Ichigo Inc. · TSE:2337

Ichigo — Q3 2015 Earnings Presentation

51 slides from Ichigo's earnings presentation, Jan 13, 2015

  1. Slide 1: Corporate Presentation Q3 FY2015

    February 2015 Q3 (March – November 2014) Corporate Presentation April 23, January 13,2015 2015 Ichigo Group Holdings Co., Co Ltd. Ltd (2337) © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. www.ichigo-holdings.co.jp/english

  2. Slide 2: © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

    © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  3. Slide 3: © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

    © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  4. Slide 4: Creating peace of mind through honest and committed management

    Creating peace of mind through honest and committed management. management © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved.

  5. Slide 5: Shift Up 2016 Mid-Term Business Plan

    Shift Up 2016 Mid-Term Business Plan ‒ 5X EPS in 3 years ‒ Tokyo Stock Exchange First Section Listing by February 2016 ‒ Enter JPX-Nikkei Index 400 by August 2016 Progress on Key Performance Indicators (KPI) (Million yen) Feb 13 Feb 2014 Feb 2014 Feb 2015 Feb 2016 (Actual) (Plan) (Actual) (Plan) (Pl

  6. Slide 6: Shift Up 2016 Mid-Term Business Plan

    Shift Up 2016 Mid-Term Business Plan Commitment: 100% Shift Up 2016 Achievement ‒ Q3 Results: Operating Profit +41%, Recurring Profit +27% YOY ‒ Segment P&L Breakdown ‒ Sponsor Support for Ichigo REIT Strategic Portfolio Restructuring ‒ Differentiated Value Value-Add Add Business Model ‒ Investment

  7. Slide 7: Commitment: 100% Shift Up 2016 Achievement

    Commitment: 100% Shift Up 2016 Achievement © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 7

  8. Slide 8: Q3 Results: Operating Profit +41%, Recurring Profit +27% YOY

    Q3 Results: Operating Profit +41%, Recurring Profit +27% YOY ‒ Gross profit also +29%, backed by growing rental income ‒ To be recognized in Q4 earnings: JPY 21.1B revenue and JPY 2.1B gross profit fit on ttransactions ti with ith IIchigo hi REIT to t supportt its it strategic t t i restructuring t

  9. Slide 9: Segment P&L Breakdown

    Segment P&L Breakdown ‒ Rental income driving operating profit growth in Real Estate and Value-Add ‒ Clean Energy operating loss decreased on production ramp-up (Million yen) Revenues Operating Profit Earnings Drivers Feb 14 Q3 Feb 15 Q3 Feb 15 Feb 14 Q3 Feb 15 Q3 Feb 15 Segment vs. Full-Year vs. Fu

  10. Slide 10: Sponsor Support for Ichigo REIT Strategic Portfolio Restructuring

    Sponsor Support for Ichigo REIT Strategic Portfolio Restructuring Ichigo REIT to focus on mid-size office assets with return stability and upside potential  To facilitate REIT PO, IGH funded and held 7 of 11 assets acquired q by y Ichigo g REIT, carrying out value-add renovations and leasing activi

  11. Slide 11: Differentiated Value-Add Business Model

    Differentiated Value-Add Business Model Value-Add for both external buyers and REIT drives asset turnover and high ROE REIT Asset Bridging Value-Add Business Model Real Estate Value-Add Assets meeting the needs of Ichigo REIT IGH Real Estate Ichigo REIT(8975) Acquisition Acquisition Value- Own & Ext

  12. Slide 12: Investment for Growth

    Investment for Growth Increased competition for acquisitions due to rising asset prices Acquire attractive assets on a proprietary basis via direct negotiation ・Rising asset prices Prime Location ・Direct negotiation Long-Term Hold ・Support REIT growth via asset bridging Take Smart Risks and Negotiat

  13. Slide 13: Full-Service Real Estate

    Full-Service Real Estate © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 13

  14. Slide 14: Real Estate Segment Asset Breakdown (1)

    Real Estate Segment Asset Breakdown (1) Acquisition of 28 assets YTD, acquisition cost of JPY 35.3B, forecast NOI of JPY 2.1B Building Acquired Expected Forecast Equity No. Asset Class Asset Type Location Acquisition Price Depreciation IGH Investment Age Date NOI/Year Multiple 1 Retail Fixed Asset M

  15. Slide 15: Real Estate Segment Asset Breakdown (2)

    Real Estate Segment Asset Breakdown (2) Building Acquired Expected Forecast Equity No. Asset Class Asset Type Location Acquisition Price Depreciation IGH Investment Age Date NOI/Year Multiple 21 Residence Real Estate for Sale Minato-ku, Tokyo 9 JPY 1B-2B 2014/12 JPY 60M - JPY 185M 1.63 x 22 Residenc

  16. Slide 16: Value-Add Segment Asset Breakdown (1)

    Value-Add Segment Asset Breakdown (1) Acquired 20 assets YTD, acquisition cost of JPY 31.1B, forecast NOI of JPY 2B Building Acquired Expected Forecast Equity No. Asset Class Asset Type Location Acquisition Price Depreciation IGH Investment Age Date NOI/Year Multiple 1 Retail Real Estate for Sale Mi

  17. Slide 17: Value-Add Segment Asset Breakdown (2)

    Value-Add Segment Asset Breakdown (2) Building B ildi Acquired A i d Expected E t d Forecast Equity No. Asset Class Asset Type Location Acquisition Price Depreciation IGH Investment Age Date NOI/Year Multiple 22 Ground Lease Real Estate for Sale Fujisawa City, Kanagawa - JPY 1B-2B 2014/03 JPY 113M -

  18. Slide 18: Asset Acquisitions Ahead of Plan

    Asset Acquisitions Ahead of Plan ‒ FY15/2 focus on new asset acquisitions to drive growth ‒ JPY67.4B real estate acquisitions completed by Dec-end 2014  Another JPY 6.3B 6 3B in advanced highly-likely highly likely pipeline pipeline, so 105% of full full-year year acquisition target already complet

  19. Slide 19: Asset Acquisition Detail – Fukuoka Retail

    Asset Acquisition Detail – Fukuoka Retail Valie Hotel Tenjin ■ Area Dominant Strategy Albore Tenjin • Concentrating Ichigo investment in areas TENJIN having highest potential for growth STATION • Executing dominant strategy in Fukuoka t drive to d i economies i off scale l and d competitive edge • A

  20. Slide 20: Value-Add Detail – Kyoto Hotel & Yokohama Resi/Retail

    Value-Add Detail – Kyoto Hotel & Yokohama Resi/Retail ■ Kyoto Hotel Value-Add Update ■ Tailored Tenant Leasing Driving Earnings (Update from FY15/2 H1 Presentation) (Residential/ Retail Building in Yokohama City) Overview ・Mixed residential/retail building that benefits from convenient train access

  21. Slide 21: Clean Energy

    Clean Energy © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 21

  22. Slide 22: Solar Expansion on Track

    Solar Expansion on Track ‒ As of Jan 2015, 15 Ichigo Solar Plants (20MW) Online  Total operating and in-development: 24 plants, 83MW (Feed-in tariff 40 yen: 20 plants, 34MW; 36yen: 4 plants, 49MW)  All 24 plants have approved grid interconnections and/or signed power sale contracts to the regional

  23. Slide 23: Solar P&L Breakdown by Power Plant

    Solar P&L Breakdown by Power Plant Extraordinary returns on par or above real estate Panel Fixed Tariff Operation Start Expected Forecast Equity Multiple No. Area Output (Pre-tax, Depreciation IGH Investment Date NOI/Year (Held for 20 years) (MW) yen) 1 Ichigo Tokushima Higashi Higashi-Okinosu Okino

  24. Slide 24: Ichigo Solar Power Plant National Map

    Ichigo Solar Power Plant National Map Serving local communities and the environment Ichigo Engaru Higashimachi (1.24MW) Online in 2015/2 Ichigo Motomombetsu Ichigo Engaru Kiyokawa Total operating and in-development (1.40MW) (1.12MW) Ichigo g solar ppower p plants: Ichigo Abira Toasa Ichigo Yubetsu B

  25. Slide 25: Near-Term Solar Earnings

    Near-Term Solar Earnings ‒ Substantial revenue and gross profit growth ‒ Operating profit on track to turn positive next year (FY16/2) (Million yen) Feb 14 Feb 15 Q1 Feb 15 Q2 Feb 15 Q3 Feb 15 Full-Year vs. Full-Year (12M) (3M) Cumulative (6M) Cumulative (9M) Forecast (12M) Forecast R Revenues 126 1

  26. Slide 26: Long-Term Solar Earnings

    Long-Term Solar Earnings JPY 1.7B annual NOI by FY18/2 – actual production beating P50 forecasts ■ Revenue Forecast based on 24 Plants, 83MW 1 2B 1.72B * Revenue forecast assumes that current operating 1.68B and in-development power plants become fully online NOI = Net Operating Income minus Depreci

  27. Slide 27: Appendix: Financial & Real Estate Data

    Appendix: Financial & Real Estate Data © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 27

  28. Slide 28: Note on More Detailed Consolidated and Asset Disclosure

    Note on More Detailed Consolidated and Asset Disclosure As of FY14/2 full-year financials, we have increased our disclosure with respect to our statutory consolidated financials and assets, including risk-based disclosure of our balance sheet that separates out client and non-recourse assets and lia

  29. Slide 29: Corporate Structure and Earnings Segments

    Corporate Structure and Earnings Segments ‒ Asset Management, Real Estate, Value-Add, Clean Energy, Other Full-Service Real Estate Clean Other Asset Energy Real Estate Value-Add Management Ichigo Real Estate Investment Advisors Co., Ltd. ○ ○ ○ Ichigo Estate Co., Ltd. ○ ○ ○ Co., Ltd. Ichigo ECO Energ

  30. Slide 30: Value-Add Sample Earnings Model

    Value-Add Sample Earnings Model ‒ 5.5% NOI, JPY 2B purchase, LTV 70%, 1.5% interest rate, JPY 50M capex, 20% increase in NOI, 3-year holding period ‒ Tenant leasing, aesthetic improvement, building code violation remedy, earthquake retrofit, etc. At Acquisition NOI (JPY 110M NOI/year) － (JPY 21M int

  31. Slide 31: Consolidated Balance Sheet

    Consolidated Balance Sheet (Million yen) Feb 15 Q3 Quarter-on- Unrealized Feb 14 Feb 15 Q1 Feb 15 Q2 Market Value B/S Outside Quarter Gain Cash and Cash Equivalents 24,991 20,493 20,264 19,097 670 -1,167 1,167 19,097 0 Operating Loans Receivable 1,100 2,100 2,100 2,100 - +0 2,100 0 Real Estate 1,100

  32. Slide 32: Consolidated Balance Sheet: Segment Breakdown

    Consolidated Balance Sheet: Segment Breakdown (Million yen) Cash and Operating Operational Real Estate Intangible Investments Segment Cash Loans Investment in Fixed Assets Other Assets Total Assets For Sale Assets in Securities Equivalents Receivable Securities Asset Management 447 - - - 45 1,776 -

  33. Slide 33: Consolidated Risk-Based Balance Sheet

    Consolidated Risk-Based Balance Sheet Consolidated Balance Sheet Consolidated Risk-Based Balance Sheet Shareholder Equity Ratio 32.4％ Risk-Based Shareholder Equity Ratio 42.0％ Total Assets Total Assets JPY 161.9B 161 9B JPY 124.9B 124 9B Non-Recourse Loans & Related Liabilities Non-Recourse Loan- JP

  34. Slide 34: Corporate Loan Detail

    Corporate Loan Detail ■ Weighted Average Interest Rate and Average Loan Period Weighted Average Interest Rate Interest Rate (Loan Period, Year) Average Loan Period 3.0% 11 2.57% 2.56% 2.5% 9 8.3 years 2.22% 2.0% 7 1.96% 1.77% 5.9 years 1.5% 5 4.7 years 3.6 years 3.3 years 1.0% 3 Feb FY11 Feb FY12 Fe

  35. Slide 35: Asset Management AUM Detail

    Asset Management AUM Detail Have shrunk low-profitability private equity real estate funds to drive higher AM fee levels and profitability Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Q3 (12M) (12M) (12M) (12M) Cumulative (9M) Ichigo REIT (Public) AUM (Fiscal Year End) 114 billion yen 106 billion yen 104 bill

  36. Slide 36: Consolidated P&L: Gross Profit Segment Breakdown

    Consolidated P&L: Gross Profit Segment Breakdown (Million yen) Revenues Gross Profit YoY Segment Feb 14 Q3 Feb 15 Q3 Feb 14 Q3 Feb 15 Q3 Change Change (Gross Profit) Cumulative Cumulative Cumulative Cumulative Asset Management 3,247 2,974 -273 1,802 1,267 -535 -29.7% Asset Management Fees 1,154 973

  37. Slide 37: Consolidated P&L: Segment Q3 Actual vs Full-Year Forecast

    Consolidated P&L: Segment Q3 Actual vs Full-Year Forecast (Million yen) Feb 15 Q3 Cumulative (9M) Feb 15 Full-Year Forecast (12M) Segment vs. Full-Year vs. Full-Year Operating vs. Full-Year Operating Revenues Gross Profit Revenues Gross Profit Forecast Forecast Profit Forecast Profit Asset Managemen

  38. Slide 38: Consolidated Balance Sheet: Unrealized Gains

    Consolidated Balance Sheet: Unrealized Gains Real estate directly held by IGH (either on IGH balance sheet or in SPCs where IGH is sole equity holder) (Million yen) Book Value Cap Rate Appraisal Value Location NOI Unrealized Gain as of November 2014 NOI / Book Value after write-down as of November 2

  39. Slide 39: Consolidated Balance Sheet: Assets

    Consolidated Balance Sheet: Assets (Million yen) 2015/02 3Q vs 2015/02 2Q 2011/02 2012/02 2013/02 2014/02 2015/02 2Q (This quarter) (increase/decrease) Assets Current Assets Cash and cash equivalents 12,343 9,791 9,713 24,991 20,264 19,097 -1,167 Trade notes and accounts receivable 696 1,069 548 451

  40. Slide 40: Consolidated Balance Sheet: Liabilities & Net Assets

    Consolidated Balance Sheet: Liabilities & Net Assets (Million yen) 2015/02 3Q Quarter-on-Quarter vs 2015/02 2Q 2011/02 2012/02 2013/02 2014/02 2015/02 2Q (This quarter) (increase/decrease) Liabilities Current Liabilities Trade notes and accounts payable 47 57 64 132 178 189 +11 Short-term borrowings

  41. Slide 41: Consolidated P&L

    Consolidated P&L (Million yen) Feb 15 Q3 Feb 14 Q3 Feb 15 Feb 11 Feb 12 Feb 13 Feb 14 Change vs. Cumulative Cumulative Full-Year (12M) (12M) (12M) (12M) (YoY) Forecast (9M) (9M) Forecast Revenues 12,760 18,952 16,397 35,101 14,748 28,685 -13,937 42,000 35.1% Cost of Goods Sold 8,805 15,030 11,422 27

  42. Slide 42: Consolidated Cash Flows from Operating Activities

    Consolidated Cash Flows from Operating Activities (Million yen) Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Q3 (12M) (12M) (12M) (12M) Cumulative (9M) Cash Flows from Operating Activities: Income before income taxes 2,889 1,976 1,693 3,933 3,946 Depreciation p 168 166 230 304 393 Share-based compensation exp

  43. Slide 43: Consolidated Cash Flows from Investing & Financing Activities

    Consolidated Cash Flows from Investing & Financing Activities (Milli yen)) (Million Feb 11 Feb 12 Feb 13 Feb 14 Feb 15 Q3 (12M) (12M) (12M) (12M) Cumulative (9M) Cash Flows from Investing Activities: Payments into time deposits － -352 -0 -0 -325 Proceeds from withdrawal of time deposits 40 － 151 － 3

  44. Slide 44: IGH-Owned Real Estate Portfolio (Post-REIT Transaction)

    IGH-Owned Real Estate Portfolio (Post-REIT Transaction) Assets by Type Assets by Location Other Osaka (As of January 9, 2015) 3% 4% Land with (Billion yen) Sendai Ground 4% Lease Hotel Other 5% 8% Office 12% 27% Residence Tokyo 20% Fukuoka 53% 16% Retail Mixed 29% Kanto 8% 12% Sendai 41 Tokyo Assets

  45. Slide 45: IGH-Owned Real Estate Portfolio (As of Nov-end 2014)

    IGH-Owned Real Estate Portfolio (As of Nov-end 2014) Assets by Type Assets by Location Hotel Osaka Other Land with 5% 3% Sendai 3% (Billion yen) Ground 5% Lease Other 5% Residence 10% Office 6% 38% Mixed Tokyo 8% Fukuoka 49% 15% Retail Kanto 35% 18% Sendai 56 Assets by Size Tokyo 564 Kanto 205 Osaka

  46. Slide 46: Appendix: About Ichigo

    Appendix： About Ichigo © 2015 Ichigo Group Holdings Co., Ltd. All rights reserved. 46

  47. Slide 47: Full Service Real Estate & Clean Energy

    Full Service Real Estate & Clean Energy IIchigo hi comes from f an ancient i t Japanese J proverb, b Ichigo Ichie, meaning “One lifetime, one encounter” As the core company of the Ichigo Group, Ichigo Group Holdings seeks to serve the needs of society by investing in Japanese real estate estate. We

  48. Slide 48: Corporate History

    Corporate History A Pioneer in the Real Estate Securitization and Fund Businesses in Japan 2000 March Establish PI Technology Co., Ltd. April Establish Asset Managers Co., Ltd. 2001 August Asset Managers arranges the securitization of assets from the Ikebukuro store of The Seibu Department Stores, L

  49. Slide 49: Ichigo Group Holdings Co., Ltd. Company Profile

    Ichigo Group Holdings Co., Ltd. Company Profile Name Ichigo Group Holdings Co., Ltd. Address The Imperial Hotel Tower, 1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011 Established Board and 8 Directors, of which 5 Independent Directors March 17, 2000 Senior Executives 12 Executive Officers Paid-in Ca

  50. Slide 50: Group Structure

    Group Structure ‒ Core C B Businesses i =FFull-Service ll S i R Reall E Estate t t and d Cl Clean E Energy ‒ Actively Promoting CSR through Environmental Activities and Sports Sponsorship Hiromi Miyake (Weightlifting) ■ Ichigo Group Structure Ichigo g Group p Holdings g Co.,, Ltd. Ichigo Real Estate

  51. Slide 51: Disclaimer

    These materials were prepared to explain the Company’s businesses and are not for the purpose of soliciting investment in marketable securities issued by the Company. The Company does not guarantee the accuracy g y of the figures, g , information,, estimates or other statements included herein,, and

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