Message from the President and CEO

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Made steady progress in the first three months. Facilitated acquisitions by leveraging diverse product lines.

 In the real estate investment market focused on the Greater Tokyo area, which is the Company’s main target market, commercial real estate transactions for fiscal 2018 decreased 3% year on year. The decrease is reportedly due to a decline in the number of large-size properties put on the market, and limited growth in real estate prices. In addition, weakness was also witnessed in relatively small-size investment properties due to cautious attitudes on the part of financial institutions against the backdrop of fraudulent loan issues, in particular. Nevertheless, demand among investors including real estate funds remains solid, mainly for properties in the Tokyo metropolitan area, reflecting the outlook that real estate investment demand will continue to be firm, supported by strong office demand and stable rental apartment demand.

 In these business environments, during the first three months of the fiscal year under review, the Company made steady progress in the revitalizing and sale of income-generating office buildings and rental apartments in the Revitalization Business, while seeking to develop and sell detached houses and commercial facilities as well as large condominiums in the Development Business. It focused on the acquisition of properties that contribute as future sources of income and made significant progress in the acquisition of small- to medium-size properties with high liquidity in Tokyo and different types of development sites including those for logistics facilities and hotels.

 Furthermore, the Company established the new Hotel Business segment to expand the hotel business, and opened “Tosei Hotel Cocone Ueno”, the second hotel bearing its own brand, in the first three months of the fiscal year under review. It plans to promote the hotel business mainly in the Tokyo area while working on initiatives to enhance the Tosei brand.

 As a result of these initiatives, our operating results for the first three months ended February 28, 2019 were revenue of ¥17.0 billion (an decrease of 6.8% compared with same period of the previous year), operating profit of ¥3.1 billion (an decrease of 28.0%), and profit for the period of ¥2.0 billion (a decrease of 28.5%). Although revenue  decreased due to a reaction to the sale of a large building in the previous year, achieved  25% of the full-year operating profit forecast, showing steady progress in terms of business results.

 The Group will continue to work together to raise corporate value through aiming for further growth. We look forward to your continued support.

April 2019

Seiichiro Yamaguchi

President and CEO

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