Tokyu Fudosan Holdings Corp. · TSE:3289

Tokyu Fudosan — Q2 FY2019 Earnings Presentation

47 slides from Tokyu Fudosan's earnings presentation, November 2019

1. Slide 1: Financial Highlights FY2019 Second Quarter

   Financial Highlights FY2019 Second Quarter (First Six Months) Ended September 30, 2019 TOKYU FUDOSAN HOLDINGS CORPORATION Code：3289

2. Slide 2: Forward-looking statements notice

   The forecasts and other forward-looking statements in this report are based on currently available information and certain assumptions determined as rational. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual performance may significantl

3. Slide 3: Contents

   Contents • Overview of Results Fiscal Year 2019 Second Quarter ・・・・・ 3 • Medium-Term Management Plan 2017-2020 ・・・・・ 32 • Reference ・・・・・ 38 2 Copyright © TOKYU FUDOSAN HOLDINGS CORPORATION All rights reserved.

4. Slide 4: FY2019 Q2 Financial Highlights

   FY2019 Q2 Financial Highlights Increase in revenue and Decrease in profit in the second quarter of FY2019, although they were in line with the full-year forecast. ・Results of the FY2019 Second Quarter Ended September 30, 2019 ¥412.5 billion in operating revenue and ¥31.7 billion in operating profit

5. Slide 5: FY2019 Q2 (First Six Months) Operating Results

   FY2019 Q2 (First Six Months) Operating Results Respective businesses remained firm, although profit decreased due to a decrease in revenue on sales of buildings for investors. Q2 First Six Months Full-year (ended Sep-30) (ended March-31) Compared to the same period （\ billion） FY2019 Progress last y

6. Slide 6: FY2019 Q2 Segment performance

   FY2019 Q2 (First Six Months) Segment performance Revenue increased, particularly in the Residential, Property Management and Real Estate Agent segments. Profit decreased due to a decrease in sales of buildings in the Urban Development segment. 〈Changes in revenue〉 （¥billion） Innovation Real Estate W

7. Slide 7: Summary of balance sheets

   Summary of balance sheets Assets and liabilities increased, mainly due to an increase in Real estate for sale and Property and equipment, Intangible assets. FY2018 FY2019 （\ billion） As of Mar-31, As of Sep-30, Compared to the end of the previous fiscal year 2019 2019 Comparison Cash and deposits 18

8. Slide 8: Summary of Cash Flows

   Summary of Cash Flows Net cash used in operating and investing activities associated with new investments was financed with loans payable and other cash flow from financial activities. FY2018 FY2019 （\billion） Main factors for changes Q2(Apr-Sep) Q2(Apr-Sep) Net cash provided by (used in) Profit bef

9. Slide 9: FY2019 Earnings Forecasts

   FY2019 Earnings Forecasts Higher revenue and profit are expected, particularly in the Property Management and Real Estate Agent segments, and due mainly to an increase in the number of condominium units sold. FY2018 FY2019 Initial Projected Compared to the same period Full-year（\ billion） Mar-2020 C

10. Slide 10: FY2019 Forecast (Segment performance)

    FY2019 Forecast (Segment performance) Both revenue and profit are forecast to rise, particularly in the Residential, Property Management and Real Estate Agents segments. 〈Changes in revenue〉 Wellness Tokyu Hands Elimination +4.0 Innovation (2.7) （¥billion） Real Estate (3.3) Property Agents business

11. Slide 11: Trends in equity and interest-bearing debt

    Trends in equity and interest-bearing debt Rating Institution: Japan Credit Rating Agency, Ltd. Long-term：A (Stable) Short-term：J-1 Medium-Term Management Plan 2017-2020 ¥billion Equity Interest-bearing Debt Debt Equity ratiio Debt/EBITDA ratio 1,400 14.0× 12.8 EBITDA 11.7 11.7 12.0 multiple 1,200 1

12. Slide 12: Return to Shareholders

    Return to Shareholders Annual dividend for the fiscal year ending March 31, 2020, will be raised to 16.0 yen, representing the 7th consecutive increase. 16.0 16Yen Dividend*（Year-end） 15.5 14.5 14Yen Dividend*（Interim） 13.0 12.0 12Yen 8.0 8.0 10.0 7.5 10Yen 6.5 8.0 6.5 8Yen 7.0 5.0 6Yen 4.5 3.5 4Yen

13. Slide 13: ESG management

    ESG management ESG management to realize sustainable growth and the enhancement of corporate value Environment Corporate governance 〈FY2020 KPI〉 Selected as global ESG index 〈FY2020 KPI〉 Rate of attendance at the board of CO2 emissions：▲25% reduction directors' meeting ：100％ CASBEE/DBJ environmental

14. Slide 14: Urban Development(1) FY2019 Q2

    Urban Development(1) FY2019 Q2(First Six Months) Q2: Decreases in both revenue and profit FY2019: Increases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 121.8 10

15. Slide 15: Urban Development(2) Vacancy Rate and Rent

    Urban Development(2)Vacancy Rate and Rent As of September 30, 2019 Vacancy rate 0.4% (Tenants actually moving in and out, Office buildings and commercial facilities) (¥/Month/Tsubo) 12% ¥30,000 Tsubo ≅ 3.3㎡ 29,220 27,730 25,310 26,610 10% ¥25,000 25,180 23,850 23,770 24,210 24,500 23,270 22,480 22,1

16. Slide 16: Urban Development(3) Major projects

    Urban Development(3)Major projects Floor space ： thousand ㎡ Kudanminami Namba Motomachi Q Plaza Ikebukuro Jimbocho North Asakusa 2-chome Tokyo PortCity Takeshiba 1-chome Project ** 1-chome Place Toshima-ku Tokyu Building Hotel Project** Chiyoda-ku Chayamachi B-2 Block Minato-ku Osaka Commercial/Cine

17. Slide 17: Urban Development(4) Greater Shibuya area projects

    Urban Development(4)Major projects in the Greater Shibuya area Shibuya Fukuras was completed in October 2019. In addition, construction started in October in the Shibuya Sakuragaoka Block Redevelopment Plan. Shibuya 渋谷駅sta. Project led by Tokyu Land Corporation Project led by Tokyu Corporation SHIBU

18. Slide 18: Urban Development(5) Shibuya Solasta

    Urban Development(5)Major projects <Shibuya Solasta> Completed in March 2019 as a smart office that uses IoT and became a new base of the Group. 〈Smart office that uses IoT〉 Visualizes the occupancy Checks the locations of level of bathrooms. workers in real time. Registers the information of Air-co

19. Slide 19: Urban Development(6) Shibuya Fukuras

    Urban Development(6)Major projects <Shibuya Fukuras> The building was completed in October 2019. Equipped with a bus terminal and tourism support facility on the first floor, it is expected to function as a new gateway to Shibuya. Floor space ： thousand ㎡ Tokyu Plaza Shibuya Rooftop 〈CÉ LA VI〉 place

20. Slide 20: Urban Development(7) Tokyo PortCity Takeshiba

    Urban Development(7)Major projects <Tokyo PortCity Takeshiba> Facilitate the conversion of Takeshiba into a smart city in cooperation with SoftBank Corporation that will use the facility as an office tenant. Office tower Office/Commercial Floor space : about 180 Complete : May, 2020 (Plan) Office to

21. Slide 21: Urban Development(8) Renewable energy business

    Urban Development(8)Renewable energy business Investment in the renewable energy business, including investment in solar power and wind power generation plants, made progress. Projects acquired (As of September 30, 2019) Properties in operation: 19 solar power plant in operation Hokkaido solar power

22. Slide 22: Residential(1) FY2019 Q2

    Residential(1) FY2019 Q2(First Six Months) Q2: Increases in both revenue and profit FY2019: Increases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 32.0 50.5 18.5

23. Slide 23: Residential(2) Condominium sales indexes

    Residential(2)Change in the indexes for condominium sales In the fiscal year ending March 31, 2020, the number of units sold will increase, and the percentage of contracts secured has made a steady progress. FY FY2017 FY2018 FY2019 Forecast FY2020 Forecast No. of units sold Total 1,627units Total 1,

24. Slide 24: Property Management(1) FY2019 Q2

    Property Management(1) FY2019 Q2(First Six Months) Q2: Increases in both revenue and profit FY2019: Increases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 80.7 9

25. Slide 25: Property Management(2) Stock of properties

    Property Management(2)Stock of properties Condominiums and buildings under management steadily increased to expand stock under management. 〈Trend in stock of comprehensive condominium management and facility management in number of units〉 Comprehensive management Facility management 800,000 301,841

26. Slide 26: Real Estate Agents(1) FY2019 Q2

    Real Estate Agents(1) FY2019 Q2(First Six Months) Q2: Increases in both revenue and profit FY2019: Increases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 51.4 59

27. Slide 27: Real Estate Agents(2) Performance indicators

    Real Estate Agents(2)Performance indicators in sales agency operations Revenue increased, reflecting increases in the number of transactions both in the retail business and the wholesale business. FY2019 Q2 Highlights Retail Wholesale Total No. of transactions 12,796 504 13,300 □Retail (Result) ・Inc

28. Slide 28: Wellness(1) FY2019 Q2

    Wellness(1) FY2019 Q2(First Six Months) Q2: Decreases in both revenue and profit FY2019: Decreases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 62.3 54.4 (7.9) 4

29. Slide 29: Wellness(2) Major projects

    Wellness(2)Major projects A number of hotels of Tokyu Stay, which maintains a high level of operation, are scheduled to open. New Tokyu Stay hotels scheduled to open Opening date ＜Number of Tokyu Stay hotels Tokyu Stay Kanazawa February 2020 and their guest rooms＞ Tokyu Stay Okinawa Naha February 20

30. Slide 30: Tokyu Hands FY2019 Q2

    Tokyu Hands FY2019 Q2(First Six Months) Q2: Increases in both revenue and profit FY2019: Increases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months（\ billion） Q2(Apr-Sep) Q2(Apr-Sep) last year New stores +0.4, Operating revenue

31. Slide 31: Innovation Business(1) FY2019 Q2

    Innovation Business(1) FY2019 Q2(First Six Months) Q2: Decreases in both revenue and profit FY2019: Decreases in both revenue and profit Second Quarter FY2018 FY2019 Compared to the same period Comparison Progress First Six Months (\ billion) Q2(Apr-Sep) Q2(Apr-Sep) last year Operating revenue 17.6

32. Slide 32: Innovation Business(2) Overseas operations

    Innovation Business(2)Overseas operations Business expansion mainly in Indonesia and America 〈Indonesia〉 〈America〉 BRANZ BSD Puri Botanical project 425 Park Avenue Condominiums, Total number of units: Condominium, Total number of units: about 3,000 units scheduled about 600 units scheduled Completed

33. Slide 33: Medium-Term Management Plan 2017-2020

    Medium-Term Management Plan 2017-2020 32 Copyright © TOKYU FUDOSAN HOLDINGS CORPORATION All rights reserved.

34. Slide 34: Progress of Medium-Term Management Plan 2017-2020

    Progress of Medium-Term Management Plan 2017-2020 （The revised version was announced in May 2019） Revised the targets set in the Medium-Term Management Plan in consideration of the current business environment and the capital increase through public stock offering made in October 2018 and added ROE

35. Slide 35: Progress in the Medium-term Management Plan (Operating profit/Net profit)

    Progress in the Medium-term Management Plan (Operating profit/Net profit*) Operating Profit Net profit* Residential Medium-term Management Plan 2017-2020 Real-Estate Agents Innovation business 120 ¥billion Tokyu Hands Wellness 95.0 Property Management 100 Urban Development 82.0 9.0 Elimination 77.5

36. Slide 36: Basic Policy for Increasing Shareholder Value (1)

    Basic Policy for Increasing Shareholder Value and Corporate Value (1) Aim to increase EPS and ROE in an effort to increase shareholder value by growing earning power while maintaining financial discipline. Business portfolio strategy Increase Increase Asset Utilization Type Business shareholder valu

37. Slide 37: Basic Policy for Increasing Shareholder Value (2)

    Basic Policy for Increasing Shareholder Value and Corporate Value (2) Current status and basic policy on business portfolio strategy BS for FY2018 Ended Mar-2019 Breakdown of assets by segment Total assets Property Management Real Estate Agents ¥2,405.2 billion ¥102.5 billion ¥104.9 billion Tokyu Ha

38. Slide 38: Basic Policy for Increasing Shareholder Value (3)

    Basic Policy for Increasing Shareholder Value and Corporate Value (3) Basic policy regarding financial and capital policies BS for FY2018 D/E ratio and EBITDA multiple Ended Mar-2019 •For the time being, control the D/E ratio at 2.3 or below, aim for the 10 times-level of EBITDA Total assets ¥2,405.

39. Slide 39: Reference

    Reference 38 Copyright © TOKYU FUDOSAN HOLDINGS CORPORATION All rights reserved.

40. Slide 40: Market value appraisal for leased properties

    Market value appraisal for leased properties ＊As of Mar-31, 2019 Unrealized profit of leased properties increased thanks to the active real estate market and the inclusion of large redevelopment projects. FY2017 FY2018 （\ billion） Comparison Remarks Mar-2018 Mar-2019 Carrying Value 791.4 816.1 24.8

41. Slide 41: Transition in total floor area and AUM transition

    Transition in total floor area and AUM transition ＊As of Sep-30, 2019 〈Transition in total floor area〉 〈AUM transition〉 Thousand ㎡ ¥billion 2,000 1,400 API* 1,311.0 Commercial facilities CRR** 1,251.9 Office building Private REITs, etc. 1,580 1,200 1,496 1,458 1,438 1,427 1,500 988.6 1,000 583.7 527

42. Slide 42: Distribution of Office Buildings

    Distribution of Office Buildings (Urban Development segment) For the portfolios, office buildings are concentrated in four wards in the Tokyo Metropolitan area (As of Sep-30, 2019) 〈Area〉 〈Completed year〉 Metropolitan 4districts After 2001 540thousand ㎡（84%） 52buildings 410thousand ㎡（63%） 27building

43. Slide 43: The superiority of Shibuya

    The superiority of Shibuya The vacancy rate continued to remain low in the 5 wards of central Tokyo as an office area, and rents are steadily on the rise. 〈Falling vacancy rate〉 〈Increasing average rent〉 （2012 figures = 100） （%） Chiyoda-ku Chiyoda-ku 12.0 Chuo-ku Chuo-ku Minato-ku 140.0 Minato-ku 14

44. Slide 44: Major office buildings (Tokyo Metropolitan area)

    Major office buildings(Urban Development segment) As of the end of September 2019, the Company holds 64 buildings, located mainly in four wards in central Tokyo. No. of Total floor Area Major properties[Building] Year built notes buildings space * Shibuya Dogenzaka Tokyu 1983 13 Unosawa Tokyu 1984 1

45. Slide 45: Major commercial facilities

    Major commercial facilities(Urban Development segment） As of the end of September 2019, the Company operates 24 locations in the Tokyo area and 8 locations in Kansai and other regions. No. of Major properties Total floor Area Year built notes facilities [Commercial facilities] space * Tokyu Plaza Ka

46. Slide 46: Major facilities (Wellness business)

    Major facilities (Wellness business) ＊As of Sep-30, 2019 Manage diverse resort facilities throughout the country Number of Number of facilities rooms Name of facilities Teteshina Hakone Myojindai Urabandai Grandeco Kyoto Takagamine Katsuura Madarao Nasu VIALA annex Kyoto Hamanako Tateshina Annex Kyu

47. Slide 47: Tokyu Fudosan Holdings

    & TOKYU FUDOSAN HOLDINGS

Tokyu Fudosan Holdings — Q2 FY2019 Earnings Presentation on 6ix