Hoosiers is a medium-sized condominium developer focused on new-build condominiums in the Tokyo metropolitan area and regional core cities nationwide (populations of 100,000 to 500,000). The company is an independent developer unaffiliated with any of the major corporate groups. When the company was established in 1994, it concentrated on the Tokyo metropolitan area. After the Great East Japan Earthquake in 2011, Hoosiers began shifting its focus beyond the above to regional core cities. Populations in these cities were growing but they were being overlooked by large competitors. (In FY03/21, sales in regional areas accounted for 80% of the company’s total.) Since 2015, the company has diversified, moving into condominiums for seniors and real estate investment. Hoosiers’ business model has three focuses: regional areas, seniors, and high-net-worth individuals.
In terms of earnings contribution, the largest segment is Real Estate Development, which handles new-build condominiums (68.4% of total revenue and 87.1% of operating profit in FY03/21). Next is the CCRC segment (short for “Continuing Care Retirement Community”), which handles condominiums for seniors (14.3%, 6.5%). The Real Estate Investment segment acquires, develops, holds and disposes of income properties (9.5%, 7.5%). In addition, the company has the Condominium Management and Related Services segment (7.7%, operating loss of JPY71mn), and the Other (PFI) segment, which handles business related to private finance initiatives (0.1%, 0.1%).
In its mainstay Real Estate Development segment, the company targets customers who already own houses in regional core cities but want to relocate to highly convenient urban centers. For this clientele, the company develops and sells the “Duo Hills” brand of condominiums. In this segment, the company also develops and sells compact condominiums (brand name: “Duo Veel”). These are designed mainly for single women who live in major metropolises: Tokyo, Sapporo, Nagoya, and Fukuoka. According to a study by the Japan Real Estate Institute, in 2019 Hoosiers ranked third, by sales, in the condominium business in regional areas. Shared Research thinks this figure suggests the company has a certain level of name recognition in this category.
Hoosiers mainly sells condominiums in blocks containing 50 to 100 units per building. Units are typically priced at JPY20mn to JPY50mn (average price of around JPY35mn). These condominiums are more spacious than an equivalently priced condominium in the Tokyo metro area. The company says it pays special attention to the quality and functionality of interior furnishings, which is popular with female customers. Women are key members of Hoosiers’ sales team, and they are closely involved in planning and product development.
The company explains that few large developers are promoting business in regional areas, even though the stock of suitable condominiums for sale is lower than in the Tokyo metro area and potential demand exists among cash-rich business owners and seniors. Revenue is calculated as units sold multiplied by unit price. Expenses include direct costs (land, construction), personnel expenses (salespeople and people to manage model rooms), and promotional and other SG&A expenses.
The company positions the Real Estate Investment segment as a growth business. In the four years to FY03/20, operating profit grew by a CAGR of 38.9% in this segment, compared with 9.3% in the Real Estate Development segment. (In FY03/21, operating profit was down 88.9% YoY because the company decided to hold on to properties and wait for a better time to exit through sale.) In this segment, the company develops investment rental properties: “Duo Maison Flat” buildings, which are priced at less than JPY500mn, and “Duo Flats” rental housing, which are priced at JPY500mn to JPY1.0bn. The company also invests in office buildings in convenient locations in regional core cities.
In this segment, the company generates rental income on owned properties and capital gains on the disposition. For rental housing, the company draws on its experience in developing condominiums. The company says it may also get involved in rebuilding condominiums in convenient locations near stations currently occupied by offices. In Real Estate Investment, Hoosiers sees synergies with the Real Estate Development segment’s condominium business. The company’s investment portfolio contains the Hoosiers Sapporo Building (Chuo-ku, Sapporo), Sendai Business Hotel Ekimae (Aoba-ku, Sendai), Hoosiers Nagano Ekimae Building (Nagano), and Kozenmachi East Building (Nagasaki). Along with raising property values and pursuing redevelopment in regional core cities going forward, the company may convert these properties into new condominiums.
Hoosiers’ target market in the CCRC segment is healthy seniors aged 70 or more. The company develops, sells, and manages condominiums with unit ownership rights (which can be held as assets). In this business, the company is addressing what it sees as a social issue: supplying homes for seniors as Japan’s population continues to age. As of FY03/21, the company managed 1,385 units of condominiums for seniors (the highest number in Japan, according to the company’s medium-term management plan). Hoosiers says large developers frequently develop serviced housing for the elderly and fee-charging nursing homes as right-of-use properties. Most do not sell condominiums with unit ownership rights. The company explains that large developers are cautious about condominiums for seniors because of the difficulty of working with buyers and residents who may require long-term care. Hoosiers’ condominiums for seniors come with conveniences, such as restaurants, large spas, resident nurses, 24-hour staff, and round-the-clock monitoring.
In January 2021, the company outlined its new medium-term management plan, unveiling further details in May. This plan calls for Hoosiers to concentrate management resources on efforts to meet residential demand for housing. By FY03/26, the final year of the plan, the company expects to generate revenue of JPY92.0bn, recurring profit of JPY10.0bn, net income attributable to owners of the parent of JPY6.5bn, and ROE of 15% or more. At the same time, the company plans to maintain a D/E ratio of around 2.0x, a dividend payout ratio of 40% or more, and a dividend on equity (DOE) ratio of 4% or more.
In FY03/21, revenue amounted to JPY80.2bn (-5.9% YoY). Operating profit was JPY5.4bn (-18.8% YoY), recurring profit was JPY4.6bn (-16.3% YoY), and net income attributable to owners of the parent was JPY2.9bn (+942.8% YoY). ROE increased to 8.1%, from 0.6% in FY03/20. In the Real Estate Investment segment, performance was down substantially YoY. The decline was mainly because the company chose not to dispose of some of the owned properties under the uncertainty surrounding the COVID-19 pandemic.
For FY03/22, the company forecasts revenue of JPY76.0bn (-5.3% YoY), operating profit of JPY5.7bn (+4.9% YoY), recurring profit of JPY5.0bn (+8.3% YoY), and net income attributable to owners of the parent of JPY3.1bn (+7.7% YoY). Hoosiers expects EPS to grow from JPY51.0 in FY03/21 to JPY87.6 in FY03/22. The company aims to boost profitability in the residential property sales business, so anticipates ROE of 10% or more.
The company enters the regional core cities where population is from 100,000 to 500,000 as niche markets where large competitors are absent. Hoosiers is collaborating with regional government bodies and local companies to build relationships by sharing its expertise and taking such a role as an executive director of a redevelopment association. In this way, the company is creating a virtuous cycle for increasing profit and barriers to entry for other developers.
The company was an early entrant into the market for providing condominiums for seniors (an area where large competitors were absent). Hoosiers differentiates itself in this category, handled by the CCRC segment, where risk is relatively high.
The proportion of stable profits from invested income-producing properties is relatively low since a majority of profits depend on condominium unit sales and dispositions of invested property buildings.
Sports club and hotel operations have been underperforming, resulting in a bottleneck to improving asset efficiency.
As a condominium developer, the equity ratio of 27% is lower than the industry average (35%).
|Gross profit margin||35.3%||29.7%||30.0%||25.2%||24.1%||24.7%||25.3%||24.2%||21.1%||20.0%|
|Operating profit margin||24.6%||19.1%||18.4%||11.9%||8.9%||10.6%||11.5%||10.3%||7.9%||6.8%|
|Recurring profit margin||22.3%||18.3%||17.4%||11.2%||7.8%||10.1%||10.9%||9.4%||6.5%||5.8%|
|Per-share data (split-adjusted; JPY)|
|Shares issued (year-end; '000)||326||326||31,556||31,556||31,556||43,745||59,354||57,554||57,554||36,917|
|EPS (fully diluted; JPY)||0.0||0.0||0.0||99.2||61.3||86.2||112.2||55.6||4.9||50.9|
|Dividend per share (JPY)||300.0||800.0||12.0||14.0||14.0||24.0||24.0||25.0||35.0||24.0||36.0|
|Book value per share (JPY)||33,614.1||50,877.7||619.0||713.4||777.6||639.3||734.5||766.8||738.9||815.8|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||4,432||8,293||12,477||15,722||13,822||21,383||30,493||26,112||31,736||29,293|
|Total current assets||25,789||33,634||44,760||57,732||57,766||88,329||107,282||125,701||114,734||105,142|
|Tangible fixed assets||1,759||492||3,279||3,778||14,905||12,567||20,493||20,674||21,999||22,449|
|Investments and other assets||893||829||310||1,046||1,275||2,294||5,799||7,830||6,394||7,990|
|Total current liabilities||13,050||11,881||12,595||17,750||24,856||29,960||35,893||43,487||45,294||41,530|
|Total fixed liabilities||4,908||7,234||16,398||23,361||27,838||50,169||56,873||67,326||55,776||58,131|
|Total net assets||10,607||16,055||19,533||21,519||21,891||24,530||42,592||43,977||42,827||36,368|
|Total interest-bearing debt||15,414||14,099||22,603||31,585||41,517||63,624||79,237||93,465||84,918||84,097|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||1,817||5,312||-1,383||-3,268||-5,695||-4,162||-9,053||-3,316||16,110||10,722|
|Cash flows from investing activities||-102||-6||-996||-1,231||-4,497||-8,961||-10,843||-12,987||-670||-3,058|
|Cash flows from financing activities||-1,459||-1,444||6,458||7,686||8,437||20,680||28,783||12,131||-10,159||-15,077|
|Total shareholder returns||0.0%||0.0%||0.0%||0.0%||85.5%||111.7%||137.1%||121.1%||118.9%||0.0%|
|Net debt-to-equity ratio||1.04||0.36||0.52||0.74||1.27||1.72||1.14||1.53||1.24||1.51|
|Total asset turnover||44.0%||59.7%||54.2%||45.9%||36.0%||29.4%||40.5%||33.9%||37.5%||27.0%|
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||% of Est.||FY Est.|
|Gross profit margin||22.0%||22.1%||22.0%||21.1%||19.8%||19.7%||20.4%||20.0%||22.0%||22.7%|
|Operating profit margin||-||5.7%||6.5%||7.9%||-||3.2%||5.9%||6.8%||0.2%||5.8%||7.5%|
|Recurring profit margin||-||4.4%||5.1%||6.5%||-||2.5%||5.3%||5.8%||-||4.0%||6.6%|
|Gross profit margin||22.0%||22.1%||22.0%||19.5%||19.8%||19.7%||21.2%||19.4%||22.0%||23.0%|
|Operating profit margin||-||8.8%||7.9%||10.2%||-||5.8%||9.5%||8.4%||0.2%||8.9%|
|Recurring profit margin||-||8.0%||6.3%||8.9%||-||4.8%||8.9%||6.6%||-||6.9%|
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||% of Est.||FY Est.|
|Real Estate Development|
|Revenue from external customers||6,706||23,000||30,890||46,508||7,940||20,258||37,083||55,315||5,238||11,753||34.5%||34,100|
|Revenue from internal customers||10||48||74||99||12||27||39||54||1||2|
|Total segment revenue||6,717||23,049||30,965||46,608||7,952||20,285||37,122||55,370||5,239||11,756|
|% of total revenue||65.0%||67.0%||56.0%||54.2%||75.5%||68.5%||71.1%||68.4%||53.7%||43.2%|
|Revenue from external customers||298||2,670||7,656||8,947||307||4,235||5,725||11,466||1,454||7,359||34.7%||21,200|
|Revenue from internal customers||54||108||157||190||31||63||75||75||0||0|
|Total segment revenue||352||2,779||7,814||9,138||339||4,299||5,801||11,542||1,455||7,360|
|% of total revenue||3.4%||8.1%||14.1%||10.6%||3.2%||14.5%||11.1%||14.3%||14.9%||27.1%|
|Real Estate Investment|
|Revenue from external customers||1,329||4,183||10,061||21,826||958||2,009||4,435||7,409||1,385||4,593||33.3%||13,800|
|Revenue from internal customers||60||130||220||295||70||139||211||290||86||180|
|Total segment revenue||1,389||4,313||10,281||22,122||1,029||2,149||4,647||7,700||1,471||4,774|
|% of total revenue||13.4%||12.5%||18.6%||25.7%||9.8%||7.3%||8.9%||9.5%||15.1%||17.6%|
|Condominium Management and Related Services|
|Revenue from external customers||1,798||4,109||5,999||7,857||1,122||2,716||4,389||5,959||1,492||3,118||45.6%||6,840|
|Revenue from internal customers||51||111||168||253||65||139||209||280||75||149|
|Total segment revenue||1,849||4,221||6,167||8,111||1,188||2,856||4,598||6,239||1,567||3,268|
|% of total revenue||17.9%||12.3%||11.2%||9.4%||11.3%||9.6%||8.8%||7.7%||16.1%||12.0%|
|Revenue from external customers||20||42||65||90||16||29||52||72||14||38||63.3%||60|
|Revenue from internal customers||0||0||0||0||0||0||0||0||0||0|
|Total segment revenue||20||42||65||90||16||29||52||72||14||38|
|% of total revenue||0.2%||0.1%||0.1%||0.1%||0.2%||0.1%||0.1%||0.1%||0.1%||0.1%|
|Revenue from external customers||0||0||0||0||0||0||0||0||0||0|
|Revenue from internal customers||-175||-400||-621||-839||-180||-371||-535||-701||-164||-333|
|Total segment revenue||-175||-400||-621||-839||-180||-371||-535||-701||-164||-333|
|Revenue from external customers||10,153||34,007||54,673||85,231||10,346||29,249||51,686||80,222||9,585||26,863|
|Revenue from internal customers||0||0||0||0||0||0||0||0||0||0|
|Total segment revenue||10,153||34,007||54,673||85,231||10,346||29,249||51,686||80,222||9,585||26,863||35.3%||76,000|
|Real Estate Development||22||1,540||1,436||2,212||329||1,210||2,784||4,671||22||228|
|Segment profit margin||0.3%||6.7%||4.6%||4.7%||4.1%||6.0%||7.5%||8.4%||0.4%||1.9%|
|% of total segment profit||-||85.7%||42.7%||34.4%||-||144.0%||96.9%||87.1%||-157.1%||15.5%|
|Segment profit margin||-68.2%||-8.1%||4.7%||2.8%||-79.9%||0.9%||1.0%||3.0%||-2.3%||9.2%|
|% of total segment profit||-||-||10.8%||4.0%||-||4.4%||1.9%||6.5%||-||46.2%|
|Real Estate Investment||14||357||1,355||3,637||-85||-261||106||402||-62||406|
|Segment profit margin||1.0%||8.3%||13.2%||16.4%||-8.3%||-12.1%||2.3%||5.2%||-4.2%||8.5%|
|% of total segment profit||-||19.9%||40.3%||56.6%||-||-||3.7%||7.5%||-||27.7%|
|Condominium Management and Related Services||-8||118||199||300||-149||-142||-77||-71||53||143|
|Segment profit margin||-0.4%||2.8%||3.2%||3.7%||-12.5%||-5.0%||-1.7%||-1.1%||3.4%||4.4%|
|% of total segment profit||-||6.6%||5.9%||4.7%||-||-||-||-||-378.6%||9.7%|
|Segment profit margin||5.0%||9.5%||10.8%||12.2%||0.0%||-13.8%||7.7%||11.1%||35.7%||26.3%|
|% of total segment profit||-||0.2%||0.2%||0.2%||-||-||0.1%||0.1%||-35.7%||0.7%|
|Total segment profit||-152||1,939||3,567||6,692||-173||928||3,049||5,435||19||1,559|
|Real Estate Development|
|Revenue from external customers||6,706||16,294||7,890||15,618||7,940||12,318||16,825||18,232||5,238||6,515|
|Revenue from internal customers||10||38||26||25||12||15||12||15||1||1|
|Total segment revenue||6,717||16,332||7,916||15,643||7,952||12,333||16,837||18,248||5,239||6,517|
|Revenue from external customers||298||2,372||4,986||1,291||307||3,928||1,490||5,741||1,454||5,905|
|Revenue from internal customers||54||54||49||33||31||32||12||0||0||0|
|Total segment revenue||352||2,427||5,035||1,324||339||3,960||1,502||5,741||1,455||5,905|
|Real Estate Investment|
|Revenue from external customers||1,329||2,854||5,878||11,765||958||1,051||2,426||2,974||1,385||3,208|
|Revenue from internal customers||60||70||90||75||70||69||72||79||86||94|
|Total segment revenue||1,389||2,924||5,968||11,841||1,029||1,120||2,498||3,053||1,471||3,303|
|Condominium Management and Related Services|
|Revenue from external customers||1,798||2,311||1,890||1,858||1,122||1,594||1,673||1,570||1,492||1,626|
|Revenue from internal customers||51||60||57||85||65||74||70||71||75||74|
|Total segment revenue||1,849||2,372||1,946||1,944||1,188||1,668||1,742||1,641||1,567||1,701|
|Revenue from external customers||20||22||23||25||16||13||23||20||14||24|
|Revenue from internal customers||0||0||0||0||0||0||0||0||0||0|
|Total segment revenue||20||22||23||25||16||13||23||20||14||24|
|Revenue from external customers||0||0||0||0||0||0||0||0||0||0|
|Revenue from internal customers||-175||-225||-221||-218||-180||-191||-164||-166||-164||-169|
|Total segment revenue||-175||-225||-221||-218||-180||-191||-164||-166||-164||-169|
|Revenue from external customers||10,153||23,854||20,666||30,558||10,346||18,903||22,437||28,536||9,585||17,278|
|Revenue from internal customers||0||0||0||0||0||0||0||0||0||0|
|Total segment revenue||10,153||23,854||20,666||30,558||10,346||18,903||22,437||28,536||9,585||17,278|
|Real Estate Development||22||1,518||-104||776||329||881||1,574||1,887||22||206|
|Real Estate Investment||14||343||998||2,282||-85||-176||367||296||-62||468|
|Condominium Management and Related Services||-8||126||81||101||-149||7||65||6||53||90|
|Total segment profit||-152||2,091||1,628||3,125||-173||1,101||2,121||2,386||19||1,540|
Revenue was down JPY2.4bn YoY, falling JPY8.5bn YoY in the Real Estate Development segment while increasing JPY3.1bn in the CCRC segment, JPY2.6bn YoY in the Real Estate Investment segment, JPY402mn in the Condominium Management and Related Services segment, and JPY9mn in the Other (PFI) segment. Contracts were signed for 625 units in six condominium buildings, while the number of units delivered were 474 in five buildings. The number of units under management at end-1H were 18,836. In the Real Estate Development, CCRC, and Real Estate Investment segments, revenue is booked upon delivery to the customer, not at the time of concluding the purchase contract. Therefore, revenue tends to become concentrated based on these delivery periods.
Operating profit rose JPY631mn YoY. The source of this growth was YoY increases of JPY667mn in Real Estate Investment, JPY641mn in CCRC, JPY285mn in Condominium Management and Related Services, and JPY14mn in Other (PFI). Real Estate Development saw a JPY982mn decline.
In the mainstay Real Estate Development segment, external revenue was JPY11.8bn (-42.0% YoY), and operating profit was JPY228mn (-81.2% YoY). These results were a product of selling 254 condominiums, such as Duo Veel Hills Yamagata Nanokamachi Tower and Duo Veel Nishijin, and 41 detached houses, such as Duo Avenue Motoyama Hills and Duo Avenue Hikarigaoka Koen.
In the CCRC segment, revenue was JPY7.4bn (+73.8% YoY), and operating profit was JPY678mn (operating profit of JPY37mn in 1H FY03/21). These results were a product of selling 174 condominium units, such as Duo Scene Kunitachi and Duo Scene Funabashi Takanedai.
In the Real Estate Investment segment, revenue was JPY4.6bn (+128.6% YoY), and operating profit was JPY406mn (operating loss of JPY261mn in 1H FY03/21). Within revenue, the company generated JPY3.0bn from real estate sales and JPY1.3bn from rental income. Sales contracts for 1,126 units have already been concluded, reaching 81.0% of the forecast of 1,389.
In the Condominium Management and Related Services segment, revenue was JPY3.1bn (+14.8% YoY), and operating profit was JPY143mn (JPY142mn operating loss in 1H FY03/21).
Within revenue, the company generated JPY951mn from condominium management, JPY1.7bn from sports club operation, and JPY437mn in other revenue (hotel operation and contracted construction). The company recorded extraordinary losses on fixed expenses that were incurred at locations temporarily closed due to the COVID-19 pandemic.
In the Other (PFI) segment, the company produced revenue of JPY38mn and operating profit of JPY10mn, stemming from the private finance initiative (PFI) business.
|(JPYmn)||1H Act.||2H Act.||FY Act.||1H Act.||2H Act.||FY Act.||FY Est.||FY Est.|
|Cost of sales||26,507||40,713||67,220||23,475||40,670||64,145|
|Gross profit margin||22.1%||20.5%||21.1%||19.7%||20.2%||20.0%|
|Operating profit margin||5.7%||9.3%||7.9%||3.2%||8.8%||6.8%||7.5%|
|Recurring profit margin||4.4%||7.8%||6.5%||2.5%||7.6%||5.8%||6.6%|
For FY03/22, the company forecasts revenue of JPY76.0bn (-5.3% YoY), operating profit of JPY5.7bn (+4.9% YoY), and net income attributable to owners of the parent of JPY3.1bn (+7.7% YoY). The expectation for lower revenue is due to changes in the intersegment sales structure. The company expects profitability to rise in the residential property sales business (Real Estate Development segment + CCRC segment) and as the result of its efforts to put in place a post-pandemic business structure.
The company forecasts segment revenue of JPY34.1bn (-38.4% YoY). Due to a decline in the number of condominiums completed, the company expects to deliver 783 units (-487 YoY). As of the beginning of FY03/22, the company had contracts in place for 360 condominiums (45.9% of the expected total). The company plans to deliver 89 detached houses (-36 YoY).
The company forecasts segment revenue of JPY21.2bn (+84.9% YoY). The company plans to complete two blocks of CCRC condominiums totaling 473 units. During FY03/22, the company plans to deliver 517 units (+249 YoY) and already has contracts signed on 219 units. The company plans to have around 1,850 units under operation.
In this segment, the company anticipates revenue of JPY13.8bn (+86.3% YoY). The company plans to sell a total of 20 properties in FY03/22 (income properties + flats), 10 more than in FY03/21. Hoosiers is actively investing in development-type rental housing. The company aims to step up purchases of high-yield properties in good locations that can be redeveloped in the future. The company plans to sell more of these properties in FY03/22 than it did in FY03/21.
The company forecasts segment revenue of JPY6.8bn (+14.8% YoY). Hoosiers plans to return this segment to operating profitability through a thorough focus on low-cost operations.
As of end-March 2021, the company held income property worth around JPY35.0bn (worth an expected JPY38.0 bn when complete), broken down as JPY20.0bn in fixed assets, JPY12.0bn in real estate for sale, and JPY3.0bn in real estate for sale in process. The company had 3,701 units in the residential property sales business, including 2,519 condominiums, 1,028 condominiums for seniors, and 154 detached houses. As of May 2021, the company contemplated to fill its pipeline for FY03/24 and beyond.
In May 2021, Hoosiers announced details of its new medium-term management plan (FY03/22 to FY03/26). Under the new plan, the company will realign diverse businesses that end up with low profitability. Instead, the company will concentrate management resources on its core housing business.
While maintaining the strengths it has cultivated since establishment, the company plans to dramatically reconfigure its fundamental business and strategies. In this way, the company plans to adapt to a changing operating environment and social requirements. The company aims to maintain its basic policy of focusing on “regional areas, seniors, and high-net-worth individuals”. As for the dramatic reconfiguration, the company intends to shift from its philosophy of helping to resolve societal issues through its business to one that concentrates on fusing its business and ESG strategies and enhancing corporate governance and risk management.
As to reconfiguring strategies, the company will retain its core focus on regional areas nationwide and condominiums for seniors in Greater Tokyo. At the same time, it will realign all businesses under the theme of “housing.” Through this approach, the company looks to achieve stable and sustained growth. By revamping its capital structure, Hoosiers aims to bolster capital efficiency. Furthermore, the company aims to make its overseas business profitable in FY03/22, in preparation for the overseas business to become a pillar of operations a decade hence.
For FY03/26, the final year of the new medium-term management plan, the company is targeting revenue of JPY92.0bn, recurring profit of JPY10.0bn, net income attributable to owners of the parent of JPY6.5bn, ROE of 15% or more, and DOE of 4% or higher.
|(JPYmn)||FY03/21 Act.||FY03/22 Est.||FY03/23 Est.||FY03/24 Est.||FY03/22 Est.||FY03/26 Est.|
|Real Estate Development||55,315||34,100|
|Real Estate Investment||7,409||13,800|
|Condominium Management and Related Services||5,959||6,840|
|Recurring profit margin||5.8%||11%|
|Net income attributable to owners of the parent||2,878||3,100||4,200||4,800||5,500||6,500|
|Debt-to-equity ratio||2.3x||Approx. 2.0x||Approx. 2.0x|
|ROE||8.1%||10% or more||15％ or more|
|Payout ratio||47.1%||41.1%||40% or more|
|DOE||3.1%||4% or more||4% or more|
In the past, the company’s shareholder return policy called for a “total distribution ratio of 40% or more.” While maintaining the link between shareholder returns and company performance, the company intends to raise the lower limit to dividends by introducing a DOE target. Thus, its new policy from FY03/22 is a “dividend payout ratio of 40% or more and DOE of 4% or more.”
The company has set FY03/26 KPIs for the residential property sales business (Real Estate Development segment + CCRC segment). The company estimates units delivery of 1,500–1,700 (1,663 units in FY03/21), assuming revenue of JPY60.0–65.0bn (JPY66.8bn), and a contribution to consolidated net income of JPY1.9–3.0bn. (Profit excludes management of condominiums for seniors.)
From FY03/23, the company targets annual net income attributable to owners of the parent of JPY3.0bn or more from the residential unit sales alone. The company expects shareholders’ equity to reach JPY40.0bn in FY03/26. The company calculates that it needs dividend resources of JPY1.6bn to achieve companywide DOE of 4%. As the company expects to generate JPY3.0bn in net income from the residential unit sales business alone, our calculations suggest that business on its own would meet the 4% DOE target.
|FY03/21 Act.||Medium-term management plan (target range per fiscal year)|
|Units delivered||1,663 units||Stable supply of 1,500 to 1,700 units|
|Revenue||Approx. JPY66.8bn||Approx. JPY60.0–65.0bn|
|Contribution to consolidated net income||Approx. JPY1.9bn||JPY3.0bn or more|
In FY03/21, the company had 1,385 units under operation in the CCRC segment. The company continues to develop condominiums for seniors, as it believes the market will grow as Japan continues to age. Specifically, the company is focusing on condominiums that have unit ownership rights attached and are tailored to seniors’ needs. In FY03/21, the company’s total number of condominiums for seniors supplied exceeded 2,000 units. By FY03/26, the company aims to reach 3,000 units. By FY03/26, Hoosiers expects revenue from operating condominiums for seniors to reach around JPY2.0bn.
The company aims to further strengthen this segment as a growth business. This segment’s core business is buying and developing income-producing properties, increasing their value, and selling them on. This cycle requires the company to look ahead to future real estate market conditions and the funding environment and to be flexible in deciding when to hold and when to sell. The company aims to increase its income property portfolio from JPY35.0bn in FY03/21 to JPY45.0bn in FY03/26. To date, the company has maintained a balanced portfolio spanning residential property, offices, commercial property, hotels and others (approximately 20% each). Hoosiers intends to change its proportion, so that 75% or more of its portfolio is “residential property or offices that can be converted to residences.” Hoosiers plans to launch a private REIT in FY03/23 to provide an additional off-balanced option for selling owned properties and to expand group earnings. Furthermore, the company aims to make its overseas business profitable in FY03/22, in preparation for making it a growth business 10 years in the future.
To date, the company has considered the formation of listed REITs to be one aspect of its business expansion and growth strategy. Initially, the company had planned to list a REIT in FY03/20 that would invest in healthcare facilities (defined in a broad sense to include housing for seniors, clinical malls and hospitals, sports facilities, commercial facilities, and CCRCs). In August 2019, however, the company announced a change in focus from listed REITs to private REITs. At the same time, the company postponed its origination timing from FY03/20 to FY03/21. The company changed its approach again in May 2020, shifting the investment focus from healthcare facilities to mainly residential property (but also including healthcare facilities), and stated that origination timing was to be determined. When unveiling the new medium-term management plan, the company announced that this timing would be in FY03/23. The company plans to focus on forming REITs, which it considers a way to move owned assets off the balance sheet and an important exit strategy.
|Standard holding period||Rental housing development: 3 years; income-producing properties: 5 years|
|Profit target||GPM of 8% or more on each project|
|Asset portfolio||Aim to increase the ratio of rental residences and well-located offices in regions that can be redeveloped into condominiums to 75% of total assets (FY03/26)|
|Other||The company plans to utilize private REITs/funds and hybrid debt capital to diversify exit strategies and sources of funds.|
The company targets segment revenue of JPY10.0bn by FY03/26. Hoosiers aims to continue boosting segment profit by focusing on condominium management.
Hoosiers manages most of the condominiums it developed. In FY03/21, condominiums under management totaled 17,015 units. The company aims to increase earnings by providing new value-added and services to existing customers and raising the number of condominiums it manages above 20,000.
Demand is firm in the company’s main category: operating swimming schools for children. The company aims to pursue synergies with PFI and local redevelopment projects in regional core cities but will hold back on opening new locations that burden its balance sheet.
The company operates well-located aged business hotels and plans to improve operational efficiency and simplify services. In its aim to generate steady earnings while streamlining the balance sheet, the company plans to limit its new acquisitions of sports clubs and hotels mainly to contracted operation.
Government efforts to promote regional revitalization are driving up needs for PFI among local public entities. In designated administrative districts, the company intends to undertake combined urban developments that include PFI and condominium businesses. By involving other company departments in development, ongoing maintenance, operations, and management, Hoosiers plans to help resolve regional issues and promote its own ESG activities.
Hoosiers is a medium-sized real estate developer. The company is independent (unaffiliated with any of the major corporate groups) and specializes in new-build condominiums in the Tokyo metropolitan area and regional core cities (populations of 100,000 to 500,000) nationwide. When the company was established in 1994, it concentrated on the Tokyo metropolitan area. After the Great East Japan Earthquake in 2011, however, Hoosiers began shifting its focus to regional core cities. (In FY03/21, regional areas accounted for 80% of condominium sales. Since 2015, the company has diversified, moving into condominiums for seniors and real estate investment.
Origin of the company name: “Hoosier” is a nickname for a person from the central US state of Indiana. The company based its name on the perception that Hoosiers enjoy relatively sumptuous housing conditions even if annual incomes are not particularly high. The name therefore carries the context of “bringing better living conditions to the people of Japan.”
The company has five segments: the Real Estate Development segment, which handles new-build condominiums (68.4% of total revenue and 87.1% of operating profit in FY03/21); the CCRC segment, which handles condominiums for seniors (14.3%, 6.5%); the Real Estate Investment segment, which holds and sells income property (9.5%, 7.5%); the Condominium Management and Related Services segment (7.7%, operating loss of JPY71mn); and the Other (PFI) segment, which handles business related to private finance initiatives (0.1%, 0.1%).
|Real Estate Development||CCRC||Real Estate Investment||Condominium Management and Related Services||Other|
|Business unit||Condos||Houses for sale||Condos for seniors||Mgmt for seniors||Rental||Flats||Sales of houses||Invest. mgmt||Overseas||Condo mgmt||Sports clubs||Hotels||PFI|
|Region||Greater Tokyo||Local||Greater Tokyo||Greater Tokyo||Greater Tokyo, local||North Am., Asia||Greater Tokyo, local||Local|
|Profit type||Devt profit||Devt profit||Fee service income||Rental profit||Devt profit||Devt profit||Fee service income||Devt profit||Fee service income||Fee service income|
|% of total profit||70–80%||15–25%||5% or less|
|Customers||Buying to live||Family households (middle class)||◎||〇||◎||-||-||-||-||-||-||〇 (Asia)||◎||◎||◎||-|
|Senior households (high net worth)||〇||◎||-||◎||◎||-||-||-||-||-||◎||-||-||-|
|Invest.||Individual investors (high net worth)||-||-||-||-||-||-||◎||-||-||-||-||-||-||-|
|Corporations, investors (fund/REIT)||-||-||-||-||-||-||〇||〇||-||〇 (North America)||-||-||-||-|
|Main characteristics, strength||Condominium development in regional cities (little competition)||New business model looking ahead to market expansion||Development capabilities unique to developers, product offerings to meet diverse lifestyles||Stable earnings, affinity with local redevelopment activities|
Over the five years to FY03/21, revenue has grown at a CAGR of 20.6%, with operating profit rising at 24.7%. The company focuses on the family-oriented housing market in Greater Tokyo including metro area and on high-net-worth individual customers in regional areas nationwide. In the outskirts of Tokyo and metro area, the company sells detached houses. In regional core cities, the company targets customers who already own detached houses in regional core cities but want to relocate to highly convenient urban centers. The company notes that supplies of condominiums in outlying areas are lower than those targeting first-time home buyers in the Tokyo metropolitan area. The company expects to continue focusing on this market in the Real Estate Development segment, partly because only a few companies are developing and supplying condominiums in regional areas.
Regional cities accounted for 80% of the condominium business (in FY03/21, based on the number of buildings). In FY03/21, the company sold 1,270 units of condominiums (80% in regional areas). For reference, prices were around JPY20mn for condominiums in Ishinomaki, Miyagi Prefecture (e.g., JPY20mn for a 67sqm-condo located a 9-minute walk from Ishinomaki Station) and around JPY30mn for properties in Kasugai, Aichi Prefecture (e.g., for a 60sqm-condo located a 6-minute walk from Kasugai Station). According to a study by the Japan Real Estate Institute, in 2019 Hoosiers ranked third, by sales, in the condominium business in regional areas.
When the company was founded, it concentrated on sales of family-oriented condominiums on the Tokyo outskirts. Its first business was in Saitama and Chiba prefectures, which neighbor Tokyo. The condominium business in the Tokyo metropolitan area grew increasingly difficult for the company after 2013, due to soaring land and construction costs. The company changed course substantially following the global financial crisis of 2008 and the Great East Japan Earthquake of 2011; since 2017, Hoosiers has developed the condominium business in regional core cities.
Regional areas are characterized by a growing number of vacant houses, while their urban centers are hollowing out as businesses move out and stores close. Even while their buildings are becoming decrepit, due to falling tax revenues many local governments lack the funds to rebuild these buildings. These local governments need to make their regions more attractive through redevelopment and attract stores and companies to their regions. The reality, however, is a lack of incoming companies and sponsors. Against this backdrop, Hoosiers is working with local governments to promote redevelopment in regional core cities by supplying high-quality condominiums.
Hoosiers is positioning the Real Estate Investment segment as a growth business. This segment includes three businesses: real estate investment, asset investment, and overseas business. In this segment, the company provides rental housings and other income property to professional investors (high-net-worth individuals, operating companies, J-REITs, and private funds) to hold and sell. From FY03/16 to FY03/20, external revenue in this segment rose by 5.2x, from JPY4.2bn to JPY21.8bn. Over the same period, operating profit increased 3.7x, from JPY976mn to JPY3.6bn. In FY03/21, external revenue was down 66.1% YoY, due to the company’s decision to curtail sales of real estate during the fiscal year in favor of continued holdings. Despite the decline in revenue, Hoosiers continued to see the segment as a growth business.
The company has a CCRC (“Continuing Care Retirement Community”) segment. Business in this segment includes development of condominiums for healthy seniors, long-term care insurance, and condominium operation and management. In the Condominium Management and Related Services segment, the company operates and manages sports clubs, condominiums, and hotels.
Hoosiers derives profits from the sale of income producing properties. Thanks in part to favorable real estate market conditions over the past few years (as of FY03/21), the Real Estate Investment segment has generated higher gross profit margins than the company’s mainstay Real Estate Development segment. Over the past five years, OPM has averaged 16.5% in the Real Estate Investment segment, versus 9.2% for the Real Estate Development segment. This difference reflects the higher selling expenses in the Real Estate Development segment. (In addition to land and construction costs, in the condominium business the company incurs expenses to maintain model rooms and expenses for sales personnel.) The Real Estate Investment segment involves lower selling costs, as the company sells entire buildings rather than units.
Another reason for the higher profitability in the Real Estate Investment segment is that the company earns rental income on real estate it holds prior to sale, contributing to operating profit. In FY03/21, the Real Estate Investment segment generated external revenue of JPY7.4bn, of which JPY2.4bn was rental income. (The company does not disclose the operating profit percentages.)
We understand that the condominium unit sales business is relatively impervious to these influences, for two reasons. First, sales are mostly to individuals, where demand is firm. Second, the company concentrates on condominiums conveniently located in regional core cities, where demand is expected to be robust. Regarding profits on the sale of income-producing properties, it is typically susceptible to swings in real estate market conditions. Shared Research understands that investor sentiment and market conditions are particularly important factors in the Real Estate Investment segment, which centers on the sale of income-producing properties. The company sells residential buildings to a range of professional investors, including high-net-worth individuals, companies, real estate funds, and other professional investors.
|Real Estate Development|
|Revenue from external customers||21,708||30,911||21,861||53,107||46,508||55,315|
|Revenue from internal customers||-||-||-||17||99||54|
|Total segment revenue||21,708||30,911||21,861||53,125||46,608||55,370|
|% of total revenue||60.3%||58.3%||34.2%||58.6%||54.2%||68.4%|
|Revenue from external customers||942||4,285||14,639||5,823||8,947||11,466|
|Revenue from internal customers||29||38||129||199||190||75|
|Total segment revenue||971||4,323||14,769||6,022||9,138||11,542|
|% of total revenue||2.7%||8.1%||23.1%||6.6%||10.6%||14.3%|
|Real Estate Investment|
|Revenue from external customers||4,192||4,484||11,074||11,990||21,826||7,409|
|Revenue from internal customers||4||170||229||248||295||290|
|Total segment revenue||4,196||4,655||11,304||12,239||22,122||7,700|
|% of total revenue||11.6%||8.8%||17.7%||13.5%||25.7%||9.5%|
|Condominium Management and Related Services|
|Revenue from external customers||1,457||4,029||6,555||8,278||7,857||5,959|
|Revenue from internal customers||31||102||112||260||253||280|
|Total segment revenue||1,489||4,131||6,667||8,538||8,111||6,239|
|% of total revenue||4.1%||7.8%||10.4%||9.4%||9.4%||7.7%|
|Revenue from external customers||8||38||45||59||90||72|
|Revenue from internal customers||-||-||-||-||-||-|
|Total segment revenue||8||38||45||59||90||72|
|% of total revenue||0.0%||0.1%||0.1%||0.1%||0.1%||0.1%|
|Revenue from external customers||-||-||-||-||-||-|
|Revenue from internal customers||-82||-328||-490||-744||-839||-701|
|Total segment revenue||-82||-328||-490||-744||-839||-701|
|Revenue from external customers||35,943||52,726||63,364||89,982||85,231||80,222|
|Revenue from internal customers||-||-||-||-||-||-|
|Total segment revenue||35,943||52,726||63,364||89,982||85,231||80,222|
|Real Estate Development||1,552||3,991||1,909||5,992||2,212||4,671|
|% of total segment profit||49.1%||73.3%||25.9%||63.2%||34.4%||87.1%|
|% of total segment profit||7.7%||5.5%||24.1%||0.9%||4.0%||6.5%|
|Real Estate Investment||976||652||2,771||2,711||3,637||402|
|% of total segment profit||30.9%||12.0%||37.6%||28.6%||56.6%||7.5%|
|Condominium Management and Related Services||-32||-94||-4||10||300||-71|
|% of total segment profit||-||-||-||0.1%||4.7%||-|
|% of total segment profit||-||0.1%||0.1%||-||0.2%||0.1%|
|Total segment profit||3,184||5,590||7,289||9,287||6,692||5,435|
|Real Estate Development||28,724||30,574||38,433||40,276||45,792||31,460|
|% of total segment assets||46.2%||34.6%||35.5%||30.1%||38.8%||29.5%|
|% of total segment assets||12.4%||21.9%||11.5%||13.4%||16.5%||18.9%|
|Houses and Flats||10,157||11,489||17,340||21,729||-||-|
|% of total segment assets||3||2||2||2||-||-|
|Real Estate Investment||14,858||21,747||34,714||50,179||49,596||51,418|
|% of total segment assets||23.9%||24.6%||32.0%||37.6%||42.0%||48.2%|
|Condominium Management and Related Services||732||5,152||5,372||3,545||3,245||3,579|
|% of total segment assets||1.2%||5.8%||5.0%||2.7%||2.7%||3.4%|
|% of total segment assets||0.0%||0.0%||0.0%||0.0%||0.0%||0.1%|
|Total segment assets||74,586||104,660||135,359||154,792||143,897||136,030|
In the mainstay Real Estate Development segment, the company develops new-build condominiums and detached houses. The company reshuffled its segments in FY03/21, bringing the detached housing business into this segment. According to Hoosiers’ fact book, in FY03/21 segment revenue was JPY55.5bn, and operating profit was JPY4.7bn. Condominiums accounted for JPY45.3bn of revenue, detached houses for JPY9.8bn, and other property for JPY378mn. Condominiums in regional areas make up a particularly high percentage of revenue, accounting for 80% in FY03/21 (based on the number of buildings).
In regional core cities, the company’s main customers are people who already own houses but want to relocate to highly convenient urban centers. The company develops and sells high-end condominiums (brand name: Duo Hills) for this market. The company also develops and sells compact condominiums (brand name: Duo Veel). These are designed for single women who live in major metropolises: Tokyo, Sapporo, Nagoya, and Fukuoka. The company develops detached houses under the Duo Avenue brand. The company sells detached houses mainly in the Jonan/Josai area of Tokyo, as well as in Aichi and Kanagawa prefectures.
Of the new-build condominiums the company supplied between FY03/17 and FY03/21, 62% were in regional core cities and 38% were in the Tokyo metropolitan area. The 62%breaks down further into cities with populations of 100,000 to 500,000 (39%), cities of more than 500,000 (17%), and cities of fewer than 100,000 (6%).
When the company was first founded, it concentrated on sales of family-oriented condominiums on the Tokyo outskirts. Its first business was in Saitama and Chiba prefectures, which neighbor Tokyo. This regional focus was due in part to President Hirooka’s familiarity with land in this vicinity through his previous employment at Recruit Cosmos Co., Ltd. (now Cosmos Initia Co., Ltd.) Also, at that time land in the area was relatively inexpensive. Also, from the company’s start of business in 1994 through 2009, the Japanese economy was deflationary. As a result, the costs of land and construction were relatively low at the time, making condominium sales in the Tokyo suburbs highly profitable. From around 2013, amid soaring land and construction costs Hoosiers found it difficult to differentiate itself in the condominium business in the Tokyo metropolitan area.
The company shifted its business focus significantly following the global financial crisis of 2008 and the Great East Japan Earthquake of 2011, and from 2017 it began developing condominiums in regional core cities. Shortly after the 2011 earthquake, President Hirooka decided the company should make construction in disaster areas a business focus. As part of its redevelopment work, the company began developing and selling condominiums in the city of Ishinomaki, Miyagi Prefecture. Whereas no large developers came forward, Hoosiers’ decision to shoulder the risk of development in this area marked its full-fledged entry into the regional condominium business.
The main buyers of the company’s condominiums in regional core cities are high-net-worth individuals who are cash-rich. Frequently they already own detached houses, but they want to move to urban centers with more convenient access to shopping and lifestyle activities. They tend to purchase the properties with cash. The company says sales are favorable, as it typically develops condominiums in areas that were previously unbuilt or had few condominiums.
The company is working with local governments to redevelop central areas of regional core cities. Hoosiers concentrates on converting commercial facilities in convenient central locations to joint use as condominiums. The company has steadily built up expertise in this area by working with consultants experienced in redevelopment. As populations decline, this approach offers a way for local governments to encourage seniors to relocate from suburbs to more convenient central areas. The company believes demand for condominiums in regional core cities have room to grow.
Large developers, such as Mitsui Fudosan and Sumitomo Realty & Development, have been cautious about developing condominiums in regional cities. Being small relative to their scale of operations in the Tokyo metro area, these areas are less attractive to large developers. Hoosiers says the right market size for new-build condominiums in regional core cities is 50 to 100 units. At an average selling price of JPY30mn per unit, a block would deliver JPY1.5bn to JPY3.0bn, which is too small to attract large developers.
Conversely, such markets are too large for local developers, who also lack expertise in redevelopment. This situation puts Hoosiers at a competitive position. Hoosiers has been collaborating with shopping districts and local governments in regional core cities since the start of its redevelopment business, working to re-energize and reinvigorate these areas. Shared Research understands that the company is leveraging this experience to develop condominiums in regional core cities.
In FY03/14, the company generated 28.6% of revenue in the Real Estate Development segment from business in regional areas. By FY03/21, this figure had risen to 80%. The company has defined its target market as the 230 cities around Japan with populations of 100,000 to 500,000. Hoosiers believes it has ample room to grow, as it has developed real estate in only 70 of these cities to date. The company narrowed its number of target cities down further, to 50 (areas where competition is not excessive and demand is favorable). Between 2016 and 2020, the company developed and sold 6,100 units in these areas, 51% of what it calculates to be the potential demand of 12,000 units. Put differently, the company believes these markets still have another potential demand for 5,900 units (the remaining 49%).
The company explains that redevelopment projects are an effective way to spur condominium demand in regional areas. Sites of former shops and department stores that have vacated the area are a frequent occurrence in the central urban areas of regional locations. Redevelopment into condominiums helps revitalize these regions. One such example is Duo Hills Yamagata Nanokamachi Tower, a block of condominiums in the city of Yamagata (in Yamagata Prefecture). This was the first large-scale development in Yamagata’s Nanokamachi area in eight years. The population of central Yamagata had been on a decline; the company expects this development to boost the resident population and prompt an urban turnaround. As a landowner, the company heads the local redevelopment association and is collaborating with the city of Yamagata and the local chamber of commerce to attract named tenants to empty store spaces. The company is also promoting a plan to support female entrepreneurs.
|Redevelopment project||Type||Condos for sale||District||Area||Population||Project status||Fiscal year|
|Ishinomaki Terrace||Independent||Y||Ishinomaki||3-1 Chuo||89,688||Completed||FY03/17|
|Hakodate Marks the Tower||Independent||Y||Hakodate||Hakodate Ekimae Wakamatsu||265,979||Completed||FY03/18|
|Duo Hills Ishinomaki Tachimachi||Independent||Y||Ishinomaki||2-5 Tachimachi||89,688||Completed||FY03/18|
|The Tower Obihiro||JV||Y||Obihiro||West 3-9||169,327||Rights transfer plan approved||FY03/19|
|Duo Hills Shiogama Kaigandori||Independent||Y||Shiogama||Shiogama Kaigandori 1, 2||54,187||Rights transfer plan approved||FY03/19|
|Duo Hills Yamagata Nanokamachi Tower||Independent||Y||Yamagata||Block 5 South, Nanokamachi||253,832||Rights transfer plan approved||FY03/20|
|Okayama Omotecho redevelopment project||Independent||Y||Okayama||3-15 Omotecho, Okayama||719,474||City planning decision||FY03/21|
|Iwaki Eki Namiki Dori regional redevelopment project||JV||Y||Iwaki||Iwaki Eki Namiki Dori||350,237||Project plan approved||FY03/21|
The company says 35 urban redevelopment projects have taken place between 2016 and 2020 in Japan (including condominium developments, but excluding metropolitan areas). Hoosiers has been involved in eight of these projects, six on its own and two through joint ventures. Daikyo, a competitor, is the only company that was involved in more of these projects (nine, and only three of these projects were on its own). Shared Research understands that Hoosiers is working to use its experience and expertise in the redevelopment business in regional core cities to distinguish itself from competitors.
|Daiwa House Industry||4||1||3|
|Asahi Kasei Realty & Residence||2||1||1|
|Nomura Real Estate Development||3||1||2|
As of May 2021, the company was involved in three such projects on its own and four through joint ventures. The independent projects are Ishinomaki Chuo 2-4 district (Miyagi Prefecture), Mito Ekimae Sannomaru district (Ibaraki Prefecture), and Tawaramoto Ekinan district (Nara Prefecture). The joint ventures are Tajimi Ekinan district (Gifu Prefecture), Honatsugi Ekiminamiguchi district (Kanagawa Prefecture), and two others.
|Project name||Prefecture||Area||Type||Participation||Project state||Sales phase|
|Ishinomaki Chuo 2-4 district||Miyagi||Other||Development business for superior buildings||Independent||Subsidy grant approved||On sale|
|Tajimi Ekinan district||Gifu||Three metropolitan areas||Category 1 urban redevelopment project||JV||Rights transfer plan approved||On sale|
|Honatsugi Ekiminamiguchi district||Kanagawa||Three metropolitan areas||Category 1 urban redevelopment project||JV||Rights transfer plan approved||On sale|
|Oyamacho Crosspoint||Tokyo||Three metropolitan areas||Category 1 urban redevelopment project||JV||Rights transfer plan approved||-|
|Mito Ekimae Sannomaru district||Ibaraki||Three metropolitan areas||Category 1 urban redevelopment project||Independent||Project plan approved||-|
|Ome Ekimae district||Tokyo||Three metropolitan areas||Category 1 urban redevelopment project||JV||Project plan approved||-|
|Tawaramoto Ekinan district||Nara||Three metropolitan areas||Category 1 urban redevelopment project||Independent||Project plan approved||-|
|Fukui Prefecture project||Fukui||Other||-||-||-||-|
|Aomori Prefecture project||Aomori||Other||-||-||-||-|
|Tochigi Prefecture project||Tochigi||Three metropolitan areas||-||-||-||-|
Duo Hills Yamagata Nanokamachi Tower
▷ Completed in March 2021
▷ 144 units
▷ Access: A 19-minute walk from Yamagata Station on the Yamagata Shinkansen Line
▷ Steel-reinforced concrete structure with some steel structural areas; 20 stories above ground
▷ Site area: 2,170.27sqm
▷ Total floor space: 16,264.85sqm
Duo Hills Sakai The Residence
▷ Scheduled for completion in August 2022
▷ 81 units
▷ Access: 6-minute walk from Sakai Station on the Nankai Main Line
▷ Steel-reinforced concrete structure, 14 stories above ground
▷ Site area: 1,348.53sqm
▷ Total floor space: 6,016.33sqm
The condominiums the company has developed in regional areas are diverse and tailored to regional needs. Duo Hills Yamagata Nanokamachi Tower condominiums have 15 different floor layouts, ranging from 66sqm 3LDKs (three rooms plus a living/dining/kitchen area) to 100sqm 4LDKs. By offering a variety of layouts, the company caters to people who want compact living areas as well as families who require more space. These condominiums are located within a five-minute walk of shops and restaurants, and have convenient access to museums and other cultural facilities. The area is home to the Yamagata Hanagasa Festival, one of the four great festivals in the Tohoku area.
Compared with other Japanese companies, Hoosiers’ ratio of female employees is high, at 42% (FY03/20). These employees concentrate on developing condominiums with features that other women will find attractive. The company says that more than 10% of managers (section manager level or above) are women. According to Hoosiers, the women of a family tend to play a major role in deciding what condominiums or houses to buy. Accordingly, taking a female perspective into consideration when building properties is vital. Many women work in the company’s condominium development department, where they play a major role at the product planning and development stage. Women are also active in frontline sales.
Women have been instrumental in developing a number of fittings: a toilet paper holder with a shelf for small items, a towel rack with a hook for accessories, a shoe cupboard with storage space for a folding baby buggy, and a closet for storing futons. The company offers numerous plan variations. For example, spacious walk-in closets are popular with women and families who have lots of clothing. Kitchen islands facilitate communication with guests.
Toilet paper holder with shelf
Towel rack with hook for accessories
Shoe cupboard with storage space for a folding baby buggy
In major urban areas (the Tokyo metro area, as well as Nagoya, Sapporo, and Fukuoka), the company develops compact condominiums targeting working women (brand name: Duo Veel). In addition to being developed from a female perspective, the company notes that security, privacy, and storage space are selling points for these compact condominiums. The condominiums are priced to be affordable for single women. For example, 30sqm compact condominiums at Duo Veel Sakae (Aichi Prefecture) are priced at JPY27mn. The COVID-19 pandemic has encouraged women to think more carefully about their living arrangements, says the company, prompting them to move out of cramped rental housing.
Duo Veel Sendai Kamisugi
▷ Scheduled for completion in November 2021
▷ 58 units
▷ Access: 2-minute walk from Kita-Yobancho Station on the Namboku subway line
▷ Steel-reinforced concrete structure, 13 floors above ground
▷ Site area: 426.05sqm
▷ Total floor space: 2,866.54sqm
(1) Adjustable-height pillow storage
(2) Hanger for short clothing (optional)
(3) Hanger pipe for long clothing
(4) Adjustable-height shelving
Duo Veel Nishijin
▷ Scheduled for completion in July 2021
▷ 57 units
▷ Access: 5-minute walk from Nishijin Station on the Airport subway line
▷ Steel-reinforced concrete structure, 15 stories above ground
▷ Site area: 572.71sqm
▷ Total floor space: 2677.36sqm
Storage behind three mirrored doors
The new medium-term management plan, announced in January 2021, sets KPIs to be achieved by FY03/26 in the residential property sales business (Real Estate Development segment + CCRC segment). The company is targeting units delivered of 1,500–1,700 (1,663 units in FY03/21), revenue of JPY60.0–65.0bn (JPY66.8bn), and a contribution to consolidated net income of JPY1.9–3.0bn. (Profit target excludes management of condominiums for seniors.) The company has already acquired enough land to meet its property sales targets through FY03/23 (excluding the detached housing business).
Instead of pursuing growth in volume (i.e., the number of units delivered), the company aims to increase profits through improved profitability. The inventory turnover ratio has fallen over the past decade, from 1.56x at its peak in FY03/13 to 1.11x in FY03/21. By increasing turnover, the company intends to boost profitability without expanding the balance sheet. The company also intends to step up supplies of condominiums in its main market (central urban areas of regional core cities) where existing demand is not being met. With working styles changing due to the COVID-19 crisis, the company believes regional core cities are coming into the limelight and will underpin demand over the medium term. For reference, Hoosiers ranked third in 2019 in a nationwide ranking of condominium providers in the “other regions” category, which excludes the Tokyo and Osaka areas.
In the Tokyo metropolitan area and its suburbs, Hoosiers has a detached housing business (the Duo Avenue brand). The main sales area for this business is Tokyo’s Jonan and Josai areas, as well as Aichi and Kanagawa prefectures. Typical prices are JPY60mn to JPY69mn for a 90–100sqm house on a 110–120sqm site in Shakujii, Nerima-ku, Tokyo, an 11-minute walk from the nearest train station. Another typical example is a house priced at around JPY75mn in Kawasaki, Kanagawa Prefecture: a 100sqm building on a 160sqm site, located 10 minutes on foot from Saginuma Station. Hoosiers’ homes are in the upper-middle price range and tend to target demand from families who want spacious homes.
Hoosiers plans to sell around 100 detached houses per year. The company notes that the COVID-19 pandemic has heightened demand for comfortable, spacious living quarters. Demand for detached housing is relatively firm, explains the company, helping to offset earnings volatility in the condominium business.
Business in the CCRC segment includes development of condominiums for healthy seniors, long-term care insurance, and the operation and management of condominiums for seniors. The segment name is short for “continuing care retirement community” and describes the company’s approach of ensuring ongoing care for seniors from the time they are healthy until they require long-term care. The company sells condominiums for seniors under the Duo Scene brand via Hoosiers Care Design, a wholly owned subsidiary.
In FY03/21, this segment produced revenue of JPY11.5bn and operating profit of JPY351mn. OPM, at 3.0%, is lower than that in other segments because of the company’s aggressive investment in staffing for future growth. The company expects profitability to gradually improve as utilization rates of condominiums improve. The number of units sold was 162 in FY03/19, 206 in FY03/20, and 268 in FY03/21.
Although the new medium-term management plan does not specify unit sales targets, in this segment company says it aims to sell between 200 and 300 units per year and expand profit by improving profitability rather than increasing scale (i.e., the number units sold). The company already has enough land in inventory to meet its unit sales targets through FY03/23. The company had 1,385 units under operation in FY03/21. The company already has 1,000 units in the pipeline from FY03/22 and aims to reach 2,500 units under operation by FY03/26.
In this segment, the company targets healthy seniors who own their homes. Buyers tend to be high-net-worth individuals who are in their early 70s and have financial assets worth JPY100mn or more. The company tends to supply condominiums on the outskirts of the Tokyo metro area, in areas convenient for everyday life. Buyers often purchase condominiums in cash. The company says the number of healthy seniors aged 65 or older who live in the three prefectures around Tokyo (Chiba, Kanagawa, and Saitama prefectures) and along the Tsukuba Express train line (Ibaraki Prefecture) is forecast to rise to 10.3mn in 2045, from 8.5mn in 2020.
The primary services these facilities provide are round-the-clock monitoring, health support, medical care, and nursing care (even though healthy seniors are the main market). Common spaces offer restaurants, large spas, and rooms for karaoke and other leisure activities. Facilities also have resident nurses and 24-hour staff. Toilets, sinks, baths, kitchens, storage, bedrooms, and living rooms are in private areas. Facility staff prepare meals and cleaning services, so residents can enjoy their leisure time pursuing hobbies, karaoke, shopping, or other pastimes. Hoosiers has built up substantial experience in this area; as of September 2020, the company was Japan’s leading provider of condominiums for seniors on a cumulative basis.
There are five main differences between condominiums for seniors and serviced housing for the elderly and fee-charging nursing homes: 1) freedom of lifestyle, 2) monitoring and medical care, nursing care, and health support services, 3) amount of living space, 4) type of rights, and 5) asset prices.
In terms of freedom of lifestyle, condominiums for seniors place fewer restrictions on outings and facility use than the other two categories of housing. Despite having fewer people providing nursing care services, condominiums for the elderly offer monitoring and medical care, nursing care, and health support on a par with serviced housing for the elderly and fee-charging nursing homes. Condominiums for seniors have more living space: typically, around 60sqm versus only around 20sqm in serviced housing for the elderly and fee-charging nursing homes.
Hoosiers’ condominiums for seniors include ownership rights, whereas serviced housing for the elderly offer the right to lease and fee-charging nursing homes provide right of use. Because they have ownership rights, the company’s con