■Medium- to long-term growth strategy
1. Numerical targets for medium- to long-term plans
Real Gate ＜5532＞ is promoting a three-year medium-term management plan with the 2024/9 fiscal year as the first year and the 2026/9 fiscal year as the final year. We planned a growth pace of around 15% per annum in terms of sales and operating profit based on the results for the fiscal year ending 2023/9. Operating properties and operating area will be increased, and while maintaining a sales structure centered on stock type, acquisition of flow-type income will also be added. At the end of the second quarter of the fiscal year ending 2024/9, the progress rate for the first half of the fiscal year was over 100% compared to the full-year operating profit plan, and target achievement with room for the first year was visible. Since resources can be allocated to preparations for the fiscal year ending 2025/9 in the second half, there will also be a positive impact on financial results for the fiscal year ending 2025/9 onwards. Against this background, in the explanation of financial results for the second quarter of the fiscal year ending 2024/9, it was suggested that the medium-term growth pace of operating profit would be raised from 15% to 25% to 30%. Assuming a 30% increase in operating profit, the fiscal year ending 2024/9 is expected to be 712 million yen, the 2025/9 fiscal year is 926 million yen, and the 2026/9 fiscal year is expected to be 1,204 million yen, and this level is thought to be the upper limit that can be achieved.
2. Growth Strategy: Ownership model and larger size are key points
The company has set out six growth strategies in its medium-term management plan.
1) Increased operating properties and operating area
2) ML/increase in ownership
3) Expansion of POPUP shop and event space
4) Increase in large-scale and underbuilt projects
5) Environmentally-friendly building regeneration
6) City development by the company
What is particularly important as a driver of growth is “2) increase in ML/ownership” and “4) increase in large/underbuilt projects.” Regarding “2) ML/increase in ownership,” larger profits can be obtained by increasing the proportion of ownership models. The financial infrastructure is the key, but since it came under the umbrella of CyberAgent and went public, the cooperative system of financial institutions has been strengthened, and development utilizing leverage while maintaining an equity ratio of around 20% is possible. Regarding the “4) increase in large/underbuilt projects,” demand for solutions from the FWP business is increasing from large buildings that the company did not target as the main target. The reason behind this is an increase in the vacancy rate of large, newly built buildings in the center of the city. The company has already accumulated results with the “RandL TAKANAWA GATEWAY (7,650 m2, completed in 2023/11)”.
Currently, an organizational structure has been established to open 8 to 10 buildings per year, and by working on ownership models and enlargement with this system, it is possible to achieve targeted growth over the next few years. Beyond that, how we can develop scarce human resources, such as project managers, who have expertise unique to the FWP business will be a barometer of growth.
3. Significant expansion of potential markets
The company is currently expanding dominantly by narrowing it down to some areas in the center of the city (Shibuya-ku, Minato-ku, Meguro), and it is a policy not to expand the area unnecessarily, even if it is the 23 wards of Tokyo. In order to grasp the sense of scale of the potential market, when comparing the office floor area (24.57 million m2) in Shibuya-ku and Minato Ward and the company's operating area (96,000 m2), it is 1,000 to 4, and it can be seen that there is a large potential market. Also, considering not only current offices, but also transformation from hotels, stores, houses, etc. to offices, the possibility of business expansion is expanding further. From the viewpoint of age, 80% of small to medium offices in the 5 wards of the city center and 56% of large offices have been built for 20 years or more, and it can be confirmed that there are many old buildings that are the company's target. At present, even new buildings will eventually become old and lose their asset value and competitiveness, so more and more differentiation is required. From this point of view, the targets for the company's FWP business are potentially sufficient, and it can be said that they will continue to increase in the future.
(Written by FISCO Visiting Analyst Hideo Kakuta)