Long-term Vision,
Medium-term Business Plan
Background Behind the Long-term Vision and Medium-term Business Plan
Fiscal 2019 marks the final year of the Tokyo Tatemono Group five-year Medium-Term Business Plan, the aim of which is, "Tokyo Tatemono Group aims to continue to be the leading choice." The group achieved fiscal 2019 operating income of ¥52.4 billion and record-high profits in fiscal 2018 and fiscal 2019. Plan execution went smoothly as the group exceeded profit growth targets. Financial indicators also reflected the group's disciplined financial management. Fiscal 2019 debt-equity ratio was 2.5 times, while the interest-bearing debt to EBITDA multiple was 12.6 times.
Meanwhile, looking at the immediate business environment reveals significant changes across a variety of matters. These changes include intensifying international competition across cities, diversification of lifestyles, advancements in digital technology, and increased awareness of ESG.
Aiming to achieve sustainable growth for the group amid this business environment, the group has formulated a long-term vision looking ahead to the year 2030, which is the target year for the Sustainable Development Goals and the approximate time when a number of large-scale redevelopment projects will be completed. The group has also created a new medium-term business plan for fiscal years 2020 through 2024.
Long-term Vision
In an era full of uncertainty and rapid change in terms of demographics, diverse values, accelerating technological progress, and more, various issues have emerged on the path to creating a sustainable society.
The Tokyo Tatemono Group recognizes that the role developers play must also change significantly.
The group's aim is to be a good company for stakeholders by leveraging its businesses to solve social issues and achieve higher levels of growth as a company.
Steady Profit Growth
Target for 2030:
Consolidated business profit*: ¥120.0 billion
Helping Solve a Variety of Social Issues
Contributing to the SDGs
Basic Profit Growth Policy
- Steadily expand stable leasing profit, making it the core of our profit composition
- Target a well-balanced profit structure, mindful of capital efficiency
* Consolidated business profit = consolidated operating profit + share of profit (loss) of entities accounted for using equity method. To capture the growth of overseas businesses, we have defined business profit as a target profit indicator. Business profit is the sum of operating profit and share of profit (loss) of entities accounted for using equity method.
Positioning of the Medium-term Business Plan
In the first step toward achieving our 2030 long-term vision, we have established a five-year period from 2020 to 2024 for our Medium-term Business Plan, targeting a milestone of ¥75 billion in consolidated business profit.
* Consolidated business profit = consolidated operating profit + share of profit (loss) of entities accounted for using equity method
Profit / Financial Plan
The group has set a profit target for consolidated business profit of ¥75.0 billion for fiscal 2024. In addition, the group has set the following ROE, debt-equity ratio, and interest-bearing debt to EBITDA multiple for FY2024 to optimize its business portfolio in consideration of capital efficiency and fiscal discipline.
|
Profit Target |
Consolidated business profit*1: ¥75.0 billion |
|
Capital Efficiency |
ROE: 8-10% |
|
Financial Indicators |
Debt-equity ratio*2: Appr. 2.4X |
-
Consolidated business profit = consolidated operating profit + share of profit (loss) of entities accounted for using equity method
-
Debt-equity ratio = consolidated interest-bearing debt / consolidated owners' equity
-
Interest-bearing debt / EBITDA multiple = interest-bearing debt / (operating profit + interest & dividend income + equity gains (losses) of affiliated companies + depreciation expense + goodwill amortization expense)
Investment Plan
The five-year cumulative investment plan incorporated into the current medium-term business plan is as follows. In addition investment in consideration of capital efficiency, the group intends to sell fixed assets in consideration of profitability and reduce cross-shareholdings to maintain or reduce the group's debt-equity ratio and control the balance sheet in an appropriate manner.
Unit: 100m yen
|
Gross investment total |
|
14,000 |
|
Investment in large-scale redevelopment |
2,300 |
|
|
Investment in condominium projects |
4,300 |
|
|
Investment in properties for sale to investors |
5,500 |
|
|
Investment in the overseas business |
700 |
|
|
Other |
1,200 |
|
|
Recovered |
|
9,000 |
|
Net investment |
|
5,000 |
Roadmap2030
To achieve the Tokyo Tatemono Group long-term vision, the group is pursuing five key strategies and an evolved approach to ESG management under the current medium-term management plan.
Evolved Approach to ESG Management
The Tokyo Tatemono Group has established a Sustainability Committee and works with business divisions to set goals, monitor progress, evaluate performance levels, and continue to implement sustainability measures on an ongoing basis. The group's goal is to leverage the positive evaluations received so far from ESG rating agencies as benchmarks for inclusion in ESG indices.
Pursue large-scale redevelopment
Through a steady pursuit of large-scale redevelopment and by improving the attractiveness of the respective surrounding areas, the group aims to increase the value of its entire office building portfolio, bringing an expanded flow of stable leasing profit.
Strengthen condominium business further
Redevelopment and rebuilding will be the tools that lead to continuous cycle of development opportunities for highly competitive condominiums that provide high-quality housing in response to social changes.
Expand property sales to investors
By developing a broad pool of asset types, including hotels, rental apartments, and logistics facilities, the Tokyo Tatemono Group will continue to seize development opportunities and sell properties in a flexible manner that generates profits.
Strengthen brokerage, fund, and parking lot businesses
The group will strengthen its brokering and parking lot businesses, focusing on real estate stock portfolio expansion and needs for effective utilization. The group will strengthen its fund business by expanding the sale of properties to investors, including REITs sponsored by the group.
Grow overseas businesses
The Tokyo Tatemono Group will collaborate with leading local partners, primarily in China and other Asian countries, aiming to acquire new business opportunities in condominiums and other businesses offering quick turnover.
Shareholder Return Policy
During the period of this medium-term business plan, the group has established a baseline for consolidated dividend payout ratio of at least 30%, aiming to increase shareholder returns continuously through sustainable growth.
The group will consider company share repurchases based on the business environment and group's financial situation.