Loadstar Capital Kk · TSE:3482

Loadstar Capital Kk — H1 2018 Earnings Presentation

57 slides from Loadstar Capital Kk's earnings presentation, August 2018

  1. Slide 1: Six months ended June 30, 2018 Earnings Briefing

    Six months ended June 30, 2018 Earnings Briefing Loadstar Capital K.K. Securities code: 3482 August 2018 © Loadstar Capital ALL RIGHTS RESERVED

  2. Slide 2: Overview of Financial Results for the Six Months Ended June 30, 2018

    1. Overview of Financial Results for the Six months Ended June 30, 2018 © Loadstar Capital ALL RIGHTS RESERVED 1

  3. Slide 3: Financial Results Highlights

    Financial Results Highlights Corporate Funding Business Significant increase in both sales and Y-o-Y profits Achieved more real estate investments ＋52％ (up 30% from the end of previous year-end) and realized gains by adding Net Sales value to investment properties Crowdfunding Business Y-o-Y Signifi

  4. Slide 4: Financial Results Highlights: Growing Net Profits

    Financial Results Highlights Growing Net Profits （¥ millions） 10,585 12,000 Revised Forecasts 10,498 Original Forecasts 9,000 % of FY2018 Forecast 6,000 48% 5,085 3,000 0 2018Q2 FY2018 Forecast © Loadstar Capital ALL RIGHTS RESERVED 3

  5. Slide 5: Ordinary profit: Fast progress vis-à-vis forecasts

    Financial Results Highlights Ordinary profit Fast progress vis-à-vis forecasts 2,089 （¥ millions） Revised Forecasts 2,000 1,591 Original Forecasts 1,409 % of FY2018 1,500 Forecast 67% 1,000 500 0 2018Q2 FY2018 Forecast © Loadstar Capital ALL RIGHTS RESERVED 4

  6. Slide 6: Business Overview

    ２．Business Overview © Loadstar Capital ALL RIGHTS RESERVED 5

  7. Slide 7: Real Estate X Tech to Open Up a New Market

    Real Estate Investments Corporate Philosophy Real Estate X Tech to Open Up a New Market CROWDFUNDING AI （Equity Investment-type / Loan-Type） × REAL ESTATE INVESTMENTS Real Estate Tech Real Estate CORPORATE FUNDING BROKERAGE Investments ASSET MANAGEMENT (Real Estate Principal Investment) / ADVISORY ©

  8. Slide 8: Corporate Funding Business Results

    Corporate Funding Business Results Net Sales Steadily expanding ■Real estate leasing % Y-o-Y ■Real estate investment +29% （¥ millions） 5,000 618 4,000 3,000 480 4,378 % Y-o-Y 2,000 1,000 2,808 +56% 0 2017Q2 2018Q2 © Loadstar Capital ALL RIGHTS RESERVED 7

  9. Slide 9: Corporate Funding Business Results: Acquired and Sold Properties

    Corporate Funding Business Results ⚫ Acquired 6 properties, and Sold 4 properties The cost-effectiveness was improved because the acquired property size increased ⚫ Maintained good relationships with partner banks Real estate as inventory (Book value) （¥ millions） Solid lines：Book value Dotted lines

  10. Slide 10: Corporate Funding Business Topics

    Corporate Funding Business Topics ⚫ SURUGA Bank Problem and Financial Institutions’ Lending Stance We are engaged in the real estate investment business, focusing on office buildings in Central Tokyo. SURUGA Bank problem has had no impact on the lending policies of the banks we work with. In fact, l

  11. Slide 11: Real Estate Tech: Real Estate X Tech

    Real Estate Tech Corporate Philosophy Real Estate X Tech to Open Up a New Market CROWDFUNDING AI （Equity Investment-type / Loan-Type） × REAL ESTATE INVESTMENTS Real Estate Tech Real Estate CORPORATE FUNDING Investments (Real Estate Principal Investment) ASSET MANAGEMENT BROKERAGE / ADVISORY © Loadst

  12. Slide 12: Crowdfunding Business Results

    Crowdfunding Business Results Net Sales Grown significantly （¥ millions） 100 88 80 % Y-o-Y 60 +433% 40 20 16 0 2017Q2 2018Q2 © Loadstar Capital ALL RIGHTS RESERVED 11

  13. Slide 13: Investor Members / Cumulative Investment Amount

    Investor Members／Cumulative Investment Amount The number of investor members and cumulative investment amount are surging due to the growing recognition of the company as well as crowdfunding in general. （¥ millions） （People） 7,000 14,000 12,502 累積投資金額(左軸) Cumulatice Investment Amount (Left axis) 6,

  14. Slide 14: Launch of Equity Investment-type Crowdfunding

    Launch Equity Investment-type Crowdfunding On August 10, 2018, we began accepting investments in our first equity investment-type product. 【Overview】 Project Name Akihabara Office Building Total Amount Raised ¥265 million ¥100,000 per unit (5-100 units) Investment Units Minimum investment amount = ¥

  15. Slide 15: Growth Potential of Crowdfunding Business

    Growth Potential of Crowdfunding Business Japanese market is expanding, and going forward equity investment-type crowdfunding is expected to grow as overseas market has been. Japan’s crowdfunding market Overseas crowdfunding market （¥100 millions） （Billion USD） 1,200 120 Donation-type 1,090 105.6 Eq

  16. Slide 16: Factors of Growth Potential in Japan ①

    Factors of Growth Potential in Japan ① Possibilities for reaching the individual financial assets of people of wide-ranging ages Stocks, Investment Trusts, FX, etc. Investment-type Crowdfunding Value may largely fluctuate in hourly or daily basis. Value has limited impacts from the stock market / Li

  17. Slide 17: Factors of Growth Potential in Japan ②

    Factors of Growth Potential in Japan ② Going forward, there is a chance that professional investors will start to get involved due to the growth of the platform. Real Estate Investment Product Other Investment Publicly Offered Private-Placement Listed REITs Private-Placement REITs/Funds ¥16.2 trilli

  18. Slide 18: Crowdfunding Business Development

    Crowdfunding Business Development Acquire investor members OwnersBook Matsui Securities Introduce borrowers THE SEIBU SHINKIN BANK ORIX Bank Corporation SAISON FUNDEX CORPORATION Shinsei Investment&Finance Limited © Loadstar Capital ALL RIGHTS RESERVED 17

  19. Slide 19: Crowdfunding Business Topics

    Crowdfunding Business Topics ⚫ Business Improvement Order Issued to Major Social Lending Company In July, the Kanto Local Finance Bureau issued a business improvement order to the industry's largest social lending operating company (unlisted). In the administrative action pursuant to the Financial I

  20. Slide 20: Return to shareholders

    Return to shareholders 《Basic dividend policy》 ⚫ We commit to improve corporate value and shareholder profit by expanding business performance ⚫ Perform stable and continuous profit reduction with a payout ratio of 15% as a guide Surplus Dividends to Growth investment Shareholders 2018 2012 … 2016 2

  21. Slide 21: Change in other affiliates

    Change in other affiliates On June 21, 2018, the 100% parent company of Loadstar Capital affiliate Renren Lianhe Holdings（owns 36.4% of Loadstar Capital’s shares) changed from Renren Inc. to Oak Pacific Investment.The capital relationship chart following the change is shown below. The shareholder co

  22. Slide 22: Appendix

    Appendix © Loadstar Capital ALL RIGHTS RESERVED 26

  23. Slide 23: Company Profile (as of July 31, 2018)

    Company Profile（as of July 31, 2018） Company Name Loadstar Capital K.K. Address Zegna Ginza Building 6F, 2-6-16 Ginza, Chuo-ku, Tokyo, Japan Founded March 14, 2012 Representative President & CEO Tatsushi Iwano Share Capital ¥1,335 million Number of Officers 42 and Employees Consolidated Loadstar Fun

  24. Slide 24: Management Team

    Management Team Tatsushi Iwano President April 1996 Joined Japan Real Estate Institute April 2000 Joined Goldman Sachs Realty Japan Ltd. August 2004 Joined Rockpoint Management Japan LLC March 2012 Founded Loadstar Capital K.K. Assumed office as President (current) May 2014 Assumed office as Preside

  25. Slide 25: Introduction of New Officer: Hiroyasu Kaizuka

    Introduction of New Officer Loadstar Capital K.K. Hiroyasu Kaizuka Executive Director, Investment Management Department 1989年 Joined Royal Bank of Canada 1993年 Joined Richard Ellis (currently CBRE), managed overall corporate real estate strategies of U.S. companies in Japan 1999年 Joined Goldman Sach

  26. Slide 26: Introduction of New Officer: Hideo Wanami

    Introduction of New Officer Loadstar Capital K.K. Hideo Wanami Independent director 1980年 Joined Tokyo Regional Taxation Bureau 2005年 Professor, National Tax College, National Tax Agency 2008年 Registered as a tax accountant 2008年 Executive Advisor, Grant Thornton Taiyo Tax Corporation 2009年 Joined P

  27. Slide 27: History/Financial Results

    History/Financial Results Total number of OwnersBook Total number of OwnersBook registered members surpasses registered members surpasses 12,000 20,000（as of 7/31) Leading company in real estate “AI-Checker” launch 2018 tech Loadstar Funding K.K. founded Launch of crowdfunding service “OwnersBook” 2

  28. Slide 28: Consolidated Statements of Income

    Consolidated Statements of Income （¥ millions) FY2018 1Q-2Q Results FY2018（Forecasts） % of % of Net After Before Amt. % of Net Amount % Y-o-Y FY2018 % Y-o-Y Sales Revision Revision Changed Sales Forecast Net Sales 5,085 100.0% 153.8% 48.0% 10,585 10,498 87 100.0% 120.4% Cost of sales 3,243 63.8% 142

  29. Slide 29: Consolidated Financial Position

    Consolidated Financial Position （¥ millions） 12/31/2017 6/30/2018 % vs. Amount % of total Amount % of total 12/31/2017 Current assets 21,849 99.4% 28,357 99.4% 129.8% Cash and deposits 4,615 21.0% 4,739 16.6% 102.7% Operating loans 1,167 5.3% 2,666 9.3% 228.4% Real estate as inventory 15,987 72.7% 2

  30. Slide 30: Consolidated Statements of Cash Flows

    Consolidated Statements of Cash Flows （¥ millions） FY2017 1Q-2Q FY2018 1Q-2Q Amt. Changed CF from operating activities 841 △3,532 △4,374 Profit before income taxes 674 1,342 668 Decrease (increase) in operating loans receivable △156 △1,498 △1,342 Decrease (increase) in real estate as inventory △788

  31. Slide 31: Loadstar Capital's Strengths and Features

    Loadstar Capital’s Strengths and Features © Loadstar Capital ALL RIGHTS RESERVED 30

  32. Slide 32: Loadstar Capital's Strength

    Loadstar capital’s Strength Barrier to entry due to Ability to respond to government approval and licenses market changes, Supported by a First-mover advantage as we entered the stable financial base Innovation crowdfunding market stability and at an early stage Entry barriers Professionals Fast inv

  33. Slide 33: Growth Potential of Crowdfunding Business

    Growth Potential of Crowdfunding Business Japanese market is expanding, and going forward equity investment-type crowdfunding is expected to grow as overseas market has been. Japan’s crowdfunding market Overseas crowdfunding market （¥100 millions） （Billion USD） 1,200 120 Donation-type 1,090 105.6 Eq

  34. Slide 34: Factors of Growth Potential in Japan ①

    Factors of Growth Potential in Japan ① Possibilities for reaching the individual financial assets of people of wide-ranging ages Stocks, Investment Trusts, FX, etc. Investment-type Crowdfunding Value may largely fluctuate in hourly or daily basis. Value has limited impacts from the stock market / Li

  35. Slide 35: Factors of Growth Potential in Japan ②

    Factors of Growth Potential in Japan ② Going forward, there is a chance that professional investors will start to get involved due to the growth of the platform. Other Investment Real Estate Investment Product Domains Domains Publicly Offered Private-Placement Listed REITs Private-Placement REITs/Fu

  36. Slide 36: Competitive Advantage

    Competitive Advantage ⚫ Supply side We have obtained the approvals and licenses necessary to engage in the equity investment-type crowdfunding business ⚫ Demand side Careful selection of projects by real estate specialists and listing on TSE Mothers, established trust as an company in the cloud fund

  37. Slide 37: High Expertise

    High Expertise With a high level of expertise in both real estate and IT, we are able to accurately grasp the market’s needs and quickly provide services. Real Estate Pros IT Pros ■Starting with senior management, our real estate professionals have been working in real ■Experts with more than 15 yea

  38. Slide 38: Corporate Funding Business Overview

    Corporate Funding Business Overview Acquire mainly medium-sized office buildings within Tokyo’s 23 wards, and value up Sell Information Real estate Increase real Appropriately judge gathering acquisition estate value market conditions ✓ Over 20 years of ✓ Quick decision-making ✓ Construction work to

  39. Slide 39: Stable Financial Base

    Stable Financial Base ⚫ Long-term borrowings based on high level of creditworthiness from financial institutions Our financial base allows us to flexibly respond to changes in the market. ⚫ Our track record of adding value to properties with low occupancy rates and later increasing the price to a fa

  40. Slide 40: OwnersBook

    OwnersBook © Loadstar Capital ALL RIGHTS RESERVED 39

  41. Slide 41: OwnersBook Features

    OwnersBook Features Small investment amounts Makes it easy to invest in real estate through small investments Online platform allows for Can invest according to risk lower investor costs tolerance level Free-of-charge member registration, Product lineup based on investors’ no investment fees, risk t

  42. Slide 42: The world OwnersBook is changing

    The world OwnersBook is changing Starting from one investment unit of ¥10,000 Making real estate investing more accessible to more people First in the industry in Japan to Surpassed the 20,000 member mark launch app service (As of July 31, 2018) © Loadstar Capital ALL RIGHTS RESERVED 41

  43. Slide 43: Loan-type OwnersBook

    Loan-type OwnersBook Lending for real estate-backed/loans* OwnersBook Investors Senior Loan Lending Investment Real ¥300 million estate ¥500 Mezzanine Loan million ¥50 million Interest / Dividend/ Equity Principal Principal ¥150 million Investors * In some cases, we deal with senior loans. © Loadsta

  44. Slide 44: Equity Investment-type OwnersBook

    Equity Investment-type OwnersBook Individual investors are able to invest in the equity portion. OwnersBook Investors Investment Investment Real Loan estate ¥350 million ¥500 million Dividend / Dividend / Equity Principal Principal ¥150 million Investors © Loadstar Capital ALL RIGHTS RESERVED 43

  45. Slide 45: Equity Investment-type: The world we aim for

    Equity Investment-type ～ The world we aim for ～ Historically The Aim of OwnersBook Larger Investment Small Size Small Size Products Real Estate J-REIT mainly for Real Estate J-REIT investment professional investment investors Individual investors Individual investors Institutional investors Institut

  46. Slide 46: Equity Investment-type: Real Estate Investment for individual investors

    Equity Investment-type -Real Estate Investment for individual investors- Investment Investment Target Property Characteristics Amount Target of loan is unknown Can invest starting （concealed） Compared to equity OwnersBook from one investment At least two or more investment-type, this is a Loan-type

  47. Slide 47: Equity Investment-type: Profit structure

    Equity Investment-type ～ Profit structure ～ Asset Management Model Up-front fee Disposition fee fee Loan amount Loan-type － － × 2％ Equity Equity Amount Real Estate Price Real Estate Sales Price Investment-type × 2％ × 1％ × 1％ * The above fee condition is a typical sample. Real Estate Office Loan Resi

  48. Slide 48: Crowdfunding: Risk and Return

    Crowdfunding ～ Risk and Return ～ ⚫ The average yield for loan-type is approximately 5%, equity investment-type aims for returns of approximately 6-10% of cash on cash yield. High Futures Return (Expected Gains) Equity investment -type CF Investment in Foreign Loan-type CF physical stocks real estate

  49. Slide 49: Real Estate Market Analysis

    Real Estate Market Analysis © Loadstar Capital ALL RIGHTS RESERVED 48

  50. Slide 50: Japan's Position in the Real Estate Market and Our Advantages

    Japan’s Position in the Real Estate Market and Our Advantages in our Core Domains • Growth possibilities for Japan’s investment real estate market • Japanese people’s wealth • Areas with population growth in past 20 years • Areas with real estate for investment • The world in 2025（Urban population ＆

  51. Slide 51: Japan's Investment Real Estate Market

    Japan’s Investment Real Estate Market Japan’s investment real estate market has a lot of room to grow further. Japan’s investment market （Units: ¥trillion） 2,300 Still very small. A lot of rooms to grow. 918 931 703 84 JGB Stock Market Capitalization Total Real Estate Value Investment Real Estate To

  52. Slide 52: Japanese People's Wealth

    Japanese People’s Wealth More than half of Japan’s household financial assets are waiting on the sidelines, not being invested. Cash and deposits total ¥961 trillion* 1 *2 *2 ¥1,809 trillion $77.1 trillion Source: *1 The Bank of Japan Research and Statistics Department ”Flow of Funds Accounts (Q4 20

  53. Slide 53: Areas with Population Growth in Past 20 Years

    Areas with Population Growth in Past 20 Years Tokyo’s population has increased for last 19 years and the trend continues. Only Tokyo has an infrastructure that can compete with major cities overseas. Tokyo’s Population will Increase Tokyo’s Population (Thousands) Going Forward (Thousands) Increase 1

  54. Slide 54: Areas with Real Estate for Investment

    Areas with Real Estate for Investment Over 70% of investable assets stay in the greater Tokyo area. Ratio of office floor space in Japanese cities 2.23 Sendai 1.72 Hiroshima 2.54 Sapporo 3.57 Fukuoka 5.87 Nagoya 1.12 Kyoto 1.85 Kobe 15.91 Osaka 63.94 Tokyo 1.03 Saitama 5.00 Yokohama 1.95 Chiba Sourc

  55. Slide 55: The World in 2025 (Urban Population & GDP)

    The World in 2025（Urban Population ＆ GDP） Invest with an eye to the future. The Tokyo economic area continues to have the largest urban population and GDP in the world. 40 000 Tokyo 35 000 Delhi 30 000 Shanghai 2025 POPULATION (thousands) Beijing 25 000 Mumbai Mexico C. Sao Paulo 20 000 New York 15

  56. Slide 56: Concentration of Large Companies in Tokyo

    Concentration of Large Companies in Tokyo Tokyo has the second highest concentration of large companies in the world. Fortune 500 Companies by City (Ranking) 60 50 40 30 20 10 0 Beijing Tokyo Paris New York London Seoul Shanghai Osaka Hong Kong Source: Loadstar Capital K.K., based on data from Fortu

  57. Slide 57: Global Comparison of Investment Real Estate Performance

    Global Comparison of Investment Real Estate Performance Tokyo has a favorable environment. Prime Office Yield to Gov’t Bond Historical Yield Spread by Major Cities (unit: bps) Yield Spread 350 6.00% 300 5.00% 250 4.00% 200 3.00% 150 2.00% 100 1.00% 50 0 0.00% 2014 2015 2016 2017 2018 Hong London New

Loadstar Capital K.K. — H1 2018 Earnings Presentation on 6ix