Japanese

Raysum Co., Ltd.

Breaking Away from the Mass Supply Model

With an aim of breaking away from the mass supply model, I established Raysum Co., Ltd. in 1992. At that time, the notion that buildings are unwanted attachments to land, so I first focused on creating a market where aged buildings with tenants would be transacted at fair value. As we became the first company to list in this field of business and our type of business model has come to be called the real estate securitization business, literally fulfilling part of the aim of founding the company in Japan.

Shift to the Qualitative Conversion of Real Estate Stock

We will shift into a phase of qualitative conversion of real estate stock with the emergence of the transaction market. We have put forth efforts to attract new tenants for properties of which use is converted, anticipating changes with time and worked on large-scale renovation and aseismic reinforcement, drawing upon the latest technology. As such cases were unprecedented we were unable to estimate time and cost for improving properties upon acquisition. However, we tackled difficult projects one after another by firmly pursuing "for what" Raysum exists.

Materializing New Ideas One after Another to Manage Medium- to Long-term Risks

Investment products with more sufficient track records and that have more predictable forms present greater risks over the medium- to long-term from the perspective of each customer as they are incapable of responding to changes of the times. Development of products like community hostels and specialized hospitals with the future in mind appears more risky due to its novelty, but we believe this will come to help manage risks.

I believe that "all humans live to be a better self." That is why I would like to create new possibilities for each individual by breaking away from presumed ideas and materializing new ideas one after another. We humbly ask for your continuous support.

Breaking Away from the Mass Supply Model

Although Japan has been aware of the coming acceleration of aging society and population decrease for several decades, it still features one of the most notable supplies of newly constructed real estate among developed nations, resulting in serious excess. How can these real estate stocks in Japan be best utilized? A part probably has to be returned to nature. If left unaddressed, such real estate will just turn to piles of scrap, lead to the decline of towns and cause more grave impacts on society.

With an aim of breaking away from the mass supply model in mind, I established Raysum Co., Ltd. in 1992, the year of the economic bubble burst. At that time, the notion that buildings are unwanted attachments to land and should be demolished once they become old dominated the industry in addition to the appraisal systems of the financial sector, so I first focused on creating a market where aged buildings with tenants would be transacted at fair value.

Particularly, in order to overcome the collateral appraisal systems of the financial sector, we purchased a number of loans in bulk from banks and circulated real estate, or their collateral, in the market for the first time in Japan. Moreover, even assets rightly owned by the national government were not on the market if they were old and tenanted. We became the first in Japan to realize a business which purchases substantial amounts of national government-owned real estate in bulk and sells them through securitization.

Having no competition, this business model generated considerable profits in the first few years. As we became the first company to list in this field of business and were highly profitable, due attention was given. Many rival companies appeared thereafter, and old tenanted properties are now found commonly circulated under the category of "real estate for investment." Our type of business model has come to be called the real estate securitization business, literally fulfilling part of the aim of founding the company in Japan.

Shift to the Qualitative Conversion of Real Estate Stock

I have learned from my experience that there are constant changes in industry practices and in the appraisal systems of the financial sector in accordance with the times. As such, we will shift into a phase of qualitative conversion of real estate stock with the emergence of the transaction market.

We have worked on solving relocation issues for many tenants remaining in extremely old, large building complexes in central Tokyo as well as on large-scale renovation and aseismic reinforcement, drawing upon the latest technology. At the same time, we have also put forth efforts to attract new tenants for properties of which use is converted, anticipating changes with time. As such cases were unprecedented we were unable to estimate time and cost for improving properties upon acquisition. However, we tackled difficult projects one after another by firmly pursuing "for what" Raysum exists.
We have converted the use of numerous properties, such as turning a large office building in central Tokyo into a large nursery school with an indoor yard and playground, a bank branch office into a convenience store, a gas station into a restaurant, a business hotel into a community hostel, a golf course into a resort facility by digging a hot spring, and a Kyo-machiya (traditional townhouse in Kyoto) into a high-end accommodation facility. We approached each case seriously, including use conversion of buildings that are unable to keep up with changes in the world or are legally unfit. We have accumulated an abundant track record of properties of which value was significantly raised through such efforts.

Materializing New Ideas One after Another to Manage Medium- to Long-term Risks

Investment products with more sufficient track records and that have more predictable forms present greater risks over the medium- to long-term from the perspective of each customer as they are incapable of responding to changes of the times. Development of products with the future in mind appears more risky due to its novelty, but we believe this will come to help manage risks. Specifically, this includes operation of community hostels that attract young people from around the world to Japan where there is a decline in younger populations and form connections between them and the region; development of specialized hospitals that can address health problems that are increasing in line with the aging population; and revitalizing historically valuable old buildings as tourism resources.

I believe that "all humans live to be a better self." That is why I would like to create new possibilities for each individual by breaking away from presumed ideas and materializing new ideas one after another. We humbly ask for your continuous support.

Takeshi Tanaka

President and Representative Director

Raysum Co., Ltd.

June 2017