daiwa house group 2008-2010 medium-term management …daiwa house group 2008-2010 medium-term...

Daiwa House Group 2008-2010Medium-Term Management Plan

Challenge 2010(2008.4 – 2011.3)

1

1. Positioning of Challenge 2010, the 2nd Medium-Term Management Plan

2. Management Vision

3. Looking Back at the 1st Medium-Term Management Plan• Performance indicators• Basic strategies• Social contributions

4. Analysis of Business Environment• Demographic and household number trends, and housing

construction starts

5. Challenge 2010, the 2nd Medium-Term Management Plan• Basic policies• Realize further growth through closer collaboration within the Group• Nurture new future earnings drivers• Conduct R&D into growing renovation market and nursing care

business, as well as steps to help prevent global warming• Reinforcing our business base

6. Business Strategies

2© 2008 Daiwa House Industry Co., Ltd. All rights reserved.

1. Positioning of Challenge 2010, the 2nd Medium-Term Management Plan

Expanded business scale through closer collaboration

within the Group

Sales: ¥1,700 billion(¥100 billion increase each year)

Ordinary income: ¥100 billion(Ratio: 5.9%)

ROE: 9.0%

Sales: ¥1,850 billion

Operating income: ¥115 billion(Ratio: 6.2%)

ROE: 9.0%

Management integration with three listed subsidiaries (Daiwa Lease, Daiwa Rakuda Industry,

and Daiwa Logistics)Strengthened Group brand

Redesign basic strategic organization unit

Invest more in entry into new business fields

Main Them

esB

usiness TargetsP

rincipal Initiatives

Improve profit structureNurture new future

earnings drivers

3rd2nd Medium-Term Management Plan (FY2008-2010)1st Medium-Term

Management Plan (FY2005-2007)


Group that CoGroup that Co--Creates Value for Individuals, Creates Value for Individuals, Communities and PeopleCommunities and People’’s Lifestyless Lifestyles

2. Management Vision

Achieving continuous growth

Contributing to the communities and society

Helping protect the environment

By expanding our operations in line with social demands for products and services that help protect the environment, we are working to fulfill our commitment to being corporate group

that co-creates value for individuals, communities, and people’s lifestyles, and thereby realize growth in harmony with the needs of society as a whole.

We try to co-create, build on and enhance new value together with our customersin order to realize a fulfilling and enriching society in which people can live.

We will value the ties we have with each and every customer and will build life-long trust with customers as a partner who will share in their joys throughout their lifetime.

Connecting HeartsConnecting Hearts

4© 2008 Daiwa House Industry Co., Ltd. All rights reserved. (FY)0706050402(FY)0706050403

7.5%8.2%ROE Operatingincome

Ordinary income target:ROE target:

Sales growth achieved, but profits remain an issue

3. Looking Back at the 1st Medium-Term Management Plan: Performance Indicators

Sales

61.2

2.0%

営業利益・経常利益・ROE

1,528.9 1,618.4

1,184.51,224.6

1,365.9

1,709.2(¥ billion) (¥ billion)

02 03

Ordinary income

¥100 billion9.0%

¥1,700 billionSales target:

Operating income, ordinary income, and ROE

80.089.1

103.0

2.0%

89.3

74.272.5

41.8

85.6


3. Looking Back at the 1st Medium-Term Management Plan: Basic Strategies

• Strengthening of corporate governance through management integration with three listed subsidiaries (Daiwa Lease, Daiwa Rakuda Industry, and Daiwa Logistics)

• Hired approx. 4,000 staff members groupwide over a three-year period, 57 employees successfully applied for transfer to new positions by opportunity announcement

• Strengthening of internal control system (establishment of Internal Auditing Office; increasing the number of external auditors; establishment of J-SOX Compliance Office)

• Reorganization of production system (reduction of factories from 13 to 11)• Implementation of more rigorous cost management through establishment of dedicated Cost

Management Office• Cutting housing materials costs through development of more efficient new house models

• Renovation of Group brand image • Consolidation of different single-family house series into the one xevo brand —changing basic

construction method for the first time in a quarter-century• Improvement in satisfaction level of home buyers by expanding after-sales service menu

(percentage of home-buyer customers of Daiwa House who stated in a questionnaire that they were satisfied rose from 89.8% in the second half of 2004 to 93.5% in the second half of 2007)

• Development of new business and services through closer collaboration within the Group (Expansion of menu of services for condominium residents under our D’s Bridge system and our Endless Partnership system; launch of credit card and monthly-contract rental apartment business)

• M&A (Eneserve and Odakyu Construction acquired)• Involvement in industry-academia projects (ELIIY Power, CYBERDYNE)• Investment in overseas real estate development projects (China)

Tasks tackled under 1st Medium-Term Management Plan

Strengthen planning functions of management and management system

Rebuild distribution system

Review production system

Actively invest in future growth

Develop core technologies

Strengthen group ties in business segments

Secure and train personnel

Strategies for strengthening our m

anagement base

Strengthen procurement system

Efficiency boosting strategies

Comprehensive portfolio management

Grow

th strategies

Basic strategies

Upgrading the centripetal force of the Group as a whole to strengthen sound but flexible business structure


Fund-raising initiatives• Employees can join a system for

automatic deduction of charitable contribution from their pay (for personally selected charity targets)

• Company matches contributions of each employee to disaster relief funds

• Company joins the “1% Club”(corporate members donate amount equivalent to 1% of ordinary income)

Repairing wheelchairs at homes for the elderly

Gift of pharmaceuticals to Southeast Asian nations

Supporting broad education syllabus at schools

At-work experience sessions for children at the KidZania theme park

Mt. Fuji Cleanup

An “Eco Workshop” for children

Regional volunteer initiativesMt. Bandai Cleanup

• Releasing sea turtles into Lake Hamana

• Mt. Fuji Cleanup• Mt. Rokko Cleanup• Nagara River Cleanup, others

Acting as principal sponsor of the Osaka Symphoniker (symphony orchestra)

Providing generous financial support for exhibitions of works of art

• The Higashiyama Kaii 100th Anniversary Exhibition

• The Great Hermitage Museum Exhibition

3. Looking Back at the 1st Medium-Term Management Plan:Social Contributions

Environmental protection EducationWelfare

Support for Culture and the Arts

Focusing on the themes of close ties with the local community, employee participation, and interaction with children

7© 2008 Daiwa House Industry Co., Ltd. All rights reserved. 2025 (FY)

Population of Japan (unit: 10,000)

Total (unit = 10,000)

Rental housing (unit = 10,000)

Household numbers (unit = 10,000)

4. Analysis of Business Environment: Demographic and Household Number Trends, and Housing Construction Starts

81819898

117117 109109118 163

146132

7482

535353626268687171

828083

442828353541

4146465064

11,927

12,10512,361

12,55712,693 12,77712,77712,777 12,71812,71812,718

12,54312,54312,543

12,27312,27312,2734,678

4,3904,067

3,798

4,9064,906 5,0145,014

5,0485,048 5,0275,027 4,964

1985 1990 1995 2000 2005 2010 2015 2020

Single-person households

Standard household(Parents & children)

789 9391,123

1,2911,421

1,5161,5161,5161,598 1,666 1,715

1,1991,1991,199

1,5181,5181,518 1,5171,5171,517 1,5031,5031,503 1,4911,4911,491 1,4661,4661,466

1,4161,4161,416 1,3511,3511,351 1,2771,2771,277

Challenge 2010Challenge 2010

Starting right now to build a stronger group structure to ensure continued growth even in FY2011 and beyond, when the business environment is expected to become still more severe

Housing construction starts

(5-year moving annual average)

Housing construction starts

(5-year moving annual average)

Source: Produced by Daiwa House Industry based on data from the Research Institute of Construction and Economy

Demographic and household number

trends

Demographic and household number

trends

Source: National Institute of Population and Social Security Research

Single-family houses + subdivision houses (unit = 10,000)


Realize further growth through closer collaboration

within the Group

Conduct R&D into growing renovation market and nursing care business, as well as steps to help prevent global warming

Reinforcing Our Business Base

Nurture new future earnings drivers

5. Challenge 2010, the 2nd Medium-Term Management Plan: Basic Policies

Raising competitiveness by demarcating business segments of each group companyStrengthening comprehensive real estate business through closer collaboration within the Group

Investing more in development of next-generation businesses such as energy and roboticsEntering overseas markets, particularly in China

Invest management resources, on a priority basis, in development of leading-edge technologiesOffer products and services that are highly effective in helping cut CO2 emissions

Upgrade our risk management and compliance system Reorganize and upgrade human resources development system


5. Basic Policies: Closer Collaboration within the Group and Delineation of Business Segments

Subdivisions

Contracting

Developm

ent & construction of

condominium

Contracting (H

ome renovation)

Real estate agency services

Developm

ent & construction of rental housing

Managem

ent& operation of rental

housing

Developm


comm

ercial facilities

Developm


medical and nursing care facilities

Developm


logistics and manufacturing facilities

Construction m

aterial logistics services

Construction m

aterials

Hom

e centers

Fitness clubs

Resort hotels

Nursing care facilities

Asset m

anagement

Business hotels

Energy

Golf courses

Condom

inium m

anagement

Rental housing interm

ediation services

Managem

ent& operation of

comm

ercial facilities

Installation, managem

ent & operation

of temporary prefabricated structures

Credit card

Non-life insurance agency

Auto leasing

Lease of office equipment

Current Businesses

8 Business Segments

Single-Family

Houses

Existing Hom

e B

usiness

Condom

iniums

Rental

Housing

Com

mercial

Facilities

Business and C

orporate Facilities

Health and Leisure

Clearly demarcating eight business segments to: Ensure fast decision-making and high-level specialist expertise, and raise competitiveness through unification of value chain and Groupwide sharing of customer bases

Other BusinessesConstruction Support Business/

City Hotels/Overseas Businesses, etc.

Overseas business

Realize further growth throughcloser collaboration within the Group



5. Basic Policies: Demarcation of Group Companies’ Business Segments

(Overseas Businesses)Investing in construction of business infrastructures and strengthening our ability to adapt the unique circumstances of each country

(City Hotels, Energy, and Financial Services Businesses)Actively nurturing candidates for future core businesses under the direct supervision of the parent company

DH (Dalian) Administrative Management Consulting Center, Tianjin Jiuhe International Villa, Daiwa House (Suzhou) Real Estate Development

Daiwa Royal, Osaka Marubiru, Daiwa Energy, Eneserve, Daiwa Rakuda Industry, Daiwa Lease, Daiwa House Insurance, Daiwa House Financial, Daiwa House REIT Management

Offering added value to customers and achieving higher management efficiency through provision of services targeting other club members

Daiwa Resort, Daiwa Royal Golf, Nippon Athletic Service, Jukeikai, Shinwa Agency

(Construction Support Business)Creating new service businesses to raise efficiency of construction business

Daiwa Logistics, Yuasa Logitec, Daiwa Rakuda Industry, Royal Home Center, Daiwa Lantec Higashinihon, Daiwa Lantec Nishinihon

Expanding earning opportunities through collaboration between construction and development operationsDaiwa House Industry, Daiwa Lease, Higashi-Fuji

Optimize earnings by the effective linkage of new commercial facility development projects and provision of property management

Daiwa House Industry, Daiwa Lease, Daiwa Unei Kanri, Daiwa Information Service, DH Property One, Daiwa Royal, Daiwa Service

Optimize earnings by the effective linkage of new rental housingdevelopments and provision of management services

Daiwa House Industry, Daiwa Lease, Daiwa Living, Daiwa Estate, Nihon Jyutaku Ryutu, Daiwa Monthly

Creating new profit-generating business through collaboration between the home-renovation and pre-owned house sales businesses

Daiwa House Industry, Daiwa House Renew,Daiwa Service, Nihon Jyutaku Ryutu

Deploying a unified brand strategy across condominium development, sale, and management, as well as development of products and services

Daiwa House Industry, Nihon Jyutaku Ryutu, Daiwa Service

Raising business efficiency across the entire spectrum of the Company’s integrated operational chain from development through sale to after-sales services

Daiwa House Industry

Expected EffectsPrincipal Group CompaniesBusiness Segment

Rental Housing

Single-Family Houses

Existing Home Business

Condominiums

Commercial Facilities

Business and Corporate Facilities

Health & Leisure

Other Businesses

Strengthening competitiveness by establishing strategy implementation units that extend beyond inter-divisional borders


(23.0)(21.5)(100.0)(77.5)

5.0%5.0%11.0 10.4 220.0209.0

6.2%5.2%115.0 89.1 1,850.01,709.2

5.0%4.4%2.5 1.5 50.034.2

4.3%0.2%3.0 0.1 70.064.8

4.7%3.3%7.0 5.2 150.0156.6

2.2%1.8%8.5 6.7 390.0381.7

9.5%8.9%21.0 18.0 220.0201.3

10.3%9.5%36.0 29.7 350.0311.5

9.8%9.1%49.0 39.0 500.0427.7

FY2010(plan)

FY2007(results)

FY2010(plan)

FY2007(results)

FY2010(plan)

FY2007(results)(¥ billion)

Operating Income Ratio (est.)

Operating income (est.)Sales

ExpansionDriving growth of

comprehensive real estate business

Value RestorationRestructuring of

strategies relating to products, areas,

selling, and others

Nurturing Businesses

Solidifying business base through sales

expansion

5. Basic Policies: Positioning of Individual Business Segments, and Business Targets


Total

Eliminations/corporate

Rental Housing



Condominiums



Health & Leisure

Other Businesses


Segmentation employed in financial statements

Housing


Resort Hotels & Sports Life

Other Businesses

Other Businesses

Home Centers

Rental Housing



Condominiums



Health and Leisure

Other Businesses

Corresponding business segments under our medium-

term management plan

Daiwa Resort, Nippon Athletic Service, Daiwa Royal Golf

Shinwa Agency, Jukeikai

For reference: Relationship between our eight business segments as perour medium-term management plan, and our financial statement segments



Development

Renting Out and Management

Management and Operation

Scale of investments in real estate development (Approx. ¥460 billion over 3 years to FY2010)Revenue from sale of developed properties (Approx. ¥230 billion over 3 years to FY2010)

Upgrade our real estate management system Expanding scope of Real Estate Investment Committee

Management and operation fees from (From approx. ¥110.1 billion in FY2007 commercial facilities to approx. ¥160 billion in FY2010)

Management fees from rental housing units (From approx. ¥134.6 billion in FY2007 to approx. ¥ 200 billion in FY2010)

5．Basic Policies: Strengthen the Comprehensive Real Estate Business

Foreseeing a limit to the growth of the construction market, and developing alternative earnings sources to supplement construction contracts;Leveraging the combined capabilities of the Daiwa House Group to strengthen our real estate operations

Royal Parks Shinden Tsukuba Shopping Mall (tentative name)

Business scale of main real estate businesses



* Debt balance of approx. ¥225 billion as of March 31, 2008

Fund procurement plan

Investment planned under 2nd medium-

term plan

Investment under 1st medium-term plan

Total investment over next three years seen at approx. ¥580 billion

Operating cash flow230

Debt increase130

Real estate development (incl. equity investments)

460

Capital investment

90

Real estate development*(incl. equity investments)

300

Capital investment

120

Investment recovery150

M&A, alliances, etc. 30

M&A, alliances, etc. 30

Long-term deposited money 70

(¥ billion)

Targets for FY2008-10

(total)

Results for FY2005-07

(total)

Targets for FY2008-10

(total)

5. Basic Policies: Investment Plans

Planning total investment of around ¥580 billion, centered on real estate development,to procure funds while keeping DER at around 0.5


Approx. 100Number of rooms2008Aburatsubo ProjectPrivate Nursing Home

Approx. 73,000㎡Total floor area2008D Project Urayasu DLogistics Center

Approx. 23,000㎡Total floor area2008Fuji Gotenba Industrial ParkFactory

Approx. 125,200㎡Total floor area2008Tsukuba Shopping Mall (tentative)

Shopping CentersApprox. 65,400㎡Total floor area 2008Foleo Otsu-Ichiriyama

Approx. 23,000㎡Total floor area2009BiVi Fujieda (tentative)

Monthly condominiums juxtaposed433Number of units2008Royal Parks Nishiarai I

Monthly condominiums juxtaposed555Number of units2008Royal Parks Tower MinamisenjuRental Condominiums

Commercial facilities juxtaposed329Number of units2008D’ Grafort Osaka N.Y. Tower HIGOBASHI

Osaka governmental housing redevelopment project 681Number of units2010

Senri-Satakedai Private-Sector-Led Housing Project (tentative)

Joint ventureApprox. 150Approx. 180Number of units2009D’ Grafort LAKETOWN IID’ Grafort LAKETOWN III

Condominiums

Approx. 300(* Approx. 2,600)

Approx. 1,000

Approx. 900

*After Period II, commercial facilities & a hotel planned to be juxtaposed

Commercial facilities juxtaposed

Overview

Number of units at Period I(Total number of units)

Number of units

Number of units

Size

2010Dalian: Former Site of Medical UniversityPeriod I

2010Suzhou: Industrial Park

CompletionNameUsage

Dalian: Yihe (Summer Palace) Champs-Elysees 2009

(Overseas)

For reference: Principal projects scheduled under Challenge 2010,the 2nd Medium-Term Management Plan

16© 2008 Daiwa House Industry Co., Ltd. All rights reserved. Underfloor inspection robotsRobot suits

Credit cards


Energy Businesses• Developing an “Energy Doctor Service” for energy

conservation which utilizes G-Pacs (an energy monitoring system), and expanding sales of energy-saving devices

• Invest further in lithium ion battery businessHigh-efficiency lighting fixtures

5. Basic Policies: Nurture Next-Generation Businesses

Focusing efforts on creation of next-generation businesses to become new earningssources

Financial ServicesCredit card business• Expand annual turnover through promotion of Groupwide

points systemAsset management business• Realize TSE listing of REIT, and expand investment scale

Robot Business• Robot suits• Underfloor inspection robots

The G-Pacs energy monitoring unit


5. Basic Policies: Strengthen Overseas Businesses

Commencing serviced apartment and office rental projects in Vietnam

• Upgrade market survey and analysis capabilities, based on our Hanoi Office

Increasing capabilities in development of condominiums targeted at wealthy customers in China

• Plans for development of real estate business in six major Chinese coastal-belt cities with high proportion of wealthy individuals – Dalian, Beijing, Tianjin, Suzhou, Shanghai, and Hangzhou

• Improve ability to collect information on land prices, bidding prices, etc. through the expansion of real estate development divisions

Summer Palace Champs-Elysees (Dalian)

Hong Qiao Villa (Shanghai)

Creating necessary business organization• Upgrade Overseas Business Office to Overseas Business Division

Aggressively pursuing real estate development business overseas, particularly in China



5. Basic Policies: R&DConduct R&D into growing renovation

market and nursing care business, as well as steps to help prevent global warming

Aggressively investing management resources in development of leading-edge technology

Base technologies developmentEmploy our prefabrication technology to meet the changing needs of society

• Improvements in methods and structures of buildings・・・Labor-saving methods, raising asset values

Leading-edge technology developmentPursue technology development in 4 focus areas with good future growth potential

• Environment- and energy-related technology・・・CO2 emission-reduction technology; resource-conservation technology

• Technology to meet need in existing home business ・・・New know-how to help customers improve their asset values

• Technology to meet needs of aging population (nursing care, etc.)・・・Service robot technology

• ICT and related robotic technologies・・・Next-generation residential computer network

Note: ICT = information & communications technology

The Restore & Rebuild System enables buildings to be easily dismantled and re-erected elsewhere.

Next-generation home computer network, making the home into a communication hub


5. Basic Policies: Environmental Initiatives

Aiming to achieve a 200% CO2 emission reduction in all business operations and processes, by taking prevention of global warming as a most important theme

Before we aimed to provide products and services enabling customers to reduce CO2emissions in an amount equivalent to our own emissions. Now, we aim to enable them to achieve a 200% CO2 emission reduction compared with our own emissions

• Airtight, strong thermal insulation(Exterior Thermal Ventilation Wall, etc.)

• Generation of power through solar panels

• High-efficiency water heaters, etc.

* 1: Takes into account increases resulting from business expansion and decreases caused by CO2 emission measures* 2: Takes into account product feature upgrades and business expansion

Conduct R&D into growing renovation market and nursing care business, as well as steps to help prevent global warming

The Daiwa House Group’s four priority themes in tackling environmental issues

CO2 emissions in course of

business activities

CO2 emissionreduction through

our products and services

FY2007 (results) FY2010 (targets)

800,000 tons

480,000 tons

1,100,000 tons*2

520,000 tons*1• Energy conservation inspection, improvements in energy use• Introduction of energy generated

from natural sources, etc.

Preventing pollution by

chemical substances

Resource conservation

Preventing global

warming

Ensuring harmony with the natural

environment


Risk Management & Compliance

Human resources

5. Basic Policies: Reinforcing Our Business Base Reinforcing Our Business Base

Upgrading Groupwide structure by positioning risk management, compliance, and human resources development as top management priorities

Widen the scope for job creation to fully develop employee potential

Convert non-regular employees to regular employee status

Take steps to spread use of child-raising support system

Provide varied menu ofcareer tracks

(skill development program)

Staff

Training S

ystemP

ersonnel S

ystem

Facilitating exchange of staff between Group companies

(voluntary job-change systemfor a wider range of Group

employees)

Group legal sections to have staff of 50;Dedicated legal affairs officer assigned

to major business operations

Create Groupwide risk management system

Conduct cross-sector compliance training across the entire Group

Appointment of compliance& risk managers

Implement more thorough compliance education

Expand scope of authority ofRisk Management Committee

Start program to develop next-generation of managers

(Daiwa House Juku, management skill development course)


Overview of Our Business Strategies

Single-Family HousesCondominiumsExisting Home BusinessRental HousingCommercial FacilitiesBusiness and Corporate FacilitiesHealth and LeisureOther Businesses (Construction Support Business, City Hotels)


Develop new marketing channels and focus management resources onselected areas

• Achieve shift from traditional system of marketing based on permanent model house centers to one based on our LABO model houses and our website

• Establish the xevo series as a well-known brand name in the field of long-lasting, high-quality houses

• Strengthen operations in the conurbations of Chubu, Kanto, and Kansai Enhance our Existing Home Business as means of raising the value of customers’ home properties

• Set up customer centers nationwide to promote services such as home rebuilding, home renovation and expansion, and services related to buying and selling pre-owned houses

Improve planning and marketing capabilities in subdivision housing field• Establish Daiwa House as leading brand name in the field of very long-lasting

houses, including housing project landscaping• Create specialist division encompassing both housing project landscaping

planning and land procurement

Reform cost structure to improve earning power• Achieving higher efficiency and greater marketing effectiveness through

amalgamation of Head Office departments and wooden-structure housing division

• Realizing cost reductions in materials, ordering, logistics, and construction through use of our 4M2G Construction Method, rationalizing our selection of construction materials, and reforming our supply chain management system

Value Restoration

xevo E

Note: 4M2G Construction Method = No scaffolding, No onsite welding, No paint, and No caulking, plus exterior Walls with pre-fitted tiles and highly value-added exterior Walls.

6. Business Strategies: Single-Family Houses

They can serve as effective marketing centers in areas where demand for rebuilding of owner-occupied houses is strongAs the model houses are “actual” size, customers can gain a realistic impression of the product being proposed.The model houses are sold off at the end of the limited period, helping to reduce fixed selling costs.

Anticipated benefits from LABO model houses

Narrowing the focus of customer targets by product and creating a cost-cutting business structure in the contracting field;Growing our Existing Home Business, and invest in more advanced marketing and planning capabilities in subdivision housing field

Daiwa House’s LABO model housesThese are model houses that are the same ashouses actually for subdivision sale, and are open

for customer viewing for a limited period.


6. Business Strategies: Condominiums

Focus on development of major high-rise condominium buildings

• Active involvement in joint-venture projects• Raising proportion of large-scale projects

(from 20% in FY2007 to 35% in FY2010, including joint ventures)• Raising proportion of condominiums located in Japan’s three

major metropolises(from 65% in FY2007 to 75% in FY2010)

• Take aggressive stance on multipurpose development projects including commercial facilities, hotels. etc.

Expand intermediation service businesses for residential sales and rentals

• Increase number of condominiums under management from 58,000 in FY2007 to 73,000 in FY2010

• Strengthen services to existing customers through D’s Bridge asset valuation system. From 120 intermediary contracts involving sale/rental in FY2007, to 280 in FY2010

Continue improving operating income ratio by cutting selling costs

• Achieve further improvement in efficiency through reduction in number of sales offices

• Reexamine existing direct sales system and continue expanding volume of selling through third-party companies

Value Restoration

D’ Grafort Osaka N.Y. Tower HIGOBASHI

D’ Grafort Kiyosumi-shirakawa

Sparkling Tower

D’ Grafort LAKETOWN

Raising operating income ratio through development of large-scale projects, expansion of intermediation service businesses for residential sales and rentals, and cost cutting


29.1

2.4

6. Business Strategies: Existing Home Business

Expand business by offering renovation work on entire housing originally built by Daiwa House Group companies

• Strengthen and propose marketing of renovation services for condominium and rental apartment buildings in addition to single-family houses

Set up more marketing offices to strengthen capability in intermediary services involving real estate for business purposes

• Open three more offices in Tokyo area (for total of six)Raise sales in Tokyo area as percentage of total from 16% in FY2007 to 30% in FY2010

Expand scale of business in sale of pre-owned houses and condominiums

• Set up dedicated business unit in charge of Tokyo areaRaise sales in Tokyo area as percentage of total from 16% in FY2007 to 35% in FY2010

Nurturing Businesses

Before renovation

After renovation

Sale of pre-owned houses/ condominiums

Real estate agency services

Renovation

FY2007 (results) FY2010 (plan)

Sales breakdown

Extensions

43.0

2.7

3.0

4.0(¥ billion)

Strengthening ability in marketing renovation services to former customers;In the real estate agency business and sale of pre-owned houses and condominiums, we will focus management resources on Tokyo area


Strategy for metropolises and major regional cities• Focus on construction and marketing of medium-to-high-

rise rental housing in metropolises, and of three-story rental buildings in major regional cities

Target large-scale projects• Secure contracts for promising public sector projects

Strengthen capabilities in management of monthly condominiums and develop business models for the holding and operation of buildingsStrengthen real estate rental mediation services

• Set up network of offices around Japan, and expand advertising strategy, particularly on the Internet

Number of housing unit rental contracts extended through our mediation service: from approx. 3,000 in FY2007, to approx. 7,000 in FY2010

Expand scale of business in property management• Acquire more management contracts for rental housing

built by Daiwa House

Raise number of residential units under management from estimated approx. 200,000 in FY2007 to approx. 300,000 in FY2010 0.5 1.0

0.3 6.0

138.4193.0

288.5

300.0

6. Business Strategies: Rental Housing Expansion

Pacific Royal CourtMinato Mirai Ocean Tower

Séjour OTT’s

Construction

Management

Mediation

Monthly condo managementFY2007 (results) FY2010 (plan)

Sales breakdown(¥ billion)

Expanding business scale by entering new markets relatively little business in the past


6. Business Strategies: Commercial Facilities Expansion

110.0

14.5

130.4

56.6

136.0

20.0

130.0

64.0

Expand business as developer• Focus on small-scale shopping centers of 10,000m2 or less

(neighborhood shopping centers, mini power centers)

Strengthen shopping center management and store operations

• Strengthen capabilities in leasing and planning to attract tenants

• Strengthen facility managementCement strong relationships with owners

• Build stronger relationships with 21,000 landowners• Acquire renovation/rebuilding contracts at the time of

termination of leasing

Aiming to be No. 1 not only in shopping center construction but also in store rentals, as well as shopping center management and store operations

Higashi Sapporo Shopping Center (tentative name)

Foreo Otsu Ichiriyama

FY2007 (results) FY2010 (plan)

Rental property unit management (PM & BM)

Conversion

Construction

Developer

Sales breakdown

(¥ billion)


Expansion

Taking a risk by investing development projects as property owners – mainly for logistics facilities, and acquiring profit as construction contractor and also as developer and operator

Increase profits on development and facility operations mainly through the effective use of REIT

• Strengthen marketing power in operation of distribution centers and nursing care facilities through collaboration with Group companies

• Strengthen marketing capabilities in major regional cities• Improve ability to gather market information from business partners engaged

in development of distribution center networks and business hotel chains, among others

Expand business for leasing offices, logistics facilities, plants, etc.Strengthen capabilities in PFI fields

Private nursing home for the aged PFI project (elementary school)

6. Business Strategies: Business and Corporate Facilities

Multi-Purpose Warehouse Facility

Office Building


6. Business Strategies: Health and Leisure

Create common advertising platform for all health- and leisure-related businesses

• By linking our wide range of services via advertisements in magazines and websites, we can raise total customer satisfaction, improve the customer relationships enjoyed by the whole Daiwa House Group, and thereby maintain customer loyalty

Use health and leisure operations as introduction for potential customers to the Group’s entire range of businesses

• Improve ease of customer access to our health- and leisure-related services to advertise our housing products and services

Building a common website across various operations (resort hotels, golf, travel, fitness clubs, etc.), and strengthening our Groupwide marketing capabilities

Value Restoration

Okinawa-Zanpamisaki Royal Hotel

Turtle Ace Golf Club (Mie) Sports Club NAS


Royal Home Center Yoko-oji Store, Kyoto

Increase pace of opening new hotels in Daiwa Roynet Hotel chain

From 10 hotels now to 30 by FY2010

Invest in renovation of Osaka Marubiru

Approx. ¥1.4 billion investment over next three years

6. Business Strategies: Other Businesses Nurturing Businesses

Strengthen our dominance in the home center market; M&A aimed at enhancing logistics services

Strengthen capabilities in provision of comprehensive 3PL services

Strengthen ability in provision of logistics services to other home builders and construction materials suppliers

Upgrade functions of logistics centers

Expanding operational scale through M&A and the launch of new services, while raising competitiveness by building intensive logistics centers

Construction Support City Hotels

Expanding business scale by opening new hotels, and facilitate increased room rates through renovation work

Daiwa Logistics' Logistics Center

Osaka MarubiruDaiwa Roynet Hotel Kanazawa (Ishikawa)

Daiwa Roynet HotelTokyo-Osaki

Disclaimer:All forward-looking statements made in relation to results or business operations provided in this document were current at the time of printing. However, please note that forward-looking statements were prepared based on Company information and may involve potential risks and uncertainties. Therefore, please be aware that actual future conditions may differ greatly from those outlined in the forward-looking statements provided herein, as there are various changeable factors involved.

daiwa house group 2008-2010 medium-term management …daiwa house group 2008-2010 medium-term...

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