Sun Frontier Fudousan : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

	Consolidated Financial Results for the First Quarter
	of the Fiscal Year Ending March 31, 2023
	August 10, 2022 released
Company name:	Sun Frontier Fudousan Co., Ltd.
Stock listing:	Tokyo Stock Exchange Prime Section
Code number:	8934
URL:	https://www.sunfrt.co.jp
Representative:	Seiichi Saito, President
Inquiries:	Takeshi Hirahara, Executive Officer, General Manager of Corporate Planning Department
	(Phone: [phone])

Scheduled date of dividend payment commencement: -

Scheduled date of quarterly securities report submission: August 12, 2022

Supplemental materials for the financial results: Yes

Presentation to explain for the financial results: Yes (For institutional investors and analysts)

*Amounts are rounded down to millions of yen.

1. Consolidated Performance in the First Quarter of the Fiscal Year Ending March 31, 2023

(1) Consolidated Operating Results

("¥" indicates millions of yen, percentage figures indicate year-on-year changes.)

				Net Sales		Operating income		Ordinary income
		The 1st Quarter of FY
		ending March 31, 2023		¥22,903		-26.6%	¥6,668			-9.2%		¥6,690		-8.1%
		The 1st Quarter of FY
		ending March 31, 2022		¥31,213		128.3%	¥7,340			250.3%		¥7,277		272.8%
		(Note) Comprehensive income: 1st Quarter of FY ending March 31, 2023: 4,936 millions of yen (0.6%)
				1st Quarter of FY ended March 31, 2022: 4,906 millions of yen (364.6%)
													Fully Diluted
				Net income		Net income per Share		Net income per Share
							(Yen)				(Yen)
		The 1st Quarter of FY
		ending March 31, 2023		¥4,690		-2.3%				96.45					96.36
		The 1st Quarter of FY
		ending March 31, 2022		¥4,802		287.7%				98.61					98.56
(2) Consolidated Financial Position
						Total Assets		Net Assets		Equity Ratio (%)
	The 1st Quarter of FY ending March 31, 2023		¥136,686			¥78,117				54.8%
	FY ended March 31, 2022				¥136,512			¥74,452				52.2%

(Reference) Total Equity: 1st Quarter of FY ending March 31, 2023 (as of June 30, 2022): 74,850 millions of yen

	: FY ended March 31, 2022 (as of March 31, 2022):		71,282 millions of yen
2. Cash Dividends
			Cash Dividends per Share (yen)
		1st quarter	2nd quarter	3rd quarter		Year	Annual Total
		end	end	end		end
	FY ended March 31, 2022	-	21.00		-	23.00	44.00
	FY ending March 31, 2023	-			-
	FY ending March 31, 2023 (Forecast)	-	23.00		-	23.00	46.00

(Note) Changes from the latest released dividend forecast: No.

3. Forecast for Consolidated Financial Results for FY2023 (April 1, 2022 to March 31, 2023)

("¥" indicates millions of yen, percentage figures indicate year-on-year changes.)

							Profit Attributable	Net Income
	Net Sales	Operating income	Ordinary income	to Owners of	per share
							Parent	(yen)
Full
year	¥84,000	17.9%	¥13,300	9.7%	¥12,800	4.8%	¥8,300	11.9%	170.67

(Note) Changes from the latest released performance: No.

1

48,630,896 shares

48,698,856 shares

• Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changing scope of consolidation): None
   New companies: -
   Excluded companies: -
2. Adaption of special accounting practices in the preparation of quarterly consolidated financial statements None
3. Changes in accounting principles, procedures and presentation methods

1)	Changes in accounting policies due to changes in accounting standard:	Yes
2)	Changes in accounting policies other than 1) above:	None
3)	Changes in accounting estimates:	None
4)	Retrospective restatement:	None

1. Number of outstanding shares (common stock)
2. 1. Number of outstanding shares at the end of the period (including treasury stock):

The 1st Quarter of FY ending March 31, 2023 (as of June 30, 2022) 48,755,500 shares

FY ended March 31, 2022 (as of March 31, 2022)

48,755,500 shares

1. Number of shares of treasury stock at the end of the period:

The 1st Quarter of FY ending March 31, 2023 (as of June 30, 2022): 200,444 shares

FY ended March 31, 2022 (as of March 31, 2022):	56,644 shares
3) Average number of shares for the period:

FY ended March 31, 2023 (as of March 31, 2023):

FY ended March 31, 2022 (as of March 31, 2022)::

(Note) The number of shares of treasury stock at the end of 1st Quarter of FY ending March 31, 2023 includes the number of shares purchased to grant restricted shares, based on the decision made by the Board of Directors at the board meeting held on May 13, 2022.

*This Summary of Consolidated Financial Results is not subject to review processes under the Financial Instruments and Exchange Act.

*Explanation for appropriate use of forecast and other special matters

Forward-looking statements, such as forecast of consolidated financial performance, stated in this document are based on information currently possessed by the Company as well as certain assumptions deemed rational. It does not mean that the Company assurances that the contents mentioned in these forward-looking statements will ever materialize. Actual financial performance may be significantly different from such expectations due to various factors. For further information on assumptions used in forecasts, please see Page 7, 1. (3) Forward-Looking Statements such as Consolidated Earnings Forecasts.

2

Accompanying Materials

Contents

1. Qualitative information regarding consolidated performance for the first three months	4
(1)	Business Performance	4
(2)	Consolidated Financial Position	7
(3)	Forward-Looking Statements such as Consolidated Earnings Forecasts	7
2.Quarterly Consolidated Financial Statements and Key Notes	8
(1)	Consolidated Balance Sheet	8
(2)	Consolidated Statements of Income and Comprehensive Income	10
(3)	Notes to Consolidated Financial Statements	12
(Notes to Assumption of Going Concern)	14
(Notes on Significant Changes in the Amount of Shareholders' Equity)	14
(Change of Accounting Policies)	14
(Additional Information)	14
(Segment Information, etc.)	14

3

1. Qualitative information regarding consolidated performance for the first three months

1. Business Performance

Matters concerning the future in this document are those judged by the Group as of the end of the first quarter of the fiscal year ending March 31, 2023.

During the three months ended June 30, 2022, the Japanese economy showed signs of recovery, particularly in personal consumption and capital investment, as restrictions on economic and social activities eased while the impact of COVID-19 subsided. As for the global economy, there are concerns about stagflation caused by the prospect for the prolonged Ukraine issue, inflation and interest rate hikes in various countries, and the economic slowdown stemming from the lockdown in Shanghai, China.

In the real estate market, the average rent for June in the Tokyo Business District (5 wards of Central Tokyo: Chiyoda, Chuo, Minato, Shinjuku, and Shibuya) was 20,273 yen (unit price per tsubo), down for the 23rd consecutive month (total 2,741 yen / approximately 12%). The average vacancy rate for the same month mostly remained flat at 6.39% according to a survey by a private research institution, and the overall office market remained weak. Meanwhile in the real estate investment market, although institutional investors' demand remains high, the outlook remains unpredictable due to the global monetary tightening phase.

During the three months ended June 30, 2022, the Group's core business, the Real Estate Revitalization Business, achieved high profitability and high-quality commercialization. As a result, sales of real estate for sale were steady, and sales in the Real Estate Service Business continued to show stable performance. In the Hotel Operation Business, which has been greatly affected by the pandemic of COVID-19, sales are on a recovery trend against the backdrop of increased demand due to the easing of restrictions on economic and social activities.

As a result, net sales amounted to 22,903 million yen (down 26.6% YoY), operating profit amounted to 6,668 million yen (down 9.2% YoY), ordinary profit amounted to 6,690 million yen (down 8.1% YoY), and profit attributable to owners of parent amounted to 4,690 million yen (down 2.3% YoY).

The results of each segment are as follows.

(Real Estate Revitalization Business)

In the Real Estate Revitalization Business, we are engaged in (i) Replanning Business and (ii) Rental Building Business.

1. In the Replanning Business, we are performing all processes in-house, from purchasing buildings to planning renovations, tenant placement, sales and after-sales support. Sales in the current consolidated fiscal year were steady due to strong investor enthusiasm. As for purchases on the other hand, the Group proactively selects properties while monitoring the impact of macroeconomic fluctuations on the real estate market and interest rate trends. In commercialization, we aim to create offices that fit a hybrid working style and are sought-after even in the new normal, while anticipating changes in urban areas, offices and work styles. Through coordination with the leasing brokerage division, the Group promoted the attraction of tenants even during the COVID-19 pandemic and finished real estate products with high occupancy rates and high added value, thereby selling products that meet the expectations of a wide range of clients in Japan and overseas. In the Real Estate Revitalization Business in New York, we sold a commercialized property for the first time in order to meet the needs of our clients who wish to diversify their asset portfolios. In the Replanning Business, including this property in New York, the number of buildings sold increased by 2 year-on-year to 10. However, sales of relatively large-scale properties owned over the medium to long term decreased year-on-year. As a result, year-on-year net sales and profits decreased. However, throughout all quarterly net sales and profits for the segment, the

4

first quarter of the fiscal year under review marked the third highest level just behind the same period of the previous fiscal year.

1. In the Rental Building Business, to build a stable revenue base as a "stock business", the Group will aim to increase rent income over the medium to long term by utilizing the operational capabilities accumulated in the real estate service division while increasing the number of rental buildings in the Replanning Business. Both net sales and profit were at the same level year-on-year.

As a result, net sales in the Real Estate Revitalization Business as a whole amounted to 18,582 million yen (down 32.3% YoY) and segment profit amounted to 7,087 million yen (down 13.9% YoY).

(Real Estate Service Business)

In the Real Estate Service Business, we are engaged in (i) Property Management Business, (ii) Building Maintenance Business, (iii) Sales Brokerage Business, (iv) Leasing Brokerage Business, (v) Conference Room Rental Business, and (iv) Rent Guarantee Business.

Each of these operating divisions is developing its businesses in the area of small to medium-sized office buildings in central Tokyo by gathering their expertise and working together. This is also the foundation for generating high profitability in the Replanning Business by creating added value through a chain reaction of expertise cultivated through originality and ingenuity in the field.

1. In the Property Management Business, the Company has achieved high-occupancy and high- profitability building management by raising the satisfaction level of tenants through attentive property management, working with the leasing brokerage division to attract tenants, and working to revise the conditions for appropriate rents. As a result of growth in the number of managing buildings, both net sales and profits increased year-on-year.

	End of June	2020	End of June	2021	End of June	2022
Number of Managing	397 buildings	403 buildings	440 buildings
Buildings
Occupancy Rate	97.9%		93.5%		91.8%

1. In the Building Maintenance Business, the Group is promoting collaboration with the property management division with its strength in high-rise cleaning of exterior windows and walls using swings, waterproofing work and exterior wall renovation work. As the number of new managing properties increased, both net sales and profits increased year-on-year.
2. In the Sales Brokerage Business, as part of our real estate consulting services, we are responding quickly to requests for consultation from clients in other divisions such as the Property Management Business and Leasing Brokerage Business. The office building business division worked together to support building owners manage their buildings and succeeded in concluding sales brokerage contracts based on the trust it has built up. As sales brokerage towards investors in Japan and abroad were strong, both net sales and profits increased year-on-year.
3. In the Leasing Brokerage Business, we have developed a service network based in 11 sites, mainly in central Tokyo, which functions as a window for consultation close to the local building owners. We are creating a new sense of value from our clients' perspective for product planning in the Replanning Business by reflecting tenants' needs and changes quickly learned at tenant leasing sites in research and proposals for optimal use of office space. Net sales increased year-on-year while profits remained at the same level as the previous fiscal year.

5