to the increase of managing properties, we thoroughly made theproposal from the perspective of our customers in order to create the business
opportunity. As a result, both sales and profit increased stably.
 No. of managing properties : 381 (31 more properties, 8.9% increase comparedto the same period of previous fiscal year) Occupancy rate: 96.4% (up by 0.6%pt on a year on year basis)＜Building Maintenance Business＞
 Growth of managing properties for property management affected the growth ofmanaging properties for building maintenance and spot case, and both sales andprofit increased.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

7(¥ million)

1,800

Sales
Segment Income
Profit Margin

1,662

1,600

1,600

62.9%

1,400
1,200
1,000

80%

60%

59.2%
984

1,006
40%

800
600
20%

400
200

0%

0
FY2017/3

FY2018/3

April to September

April to September
Sun Frontier Fudousan Co., Ltd.

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

Sales

Apr. to Sep. in
the FY ended
Mar 31, 2017

514

Apr. to Sep. in
the FY ending
Mar 31, 2018

1,392

Increase/
Decrease+170.7%(¥ million)

1,600

99

168

+69.5%

1,400

19.3%

12.1%

(7.2%pt)

1,200＜Hotel Management Business＞
 Both sales and profit grew significantly, thanks to the effects of
M&A of “Sky Court Hotel Co., Ltd.” at the end of last year and theestablishment of “Hiyori Hotel Maihama”.
 For “Hotel Sky Court” and “Spring Sunny Hotel”, both occupancy
rate and average spending per customer were healthy.
 “Hiyori Hotel Maihama” ranked second in the popular hotel section
in a target area based on the word-of-mouth evaluation in aleading hotel booking website.

1,000

Segment income
Profit margin＜Space Rental (Rental Conference Room) Business＞
 Newly opened 4 branches (Nihonbashi, Yaesu, Nagata-cho, andHamamatsu-cho) in 6 months. In addition, the floor space of"Vision Center Tokyo ANNEX" which opened in June will be
expanded in November.
 Both sales and profit grew considerably, due to the steady increaseof repeat users and introductions.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

8

800
600

Sales
Segment Income
Profit Margin

40%
1,392

30%

19.3%

514

20%

12.1%
10%

400
200

168
99
0%

0
FY2017/3

FY2018/3

April to September

April to September
Sun Frontier Fudousan Co., Ltd.

Performance of

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

Sales
Segment income
Profit margin

Apr. to Sep. in
the FY ended
Mar 31, 2017

Apr. to Sep. in
the FY ending
Mar 31, 2018

Increase/
Decrease344

450+30.8%

286

325+13.6%

83.1%

72.2%

(11.0%pt)＜Rent guarantee business＞
 We have been keeping on making efforts in improving theawareness of guarantee system by holding seminars for building
owners and cooperating companies. As a result, cases of new
guarantee and guarantee renewal are increasing steadily,
therefore both sales and profit increased as well.
＜Overseas Business＞
 Accelerate the development in Southeast Asia which is growing
continuously.
①Danang, the Biggest City in Central Vietnam

500
450

100%
450

83.1%

400
350
300

80%
72.2%

344

325
60%

286

250
200

40%

150
100

• Owning and operating our first overseas hotel “The Blossom City”• Construction for “Hiyori Garden Tower”, high-rise urban apartment
house of 28 floors and 306 flats has started in June, 2017.

②Jakarta, Capital of Indonesia

20%

50
0

0%
FY2017/3• Progressing construction of urban detached house.
• Owning and operating Serviced Apartment “Kyo Serviced Apartment”.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

(¥ million)

Sales
Segment Income
Profit Margin9

April to September

FY2018/3

April to September
Sun Frontier Fudousan Co., Ltd.

Transition of Key Performance Indicators◆Transition of ordinary income ratio(¥ million)

50,00040,00035,000

22.9%

24.4%
20.2%

Forecast
for FY2018/3

45,000

30%

売上高
Sales
経常利益
Ordinary Income
経常利益率
Ordinary Income Ratio
22.0%

25%

21.8%

30,00015%

20,000
Forecast
for FY2018/3

15,00010,000

10%

5%

5,000
0

2014/3 2015/3 2016/3 2017/3 2017/9
2017/9Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

40,00035,00030,00020%

25,000(¥ million)

0%

80.0%

純資産
Net Assets
Equity Ratio
自己資本比率

53.7%

70.0%

56.2% 55.7% 56.0%

60.0%
51.7%

25,00050.0%

20,00040.0%

15,00030.0%

10,000

20.0%

5,000

10.0%

0

10

◆Transition of Equity ratio

2014/3 2015/3 2016/3 2017/3 2017/9
2017/90.0%

Sun Frontier Fudousan Co., Ltd.

Future Developments
1) Business Environment2) Business Policy and Model
3) Growth Strategies

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11

Sun Frontier Fudousan Co., Ltd.

Business Environment
As for world
economy,a steady recovery
is continuing.

The economic growth in a broad range of countries, including the U.S., EU, Japan, Asian countries, emerging European countries, andRussia, is fueling the growth of the global economy. The concern over the slowdown of emerging countries’ economies diminished, and thecyclical upturn of the global economy is gathering steam. Accordingly, it is estimated that the global economy will recover firmly in the nearterm.

The Japanese
economy is estimatedto keep expanding,while overseas
economies are
growing.

Aiming at increasing the country's nominal GDP to 600 trillion in 2020, the government of Japan put together all the growth strategies up to

For reason of fluctuation risk in financial and capital market, uncertainty for the economic policies of the United States due to theemerging protectionism, the heightening of geopolitical risks in Europe and North Korea, etc., it is necessary to pay attention to theoutlook for the global economy.

now to enhance economy. Through working-style reform, relaxation of several regulations, and the utilization of IT, the government isstrengthening the reform for realization of the "Dynamic Engagement of All Citizens."
As the Nikkei Stock Average rose for 16 trading days in row, which was the longest after the World WarⅡ, and hit a new high for the firsttime in 26 years after the collapse of the economic bubble. As the prices of real estate in the urban center of Tokyo exceeded those during
the bubble period, the Japanese economy is expected to keep growing, thanks to monetary policy relaxation and governmental economic
measures, while overseas economies are growing gently.
Working towards the realization of Japan as a tourism nation, the Japanese government aims to increase the number of foreign visitors toJapan to 40 million by 2020. In 2016, the number of foreign visitors to Japan was 24.03 million, and in 2017, it already reached 21.19 million
at the end of September, exceeding 20 million at the rapidest pace in history. Lack of accommodation became an urgent issue. However,caution is needed in strains due to increase of construction in plan and lifting of vacation rentals. In addition, trends of tourists to Japan isthat the consumption demand is shifting from “shopping” to “experiencing."

The urban officebuilding market isthriving, although
there is concern over
the overvalue.

Supported by positive business performance, needs for offices in central Tokyo is high and stable, and rent remained strong. But as there
will be a big supply of newly-built big buildings in 2018, the average rent is showing only a slight increase. The average vacancy rate in fivewards of central Tokyo remained at a low level, also difference of vacancy rate by area is occurring.
Against the background of the graying of society and a good financing environment, for small and medium-sized buildings in central Tokyo
which our company is focusing on, the dynamism of purchase demand is still growing as there are high needs of inheritancecountermeasures and fund management. However, it is necessary to be careful when making a decision about investment, because of theskyrocketing of real estate prices and the risk of drop of Tokyo Stock Exchange REIT index.
As BOJ is continuing the monetary easing policy and long-term interest rate is still low level, attitudes of banks towards lending to realestate businesses haven’t changed significantly while some financial institutions are showing a strict stance toward collateral evaluation
with a sense of vigilance to the overvalue of real estate market.

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12

Sun Frontier Fudousan Co., Ltd.

Changes in office Rent and Vacancy Ratein 5 Wards of Central Tokyo(%)

Average rent [yen/tsubo](yen)

Average vacancy rate [%]Average rent in Sep.

18,995 yen

increased for consecutive 45
months (+17.2 % 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

2002

2003

2004

2005

2006

Bottom average rent
Dec. 201316,207 yen
Bottom vacancy rate
Nov. 2007
Vacancy rate: 2.49%
2007

2008

2009

Vacancy rate in Sep.

3.17%

Improved 6.26% by 5 years
and 3 months
2010

2011

2012

2013

2014

2015

2016

2017

※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.

2) Managerial Policy and Business Model

Not for profit, but for trust.
We change, not you. We resolve difficulties fromour customers’ point of view.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

14

Sun Frontier Fudousan Co., Ltd.

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

Customers Building owners, asset holders, and wealthy individualCore
Business

Real estate revitalization and utilization

Policies Not for profit, but for trust.

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

Strategies

CentralTokyo

OfficeStrength

TenantFinding
Capability

Real Estate
Revitalization
Capability

Operation Capability
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15

Sun Frontier Fudousan Co., Ltd.

Business Introduction
Office Buildings
Real Estate Revitalization Business

Real Estate Services Business

Re-planning
Building Rental
Real Estate Securitization

Rental Brokerage / Sales Brokerage
Property Management / Building MaintenanceConstruction Planning / Interior Design
Asset Consulting
Rent Guarantee
Rental Conference Room and Small Office

Overseas

Hotel

Hotel Management and Housing Developments
in Vietnam
Hotel Management and Detached House
Developments in Indonesia
Attract investment from Taiwan to Tokyo

Hotel Possession and Operation
Hotel Development, Revitalizationand Sales

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

16

Sun Frontier Fudousan Co., Ltd.

Business Structureof Office Buildings Business① In vertical real estate utilization business, we survey and solve difficulties by listening to customers’ concerns.
② In horizontal real estate revitalization business, first, we put together the know-how and customer needs learned fromthe process above. Then we apply this knowledge to renovate used buildings we purchased and transform them intohigh 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 research how to solve customers’ troubles at the site,and offer solutions

Customers (Building owners, asset owners, and wealthy people)
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17

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 establishment of ourcompany.
• By cleaning our office and reading the philosophy booklet
every morning we become a group that shares the value ofmaking others happiness our own happiness.
• Aiming at offering much greater happiness to customers,
we contribute to the actualization of a rich society.
2. Management among all employees’ participation based on
the accounting for each section• By developing and diffusing the accounting system for eachdivision (Amoeba management), we enhance employees'
profit awareness and promote the business operation
involving all employees with the management perspective.
3. Business management from the customers’ viewpoint• We listen to customers’ requests carefully, handle and solve
even minor troubles, without rushing anyone.
• We change ourselves to meet our customers’ needs,
making efforts to challenge new things, create and advance.
• Through internal collaboration of different sections, wecreate high added values that are linked to one another.

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18

Businessmanagement
based on theperspective ofcustomers

Mentalmanagement
based on our
ethos andphilosophy

Management among
all employeesʼ
participation based on
the accounting foreach section

Employees play major roles.
Resonant business administration.
Sun Frontier Fudousan Co., Ltd.

Three roles of the branch network
specializing in the urban center
Target regions

1. To specialize in the introduction of tenants to the ownersof small to medium-sized office buildings in the urban

Ueno

centerAkihabara

We are operating 10 branches in Chiyoda, Chuo, Minato,
Shinjuku, Shibuya, and Shinagawa Wards and Yokohama. 84

Ikebukuro

members of the rental team and 105 members of theKoujimachi

administration team* finds tenants by utilizing their familiarity

Kanda

Kudan

Nihonbashi

with local information while specializing in the introduction andmanagement of tenants for owners. (*Fixed-term, part-time, andImperial
Palacetemporary workers)

2. To deal with the needs for solving troubles from theviewpoint of owners

Shinjuku

related to real estate by marshalling our sections.

Toranomon
Shimbashi

Shibuya

3. To procure real estate for Real Estate Revitalization

Akasaka
Ebisu

Business

New

Hamamatsu-cho
Shinagawa

GotandaThrough discussions with owners, we rent their buildings in alump. Or We directly buy buildings when owners encounter
inheritance, their buildings deterioration or they become tired of

Yokohama

management of buildings.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Ginza

AoyamaIn addition to introducing tenants, we offer consulting services
for solving troubles for owners, and meet a variety of needs

Tokyo

HibiyaHeadquarters

19

represents the major area covered by a branch
represents a newly established store (Apr. 2017)

Sun Frontier Fudousan Co., Ltd.

Keeping High Occupancy Rate while Increasing Area ofManaging Properties and Number of Customers.
Changes in occupancy rate and area under our property management

100％

About 75% of our entrusted properties aged 20 years or above.

742,070

96.4%

97.23％(As of the end of Sep. 2017)

Occupancy rate of entrusted properties
95％(㎡)
700,000
600,000
500,000
400,000

Entrusted
area

96.2%

90％

(As of Sep. 2017)

200,000
100,000

Average occupancy rate of middle-sizedbuildings in 23 wards in Tokyo85％

300,0000'08/1 '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 '17/1 '17/7※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.

＜Ranking of Managing Properties Area and Customer Number＞
Top-ranked Companies in managing area
(Thousand m2)※
1 Mitsubishi Jisho Property Management

2017

2016

7,882

7,149

2

Mitsui Fudousan Building Management

7,114

8,270

3

CBRE

4,780

3,800

26 Tosei Community

857

705

27 KENEDIX Property Monegement

830

864

28 Sun Frontier Fudousan

727

650

・・・

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Top-ranked Companies
in Number of Customers ※1 Vortex

2017

2016

606

482

2 XYMAX422

266

3 Sun Frontier Fudousan

268

232

4 RIO CONSULTING

222

209

5 EARTH WIND

173－

※Resource: It is produced by our company based on“Monthly Magazine Property Management Nov. 2017”20

Note: Occupancy rate ofbuildings undermanagement of Property
Management Section
In the 4th quarter of fiscal
year 2014, as importanttenants moved to larger
offices, some units become
vacant. Thus occupancy rate
declined temporarily at theend of the term. Later,
tenants have been moving in
steadily, occupancy rate got
recovered.

Sun Frontier Fudousan Co., Ltd.

- one profitable building in Hatchobori -The Entire South-side Wall Changed to Windows,
to Enjoy the scenery of the Park all the year roundAppearance Before

Appearance After

Tenants can enjoy the four seasons by viewing“Sakuragawa Park” at the back of the property.

① An existing customer introduced
our company to the seller of thisBack sideof the building

real estate, and we bought it.
② A financial institution that had
occupied the 1st to 3rd floors
moved out, and the entire
building was renewed, creating aspace for feeling nature by
Interior Aftertaking advantage of “Sakuragawa
Park” at the back of the property.
③ We made the vacant rooms on 5
floors occupied at rents about
50% higher than those before
renovation.
④ Sold to one of the regular

Glass wall that allows sunlight to enter【Property Outline】

Outdoor terrace for tenants
Interior Before

customers.
Interior After Location: Hatchobori, Chuo-ku, Tokyo
 Structure: Steel Reinforced-Concrete
Construction, 5 stories above ground Date of completion: 1986
 Purpose of use: Workplace/Office/Housing
 Land area: 217.60㎡ (65.82 tsubo) Gross floor area: 861.60㎡ (260.63 tsubo)
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

21

Sun Frontier Fudousan Co., Ltd.

- one profitable building in Shinkawa -Optimal Conversion Utilizing the Location
Beside an Avenue
Appearance After

Interior After① Purchased a used as the head office of acompany.
② Created building volume while complying
with laws. Converted the first floor from aparking lot to a convenience store, by
utilizing the location beside the Eitai Avenue.
③ For upper floors, we set target tenants, andrenovated rental rooms by producing an
entrance that depicts the “river surface” andrenders the “Japanese-style” atmosphere.
④ Made the first floor and upper floors
occupied at rents over 20% higher than theestimates.
⑤ Sold to one of regular customers.

Rooftop After

Entrance After
Terrace on rooftop to face on Eitai Avenue【Property Outline】
 Location: Shinkawa, Chuo-ku, Tokyo
 Structure: Steel Reinforced-Concrete
Construction, 9 stories above ground Date of completion: 1986
 Purpose of use: Office/Shop Land area: 277.12㎡ (83.82 tsubo) Gross floor area: 1,855.28㎡ (561.22 tsubo)
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Entrance Before

Entrance covered with indigo Japanese traditional paper

22

Sun Frontier Fudousan Co., Ltd.

3) Growth Strategies
Establish our base by flow type businessand expand stock type business～Standing on our two feet, “flow” and “stocks”～
・・・New information for “Stock Type Business”
・・・New information for “Flow Type Business”

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

23

Sun Frontier Fudousan Co., Ltd.

Four-pronged Strategy for Future Growth
1) Existing

Development and Expansion ofBusiness Expansion

Office Building Business

2) Hotel Business

Inbound
City-tourism Hotel3) M&A

Stock Acquisition,
Capital Participation, Business Alliance4) Overseas
Business Development

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Vietnam & Indonesia
24

Sun Frontier Fudousan Co., Ltd.

Target Fields
We communicate with real estate markets, and actively operate
our business in business fields where demand will grow.

1. Rise in theinternational
position of Tokyo

2. Utilization of surplus
money and expanding
investment funds

3. Business targeted at
visitors to Japan

4. Asia region which
are growing rapidly

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

25

Sun Frontier Fudousan Co., Ltd.

Expansion of existing business

As for Rental Conference Room and Rental Office business,
Total branch number increased to 10.
Rental Conference Room (Vision Center)
1. Vision Center Tokyo

5.Vision Center
TamachiRental Office (Vision Office)6.Vision Center
Yokohama

2.Vision Office Kanda

3. Vision Office Shinjuku

4. Vision Office Kanda
ANNEX

7.Vision CenterTokyo, Nihonbashi
Newly opened
in May, 2017

8. Vision Office Tokyo
ANNEX
Newly opened
in June, 2017

9.Vision Center
Nagata-cho
Newly openedin August, 2017

10.Vision Center
Hamamatsu-cho

Under the introduction from the leasing brokerage department
which has strong familiarity and good sense for the market ofcentral Tokyo, subsequent cases in good locations are progressing
well.

Newly openedin August, 2017

We opened 2 branches in front of Tokyo station in May and June
2017, and these branches become monthly profitable in a shortspan of time. In addition, branches in Nagata-cho andHamamatsu-cho opened in August, and the floor space of “Vision
Center Tokyo ANNEX" will be expanded in November.
Total branch number increased to 10 just after 2 years of ourbusiness start.

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

26

Sun Frontier Fudousan Co., Ltd.

Concept and Development of Hotel Business－Inbound City-tourism Hotel－＜List of Domestic Hotel＞“Heart-warming Hotel”
1.
2.
3.

Hotel which grows continuously with the staffs’ attention to thecustomer’s viewpoint.
Hotel which cherishes the local culture and history, and canreclaim its appeal.
Hotel where one can enjoy high quality and exclusive service.

Hotel Name
Location

No. ofRooms

StatusOpen (Plan)

Brand

Rented―Other
Company

In operation

Apr. 2016

In operation―

Original

Kawasaki200

In operation―

Original

Koiwa

105

Iwaki

Collaborative Tokoname

150
194

＜Domestic Hotel＞
In operation

1,198

In operation―

Original

Narita100

Under construction

327

In operation―

773

HakataIn plan & preparation

Original

159

Apr. 2017

Total No. of Rooms

2,298

In operation

Original

Maihama

80

Rented―Other
Company

Toyama210

UnderConstruction

Apr. 2018

Original

Takayama81

Under
Construction

Jul. 2018

Original

Sado

111

In planJun. 2019

Original

Nanba, Osaka

224

Under
Construction

Aug. 2019

Original

Ginza-higashi

135

In planSep. 2019

Original

Honmachi, Osaka

193

In planJun. 2021

Original

Shijo Kawaramachi,

146

In planUndecided

Undecided Narita Airport

Sado

ToyamaIwaki

Takayama

Maihama

Shijo Kawaramachi,
Kyoto
Honmachi, Osaka

Narita Airport

Nanba, Osaka

NaritaKoiwa
Ginza-higashi

HakataTokoname

Kawasaki(Note) Schedule & scale are still being planned, may change in future.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

27

Kyoto

210

Together with collaborative brand “SPRINGSUNNY Hotels & Resorts”, our own
original brand hotel “HIYORI HOTELS & RESORTS” is also in progress.

Collaborative
brand

Original
brand

Sun Frontier Fudousan Co., Ltd.

“Hiyori Hotel Maihama” is under operation healthily.
“Dormy Inn Kofu-Marunouchi” sold off.
“Hiyori Hotel Maihama”, the first hotel
under our original brand began fulloperation.
Appearance

Newly opened
on July 1, 2017

“Dormy inn Kofu-Marunouchi", the firsthotel under our Hotel Development
business was sold off.
Appearance

Sold offin August, 2017

Ranked 3rd in Chiba area at “Breakfast Festival” of Rakuten Travel.

Open-air bath
【Property Outline】


Location: Urayasu, Chiba



Structure: Steel Reinforced-Concrete Construction, Steel
Date of completion: April, 2017

Number of guest rooms： 80 roomsLand area: 2,998.55㎡ (907.06 tsubo)Gross floor area: 1,623.07㎡ (491.11 tsubo)

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

 Location: Kofu, Yamanashi
 Structure: Steel Construction, 9stories above ground.
 Date of completion: July, 2017

Construction in a part, 5 stories above ground.
【Property Outline】

 Number of guest rooms： 190 rooms Land area: 1,476.01㎡(447.53 tsubo) Gross floor area : 6,297.58㎡(1,905.01 tsubo)28

Sun Frontier Fudousan Co., Ltd.

New Hotels to be Built One after AnotherTakayama
Effect Drawing(Appearance)

Construction in
Aug, 2017
Will be opened in
Apr, 2018

Sado

Construction inJun, 2017
Will be opened in
Jul 2018

Effect Drawing(Appearance)

Ginza-Higashi
Effect Drawing(Appearance)

Construction in
Oct, 2017
Will be opened inAug, 2019

Hiyori Hotel Hida Takayama(provisional)

Hiyori Hotel Sado
(provisional)

Hiyori Hotel Ginza-Higashi(provisional)

Takayama area popular among
foreign visitors to Japan【Property Outline】
 Location: Takayama, Gifu
 Structure: Wood and galvanized steel
construction with shingle roof, 2 stories
above ground Date of completion: April, 2018 (Plan) Number of guest rooms： 81 rooms Land area: 2,421.34 ㎡ (732.45 tsubo) Gross floor area: 1,848.11 ㎡ (559.05 tsubo)

Hotel serving as a foothold forvitalizing the local economy

Hotel we developed for the first time in
Ginza area

【Property Outline】【Property Outline】

 Location: Sado, Niigata

 Location: Chuo-ku, Tokyo

 Structure: Steel construction, 5 stories
above ground Structure: Steel construction, 11 stories
above ground Date of completion: June, 2018 (Plan) Date of completion: July, 2019 (Plan) Number of guest rooms: 111 rooms Number of guest rooms: 135 rooms Land area: 3,010.07 ㎡ (910.76 tsubo) Land area: 551.38 ㎡ (166.83 tsubo) Gross floor area: 2,998.88 ㎡ (907.38 tsubo) Gross floor area: 3,725.00 ㎡ (1,127.08 tsubo)(Note) Schedule & scale are still being planned, may change in future.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

29

Sun Frontier Fudousan Co., Ltd.

Overseas expansion - Two directions -Aiming at Becoming a Company that can Play a Role inReceiving Investments from Wealthy People in Asia.
Concept "To Realize the Happiness of Everyone in Asia with People who Share the Same Values.”
Projects in Vietnam
StatusOpen

Location /Use

Scale

In operation

Aug. 2016

Danang Hotel“The Blossom City”

45 rooms

Under
construction

1st half of
2019

DanangCondominium
Residence“Hiyori Garden Tower”

306 houses

In planDanangUndecidedcommercial complex① To promote wealthy people outside Japan to invest inTokyo. To lead the energy of Asia growth to Tokyo, andcontribute to the growth of Japan.

(Sun Frontier Fudousan Taipei, Hong Kong, Shanghai, Singapore, etc.)

Sun Frontier
Fudousan Taiwan(Founded in 2013)

Hotel・SA 156 rooms+Residence 229
houses+Shop

Projects in Indonesia
StatusLocation /Use

Scale

All sold

Jakartadetached house

5 housesUnder
construction

Jakartadetached house“CASA EMERALDGANDARIA”

9 houses

Jakarta Residence+SA“Kyo Serviced
Apartment”

90 rooms

In operation

Open

Undecided

Danang(Note）”SA”･･･Serviced apartment. Fully furnished apartment available for monthly
stay, providing all the hotel-like service.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

Jakarta30② To make inroads into large cities inSoutheast Asia, which are growing
rapidly and to contribute to thehappiness of local people withoutbound services(Vietnam, Indonesia, etc.)

Sun Frontier Fudousan Co., Ltd.

Danang, Vietnam, Project No.2

- High-rise Urban Apartment House Project -Danang was chosen to be the host of 2017 Asia-Pacific Economic Cooperation (APEC) summit and is gaining
worldwide attention. We established “Sun Frontier Vietnam” as an overseas subsidiary in 2015. Beside thefirst overseas hotel “The Blossom City” opened in August, 2016, the high-rise urban apartment house projectas our 2nd project, "HIYORI Garden Tower" has started construction in June.
Bldg. No. 2
High-rise urban apartment house「HIYORI Garden Tower」

Effect Drawing(Appearance)
High-rise apartmentof 28 floors

Construction for306 flats
started in June, 2017

Mockup (Bedroom)
Direct flights from Narita/Kansai Airport toDanang went into service (Narita: 5 flights
per week / Kansai: 4 flights per week.)
76 direct flights per week from China.
77 direct flights per week from Korea.
Danang is an area that many companies
want to help develop, while gathering
worldwide attention as a fascinating resort
area.
It is only a 10-minute drive from Danang

Mockup (Living Room) 2017年３月10日 起工式の様子
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

31

Airport to the city center, and a 15-minutedrive to a beautiful beach where there aremany hotels. Located at an optimal placewith very convenient access.

Sun Frontier Fudousan Co., Ltd.

Jakarta, Indonesia~ Urban Housing & Serviced Apartment ~We established “Sun Frontier Indonesia” as an overseas subsidiary.
We are progressing projects in central Jakarta.
Bldg. No.3 Serviced Apartment“Kyo Serviced Apartment”

Bldg. No.2 City Type Ready-built House“CASA EMERALD GANDARIA”
Effect Drawing
All houses have a pool

Effect Drawing (Interior)

9 houses underconstruction

Appearance

Internal pool

<Logo Mark>Serviced Apartment with 90 rooms

Operation
startedon Dec. 2016

Effect Drawing (Appearance)

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

32

Sun Frontier Fudousan Co., Ltd.

(Reference) Introduction of corporate climate

Evening Event for Thanking Customers－to give heartfelt thanks－Wednesday, October 25, 2017

The representative Horiguchi gavean address to all customers

Each department head gave an address (the photoshows the senior managing director Nakamura)
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

400 customers attended

Special performance by the
taiko group “Kodō”

33

Activity report with an album
handmade by employees
Sun Frontier Fudousan Co., Ltd.

(Reference) Introduction of corporate climate

Efforts for Creating Corporate Culture
Morning assembly of all
employees every Monday

Cleaning every morning

Reading the philosophy pocketbook
together every morning
Morning assembly at the headquarters

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

New employee training in which
the president gives a lecture

34

Sun Frontier Fudousan Co., Ltd.

(Reference)

Transition of Sales / Ordinary Income / Number of Employees(¥ million)
50,00040,000

Sales and ordinary profit grew for 6 terms in a row.
Number of Employees is also increasing stably.
売上高
Sales
経常利益
Ordinary Income
Number of Employees
従業員数40,39435,25430,62527,741276

26,87020,000050,00048,15030,00010,000(People)16,730

84

96

134

70
7,760
52
5,003
3,474
24 1,771 3,588
1,437
791
2 0 681377 501
140
1

125
8,289

14,469141 142

152
6,346

206

181
139
4,289

199

223

6,923
799

2,039

4,341

5,593

400

300

200

17,772

10,580

541

329

500

7,024

8,894 10,000 100

02000/3 2001/3 2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3(Forecast)▲3,776▲100▲10,000▲20,000
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

▲17,794

35▲200

Sun Frontier Fudousan Co., Ltd.

(Reference)

Basic Policy for Profit Distribution
The basic policy of our corporate group is to comprehensively contribute to the benefit of shareholders by (1) striving toreturn profits to shareholders stably on a long-term basis, (2) securing investment funds for actively conducting the hotel andoverseas businesses for future growth, and (3) improving the stability of finance.
2013/3

2014/3

2015/3

2016/32017/3

2018/3(Forecast)

Net income per share

66.50 yen※

94.03 yen

118.18 yen

190.78 yen

150.92 yen

163.72 yen

dividends per share

8.50 yen※

13.50 yen

16.50 yen

25.00 yen

30.00 yen

32.00 yenpayout ratio

12.8%

14.4%

14.0%

13.1%

19.9%

19.5%

Payout ratio for reference

22.1%

23.3%

19.7%

19.3%

20.9%

－

(after considering effective tax rate)※ Our company carried out 100-for-1 stock split for common shares on Oct. 1, 2013. Accordingly, the dividend per share divided by 100 is shown for easy comparison.

Changes in Earnings and dividends per share(Dividends per share)

40yen

30yen

Dividends per share

190.78 yen

Earnings per share

118.18 yen

20yen

25.0yen30.0yen150.92 yen(Net income per share)

240yen32.0yen180yen163.72 yen

94.03 yen
66.50 yen
13.5yen

10yen

2013/3150yen120yen90yen

16.5yen

60yen

8.5yen0yen

210yen30yen
2014/3Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

2015/3

2016/336

2017/3

2018/3(Forecast)

0yen

Sun Frontier Fudousan Co., Ltd.

(Reference)

Company History
1999

Established Sun Frontier Co., Ltd. (It has been 19 years since then)

2000

Changed the Trade Name to Sun Frontier Fudousan Co., Ltd.

2001

Started replanning business* (real estate revitalization)

2004

Got listed on JASDAQ Securities Exchange (5 years and 7 months after establishment)2007

Got listed on the first section of the Tokyo Stock Exchange (2 years and 3 months after the listing in JASDAQ)

2012

Made Yubi Co., Ltd. (building maintenance business) a consolidated subsidiary by M&A

2013

Established local subsidiary “Sun Frontier Fudousan Taiwan Co., Ltd.”

Origin of our corporate nameStarted space rental business (managing rental conference room/rental office)2015

Established Sun Frontier Hotel Management Inc. and started hotel management business

The corporate name “SunFrontier” is infused with thehopes of “emitting love toeveryone like solar energy for thehappiness of humankind andsociety,” “living strongly andbrightly,” and “becoming acompany that can keep taking onchallenges like a frontier settler
with ambition and dream.”

Made a business alliance on hotel business in Japan with Spring Group of China
Established local subsidiary "SUN FRONTIER VIETNAM CO., LTD.“ in Vietnam
Established local subsidiary “PT. SUN FRONTIER INDONESIA” in Indonesia
Opened our first domestic hotel “SPRINGSUNNY Hotel Nagoya Tokoname” in Tokoname, Aichi

2016

Opened our first overseas hotel “The Blossom City” in the biggest city Danang of central Vietnam
Made Sky Court Hotel Co., Ltd. a consolidated subsidiary by M&A
Started operating serviced apartment “Kyo Serviced Apartment" in Jakarta, Capital of Indonesia
Selected as a stock that constitutes “JPX-Nikkei Mid and Small Cap Index”

2017“Hiyori Hotel Maihama”, the first hotel under our original brand began full operation
Construction for “Hiyori Garden Tower”, the high-rise urban apartment house in Danang
President, Tomoaki Horiguchi* “Replanning” is the registered trademark of Sun Frontier Fudousan Co., Ltd.
Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

37

Sun Frontier Fudousan Co., Ltd.

(Reference)

Company Overview
Name

Sun Frontier Fudousan Co., Ltd.

Head Office

1-2-2 Yurakucho, Chiyoda-ku Tokyo

Established

April 8, 1999

Date of listing
CapitalNovember 19, 2004 (JASDAQ Securities Exchange)
February 26, 2007 (The first section of the Tokyo Stock Exchange）¥8,387 million

Representative

President: Tomoaki Horiguchi

Employees*

Full-time employees: 358 (Including part-time employees: 679)

Average Age*

32.4 years old
Revitalization of real estateBusiness

Real Estate Service

Brokerage,management, construction planningfor real estate, compensation for rent in arrears
Rental building operation, consultancy for assets

Head Office : Hibiya, Chiyoda-ku, Tokyo

Hotel Development and operation
Settlement Month March
Listed in

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

Copyright © 2017 Sun Frontier Fudousan Co., Ltd. All Rights Reserved.

38

Sun Frontier Fudousan Co., Ltd.

Disclaimer

Sun Frontier Fudousan Co., Ltd.

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

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