Ichigo Group Holdings Co., Ltd. (2337)

Feb. 2013 Fiscal Year Q3 (March November 2012) Corporate Presentation Ichigo Group Holdings Co., Ltd. (2337) January 17, 2013 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. www.ichigo-holdings.co.jp/english

Accelerating Growth - Ichigo Growth Strategy - ECO Energy Business Launch - Full-Service Real Estate Asset Manager - Feb. 2013 Q3 Consolidated d Financial i Results - Feb. 2013 Q3 Assets Under Management (AUM) - Structural Profitability - Strong Cash Position to Fund Growth Investments - Refinancing Debt at Significantly Improved Terms - Ichigo REIT (8975) Growth Appendix - Financial Data (Pro Forma and Consolidated) - Real Estate Data 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 5

100% Coverage Ratio Ichigo Growth Strategy Having Achieved Structural Profitability, Entering Accelerated Growth Stage Launched ECO Energy Business to Drive Additional Value from Real Estate Building Structural Target: Accelerated Growth Stage Profitability Tokyo Stock Exchange First Section Stable Financial Base Optimizing balance sheet Compressing and strengthening Optimizing interest-bearing debt Reduction and term extension Increase Structural Profitability Increase real estate fee income M&A of J-REIT AM companies Value enhancement of assets M&A of stable/profitable companies SG&A cost-cutting Significant Expansion of Structural Profitability Growth in private equity RE fund AUM - Launch new private equity RE funds - Expand investor base - Rescue AM Organic growth of J-REIT Acquisition and warehousing for J-REIT Small-sized asset and ground-lease products Value enhancement of retail assets Strengthening of BM business Launched ECO energy business Structural Profitability Growth Investments + Increased Shareholder Dividends Feb 11 Feb 12 Feb 13 * Beginning of each fiscal year. 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 7

ECO Energy Business Launch Launched ECO Energy Business to Contribute to a Sustainable Society and Solidify Position as a Full-Service Real Estate Asset Manager - Launched Ichigo ECO Energy Co., Ltd. (November 2012) - New growth engine for socially-meaningful business development - Building on megasolar platform, three core business drivers: I) Green Energy II) Energy Conservation III) High-Value Added Acquired All Shares of Solar Way Co., Ltd., a Leading Megasolar Operator - 30 megasolar projects, worth 35 MW in aggregate, g are underway - Expediting commercialization of in-place projects ECO Energy Business I) Green Energy II) Energy Conservation III) High-Value Added Busines ss Spectrum Megasolar Business Acquired Solar Way Major LED Rollout JVs & Business Partnerships Exterior LED Lighting ECO-Related Consulting 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 8

Full-Service Real Estate Asset Manager Launched ECO Energy Business to Drive Additional Value from Real Estate Full-Service Asset Management Group Ichigo Group Holdings Co., Ltd. JASDAQ:2337 (Holding Company) Group Strategy/Management & Risk Management (Warehousing Assets for AM Business, Principal Real Estate Investments, etc. ) AM Business Real Estate Solutions Business ECO Energy Business Retail PM Business BM Business Ichigo Real Estate Investment Advisors Co., Ltd. AM for Ichigo REIT (8975) and private equity RE funds Ichigo Estate Co., Ltd. Real estate solutions business in small-sized assets & ground leases Ichigo ECO Energy Co., Ltd. Building on megasolar platform, developing other ECO businesses, including ECO-related consulting, energy conservation, LED exterior lighting enhancements, etc. Seek IPO on planned TSE Infrastructure Fund Market Ichigo Marché Co., Ltd. Operates Matsudo Nanbu Wholesale Market in Chiba Miyako City Co., Ltd. Operates Miyako City, large-scale shopping mall in Miyazaki Prefecture, Kyushu Takara Building Maintenance Co., Ltd. Nichibei Building Services Co., Ltd. Nichibei Security Services Co., Ltd. Comprehensive Building Maintenance (BM) Businesses Pursuing Further Upside via Principal Investments that Add Value to Real Estate and Limit Downside Risk 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 9

Feb. 2013 Q3 Consolidated Financial Results (Million yen) Feb 13 Q3 Actual vs. Feb 13 Full-Year Forecast Revenues 68.1%, Net Profit 94.4% Feb. 2013 Q3 Financial Results (Million yen) FY 13 Feb 13 Q3 Full-Year Cumulative Forecast vs. Forecast Revenues 11,585 17,000 68.1% Revenues 11,585 Revenues 17,000 Operating Profit 1,173 1,500 78.2% Recurring Profit 1,074 1,200 89.5% Revenues 2,362 Net Profit 264 Actual Feb 13 Q1 (3 mos) Revenues 7,637 Net Profit Net Profit 535 Actual Feb 13 Q2 (6 mos) 944 Actual Feb 13 Q3 (9 mos) Net Profit 1,000 Forecast Feb 13 Full-Year (12 mos) Net Profit 944 1,000 94.4% Dividend per Share (Yen) - 200-2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 10

Feb. 2013 Q3 Assets Under Management (AUM) QoQ AUM Decreased Due to Disposition/Return of Assets - Disposition fees and gains on sales of c. JPY 200 million - Prioritizing profitability over increase in AUM - New AM mandate in December 2012 (office & residential, c. JPY 9.4 billion) PE RE Fund Asset Sales 4.4 PE RE Fund Termination of AM 12.2 REITAsset Sales 1.8 (Billion yen) New AM Mandate 9.4 340.0 321.5 Aug 12 Nov 12 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 11

Structural Profitability On Track to Achieve Fixed Revenues > 120% of Fixed Costs Fixed Revenues ( Locked-in revenues, excludes transaction fees, capital gains, etc.) Fixed Costs (SG&A + Interest Expense) Coverage: 119.5% Coverage: 91.7% BM Fees 336 (Million yen) BM Fees 256 Dividends 264 Interest 226 Dividends 785 Interest and Other 28 Interest 198 2,309 Rental Income 731 SG&A 2,291 2,517 2,988 Rental Income 762 SG&A 2,302 2,501 AM Fees 1,058 AM Fees 1,077 Feb 12 Q3 (9 mos) Feb 13 Q3 (9 mos) * Pro Forma base (definition on p. 17) 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 12

Strong Cash Position to Fund Growth Investments Structural Profitability and Sound Financial Base - 71.4% shareholder equity ratio as of Q3-end (+1.4% QoQ) - Reduced interest-bearing debt by JPY 600M to JPY 8.4B through asset sales Growth Investments and Expansion of Cash Position - Deploying cash in new investments - Securing additional funds through sales of overseas assets (Billion yen) Shareholder Equity Ratio 71.4% Cash 6.3 Assets 38.7 Liabilities 11.1 Net Assets 27.6 Cash Position 6.3 QoQ Progress Acquisition iti of Solar Way, plus New Investments Net Cash Position Increased by 10% QoQ due to Asset Sales and Dividend Income * Pro Forma base (definition on p. 17) Feb 13 Q3 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 13

Refinancing Debt at Significantly Improved Terms Recent Corporate Refinancing of JPY 3.4B - Lowered interest rate and extended loan term by 7 years - Increases profit by c. JPY 24M yen p.a. - Increases cash flow by JPY 275M p.a. via decreased interest and amortization payments Trend in Weighted-Average Interest Rates and Payments As of FY End 3.08% Interest Payment (Actual) JPY 445M As of FY End 2.60% As of FY End 2.56% As of 3Q End 2.20% JPY 445M Interest Decreased by JPY 127M vs. Feb 12 Payment (Actual) JPY 341M Interest- Bearing Debt (Actual) JPY 18.4B Interest- Bearing Debt (Actual) JPY 10.8B Interest Payment (Actual) JPY 285M Interest- Bearing Debt (Actual) JPY 9.4B Interest Payment (Forecast ) JPY 247M Interest- Bearing Debt (Forecast) JPY 7.2B Interest Payment (Forecast ) JPY 158M Interest- Bearing Debt (Forecast) JPY7.2B Feb 10 Feb 11 Feb 12 Feb 13 (Forecast) Feb 14 (Forecast) 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 14

Ichigo REIT (8975) Growth Accelerate Growth of Ichigo REIT by Maximizing Synergies with Ichigo Group in Financing, Value Enhancement, and Deal Sourcing Expand Ichigo Group s Profitability by Optimizing Portfolio and Increasing Size Ichigo REIT Growth Cycle - Currently in Stage II, expect to seek public offering that will grow dividend Stage I Stage II Stage III Lay Foundation for Growth Achieved dividend of 1,310 yen Use negative goodwill for financing and internal and external growth strategies Enhance Profitability Grow Dividends Raise Unit Price Ichigo REIT Growth Cycle Launch PO Solidify Market Position Accelerate Growth Contribute to Ichigo Group Profit Improve Portfolio Increase AUM 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 15

Pro Forma Disclosure to Improve Transparency Under Japanese accounting rules, SPCs in which Ichigo Group Holdings ( IGH ) is a greater than 50% investor or SPCs for which IGH is the asset manager and no single equity investor holds more than 50% of the total investment must be consolidated onto IGH s balance sheet. Our statutory consolidated and parent financial statements thus include clientrelated assets and liabilities and P&L which do not belong to IGH. In order to more accurately reflect the true economic exposures borne by our shareholders, we disclose Pro Forma financials which are intended to better reflect IGH s actual corporate financial position. 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 17

Balance Sheet (Pro Forma) (Million yen) Feb 12 Feb 13 Q1 Feb 13 Q2 Feb 13 Q3 Change (QoQ) Total Assets 37,980 40,038 38,327 38,692 365 Cash and Cash Equivalents 5,713 5,730 5,817 6,298 481 Investment t (Real Estate) t 8,151 8,447 8,558 8,640 82 Investment (Domestic companies) 600 551 602 580-22 Investment (Overseas companies) 4,598 4,573 4,643 4,362-281 Real Estate Held for Sale 3,785 5,890 3,748 3,373-375 Fixed Assets 10,109 10,073 10,059 10,090 31 Intangible Assets 2,105 2,075 2,045 2,255 210 Other 2,919 2,699 2,855 3,094 239 Liabilities 11,831 13,557 11,505 11,074-431 Interest-Bearing Debt 9,351 11,189 8,959 8,385-574 Other 2,480 2,368 2,546 2,689 143 Net Assets 26,149 26,481 26,822 27,617 795 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 18

P&L (Pro Forma) Breakdown (Million yen) Feb 12 Feb 13 Q1 Feb 13 Q2 Feb 13 Q3 Feb 13 Q3 Cumulative Feb 13 Q3 Cumulative Revenues 7,927 1,736 4,116 3,339 9,192 Cost of Revenues 4,101 663 3,014 2,119 5,797 Gross Profit 3,826 1,073 1,102 1,220 3,395 SG&A 2,871 766 756 780 2,302 Operating Profit 954 306 346 440 1,093 Non-Operating Gain (Loss), net -70-28 -50-21 -100 Recurring Profit 884 278 295 419 993 Extraordinary Gain (Loss), net 997 0-14 10-4 Pre-tax Profit 1,881 279 282 429 989 Tax 159 16 12 23 53 Minority Interests -48-2 -3-3 -8 Net Profit 1,770 264 270 408 944 Revenues 9,192 Real Estate Management Fees 1,294 Advisory Fees 52 Rental Income 1,479 Real Estate Sales / Dividends 3,842 Securities Sales / Dividends 911 Building Maintenance Fees 1,604 Other 10 Gross Profit 3,395 Real Estate Management Fees 1,171 Advisory Fees 52 Rental Income 762 Real Estate Sales / Dividends 1,007 Securities Sales / Dividends 202 Building Maintenance Fees 336 Other -135 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 19

Balance Sheet NAV Significant Unrealized Gains on Balance Sheet Assets - Real Estate (Million yen) Acquisition Value Book Value (As of Nov 12) Appraisal Value (As of Feb 12) Unrealized Gain Directly Owned on B/S 14,997 10,362 12,664 +2,282 Investment in IGH Funds 16,203 8,640 14,195 +5,555 Total 31,200 19,002 26,839 +7,837 - Private Equity (Million yen) Book Value (As of Nov 12) Market Value (As of Dec 12) Unrealized Gain Domestic Securities 259 529 +270 Overseas Securities 601 980 +98 Total 860 1,508 +368 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 20

Balance Sheet (Consolidated) (Million yen) Feb 12 Feb 13 Q1 Feb 13 Q2 Feb 13 Q3 QoQ change Total Assets 82,170 84,010 81,629 81,666 37 Cash and Cash Equivalents 9,791 9,944 10,076 10,499 423 Operating Investments in Securities 4,226 4,281 4,445 3,826-619 Real Estate Held for Sale 49,674 51,838 49,205 48,825825-380 Fixed Assets 10,109 10,073 10,059 10,090 31 Intangible Assets 2,105 2,075 2,045 2,255 210 Investments in Securities 3,589 3,478 3,514 3,647 133 Other 2,676 2,321 2,285 2,524 239 Liabilities 53,982 55,462 52,725 51,929-796 Interest-Bearing Debts (excl. Non-Recourse Loans) 9,351 11,189 8,959 8,385-574 Non-Recourse Loans 37,694 37,392 36,668 36,351-317 Other 6,937 6,881 7,098 7,193 95 Net Assets 28,187 28,548 28,903 29,737 834 Shareholders Equity 25,972 26,202 26,366 27,170 804 Minority Interests and Other 2,215 2,346 2,537 2,567 30 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 22

Breakdown of Assets (Consolidated) (Million yen) Amount Feb 12 Feb 13 Q1 Feb 13 Q2 Feb 13 Q3 Outside Investors' Interests The Company's Interests Amount Outside Investors' Interests The Company's Interests Amount Outside Investors' Interests The Company's Interests Amount Outside Investors' Interests The Company's Interests QoQ Change in the Company's Interests Cash and Cash Equivalents 9,791 - - 9,944 - - 10,076 - - 10,499 - - - Operating Investments in Securities 4,226 0 4,226 4,281 0 4,281 4,445 0 4,445 3,826 0 3,826-619 Domestic Real Estate 2,254 0 2,254 2,273 0 2,273 2,357 0 2,357 2,163 0 2,163-194 Listed Domestic Companies 0 0 0 0 0 0 0 0 0 0 0 0 0 Unlisted Domestic Companies 42 0 42 37 0 37 38 0 38 35 0 35-3 Listed Overseas Companies 1,019 0 1,019 1,061 0 1,061 1,201 0 1,201 916 0 916-285 Unlisted Overseas Companies 911 0 911 910 0 910 850 0 850 712 0 712-138 Reference: Allow ance for Bad Debts for Operating Investments in Securities Operating Investments in Securities less Allowance for Bad Debts for Operating Investments in Securities -288 - -288-286 - -286-283 - -283-294 - -294-11 3,938-3,938 3,995-3,995 4,163-4,163 3,532-3,532-631 Real Estate Held for Sale 49,674 40,066 9,608 51,838 40,058 11,780 49,205 39,587 9,618 48,825 39,569 9,256-362 Investments in Securities 3,589 0 3,589 3,478 0 3,478 3,514 0 3,514 3,647 0 3,647 133 Domestic Companies 529 0 529 514 0 514 564 0 564 544 0 544-20 Overseas Companies 2,955 0 2,955 2,889 0 2,889 2,876 0 2,876 3,028 0 3,028 152 Others 105 0 105 75 0 75 75 0 75 75 0 75 0 Reference: Allow ance for Bad Debts for Investments in Securities -75 - -75-75 - -75-75 - -75-75 - -75 0 Investments in Securities less Allowance for Bad Debts for 3,515-3,515 3,404-3,404 3,440-3,440 3,572-3,572 132 Investments in Securities Fixed Assets 10,109 - - 10,073 - - 10,059 - - 10,090 - - - Intangible Assets 2,105 - - 2,075 - - 2,045 - - 2,255 - - - Other Assets 3,038 - - 2,681 - - 2,641 - - 2,893 - - - Total Assets 82,170-17,061 84,010-19,179179 81,629-17,221 81,666-16,360-861 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 23

P&L (Consolidated) Feb 12 Feb 13 Q1 Feb 13 Q2 Feb 13 Q3 Feb 13 Q3 Full-Year vs. Cumulative Forecast Forecast Breakdown (Million yen) Feb 13 Q3 Revenues 18,952 2,362 5,274 3,948 11,585 17,000 68.1% Cost of Revenues 15,030 1,260 4,158 2,690 8,108 - - Gross Profit 3921 3,921 1,102102 1115 1,115 1,258 3476 3,476 - - SG&A 2,871 766 756 780 2,302 - - Operating Profit 1,050 335 359 478 1,173 1,500 78.2% Non-Operating Gain (Loss), net -70-28 -50-21 -99 - - Recurring Profit 979 307 309 457 1,074 1,200 89.5% Extraordinary Gain (Loss), net 997 0-14 10-4 - - Pre-tax Profit 1,976 308 295 467 1,070 - - Tax 159 16 12 23 53 - - Minority Interests 47 26 11 34 72 - - Net Profit 1,770 264 270 408 944 1,000 94.4% Revenues 11,585 Real Estate Management Fees 1,021 Advisory Fees 52 Rental Income 4,359 Real Estate Sales / Dividends 3,658 Securities Sales / Dividends 911 Building Maintenance Fees 1,574 Other 10 Gross Profit 3,476 Real Estate Management Fees 898 Advisory Fees 52 Rental Income 1,877 Real Estate Sales / Dividends 295 Securities Sales / Dividends 202 Building Maintenance Fees 306 Other -154 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 24

Assets Under Management (AUM) Net AUM Decreased by JPY18B Due to Asset Dispositions (As of November 2012) 600 (Billion yen) Development 530.1 500 Operating REIT 62.0 496.0 426.5 400 385.3 379.6 REIT 32% Operating 68% 300 330.6 335.9 257.0 335.0 56.0 113.8 106.1 321.5 320.7 104.3 200 123.4 166.4 Breakdown of Equity Investors 312.1 100 78.8 32.7 46.1 0 66.4 100.0 151.2 211.1 161.0 105.9 263.2 265.2 23.8 8.3 8.3 217.2 IGH 34% Domestic Financial Institution 3% Domestic Operating Company 14% Domestic Insurance Company 1% Overseas Fund 11% Overseas Financial Institution 1% Overseas Pension Fund 36% 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 26

Real Estate Portfolio Track record in a variety of asset types including office, residential, retail, and ground leases Strong in mid-sized Tokyo assets, which are highly liquid and have stable cash flows AUM by Type # of Properties by Type Residential 17% Mixed 11% Land with Ground Lease 1% Other 3% Office 59% Land with Ground Lease 56 Other 10 (Unit: # of buildings) Office 69 AUM by Location Other 5% Fukuoka 6% Sendai 2% Nagoya 6% Kanto 5% (As of November 2012) (Unit: # of buildings) Retail 9% Residential 43 Mixed 14 Retail 15 Osaka 9% Tokyo 67% Tokyo 94 Sendai 3 AUM by Size # of Properties by Size (Unit: # of buildings) Kanto 14 10 bn yen~ 7% 5~10 bn yen 25% 0~1 bn yen 11% 10 bn yen~ 1 5~10 bn yen 12 1~5 bn yen 88 0~1 bn yen 106 Fukuoka Osaka 14 Nagoya 7 9 Others 10 Land with Ground Leases & Others 56 1~5 bn yen 57% 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 27

Real Estate Cap Rates Conservative assessment of cap rates vis-à-vis market cap rates Continually mark assets to market Unrealized gains in both client and IGH assets Real Estate Investments held by Funds (SPCs) Location Acquisition Value Book Value NOI Cap rate (at Acquisition) Cap Rate(current) Appraisal Value (af ter write-down) (current) NOI / Acquisition Value NOI / Book Value after write-down as of February 2012 (As of November 2012) (Million yen) Unrealized Gain Tokyo 134,485 117,998 6,061 5.4% 6.3% 120,229 +2,231 Outside Tokyo 72,397 58,614 3,757 5.5% 6.8% 62,686 +4,072 Total 206,883 176,612612 9,819 5.4% 6.5% 182,915 +6,302 Real Estate Investments directly held by IGH (Million yen) Location Acquisition Value Book Value NOI Cap rate (at Acquisition) Cap Rate (current) Appraisal Value (af ter write-down) (current) NOI / Acquisition Value NOI / Book Value af ter write-down as of February 2012 Unrealized Gain Tokyo 4,906 4,024 299 6.5% 7.3% 5,018 +994 Outside Tokyo 7,447 5,318 587 7.2% 10.0% 6,580 +1,262 Total 12,353 9,342 886 6.9% 8.8% 11,598 +2,256 *Excludes one development asset (c. 700M) which is not currently generating NOI 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. 28

These materials were prepared to explain the Company s businesses and are not for the purpose of soliciting investment in marketable securities issued by the Company. The Company does not guarantee the accuracy of the figures, information, estimates or other statements included herein, and accepts no responsibility for damages or losses arising through the use of the figures, information, estimates or other statements contained herein. These materials are based upon information available as of the publication date, and may contain forward-looking statements pertaining to the Company s expectations, targets, plans and strategies. Such forward-looking statements are not facts, but are the result of management s judgment based on information currently available. Actual operating results or developments concerning the Company may differ substantially from those indicated by forward-looking statements. The information enclosed is also subject to revision without prior notice. Contact: Ichigo Group Holdings Co., Ltd. Investor Relations Ichigo Group Holdings is Japan s first zero-carbon listed real estate company. We are taking responsibility for the carbon emissions we create, such as via this presentation material, by taking measures to create offsets to our carbon emissions and working with organizations to invest in low-carbon technologies. 2013 Ichigo Group Holdings Co., Ltd. All rights reserved. TEL: +81-3-3502-4818 FAX:+81-3-3502-4801 E-mail: IR@ichigo-holdings.co.jp www.ichigo-holdings.co.jp/english 31