Presentation Material for the First Three Quarters of FY2019 (Ending December 31, 2019) November 5, 2019 Contents ■ Summary p.3 ■ Business Results by Segment p.14 Consolidated Statement of Income ■ p.4 (1) Commercial Properties Business p.15 for the First Three Quarters of FY2019 Consolidated Balance Sheet ■ p.5 (2) Residence Business p.22 for the First Three Quarters of FY2019 ■ Balance of Real Estate for Sale p.7 (3) Real Estate Service Business p.28 ■ Full-year Earnings Forecast for FY2019 p.8 (4) Other p.30 ■ Medium-Term Business Plan Progress Report p.9 ■ Appendix p.35 Medium-Term Business Plan Investment Plans & ■ Shareholder Returns p.10 p.36 Financial Indicator Targets ■ Vision in 2020 Onwards Fair Value of Rental Properties p.37 Acquisition of Treasury Stock and Philosophy of Business Portfolio p.11 p.38 Implementation of Hybrid Financing Image of Future Growth p.12 Quarterly Segment Data p.40 Image of Financial Strategies p.13 List of Facilities p.42 Market Data p.44 Copyright © Tokyo Tatemono Co., Ltd All Rights Reserved. 2 Summary Business Results for the First Three Quarters of FY2019 • Increase in revenue and income compared with the same period of the previous year due in part to increase in number of condominium sales posted in the residence business and increase in property sales to investors in the commercial properties business. • No change in full-year earnings forecast from the figures announced at the beginning of the period as all businesses are performing well. Steady progress is being made toward achieving operating income of ¥50.0 billion, the goal of the medium-term business plan. Topics • Urban development plan for “Urban Redevelopment Project for Yaesu 1-Chome North Area” decided. • Decided on “T-LOGI” as the brand name for Tokyo Tatemono logistics facilities. Secured new development project in Narashino City, Chiba Prefecture. • Opened urban compact commercial facility “FUNDES Gotanda” in August and urban hotel “Candeo Hotels Omiya” in October. Copyright © Tokyo Tatemono Co., Ltd All Rights Reserved. 3 Consolidated Statement of Income for the First Three Quarters of FY2019 • Revenue and income increased compared with the same period in the previous year due to increase in the number of condominium sales posted in the residence business and increase in property sales to investors in the commercial properties business and other factors. • Each business is making steady progress in line with the full-year earnings forecast announced at the beginning of the period. 2018/9 2019/9 Increase/ 2019/12 Achievement Unit: Billion yen Main factors for increase/decrease Actual Actual Decrease Forecasts rate Revenue from operations 193.5 246.1 52.6 330.0 75% Commercial properties 80.2 93.7 13.4 126.0 74% Residence 61.8 96.9 35.0 129.0 75% Real estate service 33.6 35.2 1.6 ・Revenue from operations; Operating income 50.0 71% Revenue and income increased compared with the same Other 17.7 20.1 2.4 period in the previous year due to increase in the number of 25.0 81% condominium sales posted in the residence business and Operating income 36.5 41.5 5.0 increase in property sales to investors in the commercial 50.0 83% properties business and other factors. Commercial properties 24.8 27.9 3.0 36.5 76% Residence 11.7 12.7 0.9 15.0 85% Real estate service 5.4 5.7 0.3 5.5 105% Other 0.1 1.5 1.4 0.5 305% Elimination/Corporate (5.6) (6.3) (0.6) (7.5) 84% Non-operating income 3.5 2.9 (0.5) 3.0 100% Gain/loss on equity-method investments 0.8 (0.3) (1.1) Increase in the development costs in the overseas business Increase in fee associated with issuance of hybrid bonds and Non-operating expenses 6.2 7.9 1.6 10.0 80% increase in interest expense Interest expense 4.5 5.1 0.6 Recurring income 33.8 36.6 2.8 43.0 85% Posting of gain on liquidation and gain on sale of equity in the Extraordinary income 0.6 1.5 0.8 1.0 154% overseas business Extraordinary loss 0.0 0.6 0.5 Posting of impairment loss, etc. - - Income before tax 34.4 37.5 3.1 44.0 85% Profit attributable to owners of the parent 23.7 24.9 1.2 28.0 89% Copyright © Tokyo Tatemono Co., Ltd All Rights Reserved. 4 Consolidated Balance Sheet for the First Three Quarters of FY2019 • Increase in total assets by ¥96.6 billion due to issuance of hybrid bonds, acquisition of fixed assets (DNP Gotanda Building, Tokyo Tatemono Kyobashi Building, etc.) and acquisition of real estate for sale (land for development of for-sale condominiums, logistics facilities, hotel development projects, etc.) and other factors. 2018/12-end Increase/ Unit: Billion yen 2019/6-end Main factors for increase/decrease *1 Decrease Total assets 1,450.0 1,546.7 96.6 Current assets 353.3 397.8 44.4 • Cash and deposits Increase due to amount procured from issuance of hybrid bonds being paid in and other Cash and deposits 31.7 49.6 17.9 factors • Real estate for sale Real estate for sale 283.4 306.5 23.1 Increase due to acquisition of land for development of for-sale condominiums, logistics Other current assets 38.2 41.5 3.3 facilities, hotels, etc. and other factors Fixed assets 1,096.7 1,148.9 52.1 • Property and equipment Increase due to acquisition of DNP Gotanda Building, Tokyo Tatemono Kyobashi Building Property and equipment 772.8 813.7 40.9 and buildings for redevelopment, and expenditure of construction costs of Toshima Project and other factors Intangible assets 110.4 113.5 3.1 • Investments and other assets Increase due to fair value of investment securities and other factors Investments and other assets 213.5 221.6 8.1 Total liabilities 1,093.5 1,177.3 83.8 • Interest-bearing debt Interest-bearing debt 857.1 945.0 87.8 Increase due to issuance of hybrid bonds and other factors Other liabilities 236.3 232.3 (4.0) Total net assets 356.5 369.3 12.8 • Shareholders’ equity Shareholder’s equity 266.4 273.2 6.8 Profit attributable to owners of the parent: +¥24.9 billion Dividends paid: -¥8.0 billion Accumulated other comprehensive income 81.7 87.0 5.3 Acquisition of treasury stock: -¥9.9 billion Non-controlling interests 8.4 9.0 0.5 Capital adequacy ratio 24.0% 23.3% (0.7P) Debt equity ratio *1 2.5 2.6 0.2 Interest-bearing debt / EBITDA multiple *2 12.7 - - *1: From FY2019, the Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting,” etc. The figures for the end of December 2018 are the figures after retrospective application of the concerned accounting standard, etc. *2: Debt equity ratio = Interest-bearing debt / Equity capital *3: Interest-bearing debt / EBITDA multiple = Interest-bearing debt / (Operating income + Interest & dividend income + Gain/loss on equity-method investments + Depreciation expense + Goodwill amortization expense) Copyright © Tokyo Tatemono Co., Ltd All Rights Reserved. 5 Consolidated Balance Sheet for the First Three Quarters of FY2019 Breakdown of Property and Breakdown of Equipment and Intangible Assets Total assets: ¥1,546.7 billion Interest-Bearing Debt Real estate service Current assets 397.8 Liabilities 1,177.3 ¥17.9 billion 2% Other Cash and deposits 49.6 Interest-bearing debt 945.0 Residence ¥2.8 billion 0% Other ¥23.0 billion 3% Real estate for sale 306.5 Loans payable 627.1 ¥38.1 billion 4% Real estate for sale 119.0 Bonds payable 225.0 Commercial paper ¥90.0 billion 10% Real estate for sale in progress 106.9 Commercial paper 90.0 Real estate for development 80.6 Other 2.8 Other current assets 41.5 Other liabilities 232.3 Bonds payable Fixed assets 1,148.9 ¥225.0 billion 24% Property and equipment 813.7 Loans payable Commercial properties ¥627.1 billion Intangible assets 113.5 ¥848.0 billion 91% Including ¥80.0 billion procured from hybrid 66% Investments and other assets 221.6 Net assets 369.3 bonds in 2019 Shareholders’ equity 273.2 Accumulated other Including ¥28.0 billion 87.0 procured from a hybrid comprehensive income loan in 2017 Non-controlling interests 9.0 Breakdown of Real Estate for Sale Status of Debt Equity Ratio <By Status of Development> <By Segment> Other ¥3.5 billion 1% End of September 2019 Take hybrid into Real estate for Real estate service account *3 development ¥47.5 billion 16% Debt equity ratio *1 2.6 times 2.2 times (land) Commercial properties Real estate for sale ￥80.6 billion 26% ¥93.3 billion 30% (completed) Net debt equity ratio *2 2.5 times 2.0 times ¥119.0 billion 39% Real estate for sale Residence *1 Debt equity ratio = Interest-bearing debt / Equity capital ¥162.0 billion 53% *2 Net debt equity ratio = (Interest-bearing debt - Cash and deposits) / in progress Equity capital (underway) *3 Calculated by taking into account the total equity credit of ¥54.0 billion ¥106.9 billion 35% concerning ¥108.0 billion of the total amount procured from the hybrid loan and hybrid bonds Copyright © Tokyo Tatemono Co., Ltd All Rights Reserved. 6 Balance of Real Estate for Sale • Accumulating investment while increasing profit from property sales business under the current medium-term business plan, the balance of real estate for sale increased to ¥306.5 billion.