Events leading up to the establishment of the plan and objective
In the previous Tokyo Tatemono Group Medium-term Business Plan (2012-2014), dubbed Re-Start - Challenge to Innovation, given the losses we posted in FY2011, we placed priority on strengthening our management base by enhancing our earnings power and financial position.
Through our efforts, we were able to control our interest-bearing debt and expand our equity capital. We consequently attained a debt-equity ratio of 2.6x at the end of FY2014, outperforming our goal of 3.0x, and thereby achieving a healthier financial position than we initially planned. Meanwhile, we posted consolidated operating income of ¥30.5 billion in FY2014, underperforming our goal of ¥35.0 billion. In light of this outcome, we recognize that the strengthening of our earnings power remains a key management issue that we must tackle.
Turning our focus towards the business environment, numerous changes are expected, including enhanced/diversified requirement standards for services, a bleak investment environment due in part to an escalation in competition on the back of low interest rates and a rise in construction costs, a decline in population and expansion of the senior market in Japan, an expansion of the stock-type businesses in the real estate market and diversification of real estate investment assets, and an acceleration of growth in countries and cities in Asia. We will be expected to flexibly and accurately cope with these changes.
In light of the aforementioned factors, to achieve sustainable growth from a longer-term perspective, we aim to strengthen our earnings power by building a business portfolio that is rich with growth potential. We have therefore established the Medium-term Business Plan.
- *Debt-equity ratio: consolidated interest-bearing debt / consolidated equity capital
- *Interest-bearing debt / EBITDA multiple: consolidated interest-bearing debt / (consolidated operating income + consolidated interest & dividend income + gain on equity-method investments + consolidated depreciation expense + consolidated goodwill amortization expense)
Three key strategies under the plan
We aim to achieve steady growth of commercial properties business and residential business, and plan to make other businesses, including real estate solution services business, as the third pillar of our business model.
- Strengthen measures as a group for improving and expanding our business operations which range from tenant relations to management, construction, and cleaning
- Steadily promote redevelopment projects, including Yaesu area project, and acquire seed properties for new redevelopment projects
- Utilize the know-how gained through projects such as Nakano Central Park, in other urban development projects
- Proactively develop urban compact commercial facilities and business hotels
- Provide comprehensive housing services integrating development, sales and management.
- Invest energy into long-term renovations and redevelopment businesses by leveraging track record and knowhow
- Utilize condominium brand Brillia as a brand communication tool for the overall residence business and provide high-quality Brillia services
Businesses to be strengthened as a third earnings pillar
Real Estate Solutions
- Propose CRE strategy in one-stop with Tokyo Tatemono Real Estate Sales serving as the general liaison.
- Expand real estate consulting & solutions(*)
- *Acquire real estate with underlying potential and boost added-value for resale
- Strengthen retail brokerage business mainly by focusing key service store openings in areas where there is a concentration of our condominiums
- Expand parking lot business, mainly in front of train stations in core cities nationwide
- Expand scale via active M&A
- Create group business opportunities by making effective proposals to parking lot owners
- In addition to development of facilities, provide total services, including services through the nursing care business and private nursing homes business
- Accelerate development of Grapes Series (senior housing that offers services) living facilities
- Expand scale via active M&A
- Proactive expansion of dog-friendly hotels and spa facilities based on proprietary know-how
- Continue to implement business development in China by taking advantage of our relationship with the Vanke Group as well as promote businesses in emerging economies in Asia, such as Singapore
- Implement M&A focusing on improving services in existing businesses and expansion of business domains with growth potential