Relo Group - Company History

Sasada Masanori founded Nihon Kenso in March 1967 in Tsuwano, a town in rural Shimane, doing new build and interior work on housing for wage earners. What changed the company was a contract: in September 1978 it became an approved contractor for maintenance of Mitsui & Co.’s company housing and dormitories, and in October 1979 it began caretaking the homes left empty by Mitsui employees posted elsewhere in Japan and abroad.

The work itself was unglamorous — airing and cleaning an empty house, forwarding post, handling the neighbours — and unprofitable for ordinary rental agents. But framed differently it was a service standing between three parties: the transferee, the family, and the employer’s HR department, which would pay for it because it made overseas postings possible. That triangulation, laid on top of a builder’s ordinary work of maintaining a building, was the invention. In May 1984 the company renamed itself Nihon Relocation Center; seventeen years after founding, its main business was no longer construction.

Sasada later called that renaming "the real founding of the company," and traced it to a January 1983 magazine article about American relocation firms that handled everything for a transferee in one place — property sale, leases, housing at the destination, jobs for the family, car and furniture leases, tax. If that was possible, then what he had built for one client could be built for Japanese employees generally. He signed more than fifty corporate customers in a year. By 1985 the revenue model had settled into three layers — fees on new placements, monthly management fees on an accumulating book of homes, and renovation work when the transferee returned — which is still the shape of every business the group has built since.

Caretaking ends when the transferee comes home. What did not end was the list of roughly four thousand HR departments the company now dealt with — and in September 1993 it put a second product in front of them: Fukuri Kosei Club, outsourced employee benefits. Japanese companies were caught between the fixed cost of their own resort facilities and employees who wanted more varied leisure; a membership scheme giving access to affiliated hotels and facilities converted that fixed cost into a monthly fee per head.

It took several loss-making years to work, and what finally made it work was not selling but the financial crisis: companies that sold their resort houses came looking for a replacement, and a scheme designed for smaller firms was entered by large ones. That there was something to offer at that moment was the product of five or six years Sasada had spent calling on small companies. The catalogue started with nine hotels and one sports facility.

The company registered its shares over the counter in September 1999, thirty-two years after founding. It then took regional partners into the benefits business as distribution channels — joint ventures with Aso Cement in Kyushu in 1999, Nagoya Railroad in Chubu and Chugoku Electric Power in 2000 — and in July 2000 launched Relo Net, widening relocation from empty-house caretaking to support for moving generally. By the end of the decade the two pillars were both business-to-business, both sold through HR, and both stock-based.

In July 2001 the company split itself into operating subsidiaries — relocation into Relocation Japan, benefits into Relo Club — and became a pure holding company, Relo Holdings. Splitting the businesses meant their profitability could be judged separately, which is the precondition for buying more of them. In 2002 it took the further step of subleasing company housing: instead of acting as the landlord’s agent for a fee, it signed the lease itself, absorbing vacancy periods and restoration costs, and charged companies for taking the trouble away.

From there growth came from stock contracts funding acquisitions without much debt: Redac in the United States in 2005, an equity stake in the housing manager Nihon Housing in 2009, Panasonic Excel International in 2014, and in 2016 AIRINC, whose databases of cost-of-living, housing and tax information by location were less a business than the data foundation for what the group intended to buy next. The holding company renamed itself Relo Group the same year.

The Tokyo Stock Exchange second section came in 2010 and the first section in 2011, forty-four years after founding. Under the successive "Olympic Operation" medium-term plans, operating profit roughly doubled from ¥8.7bn to ¥17.8bn between FY2014 and FY2018, and the group passed sixty consolidated subsidiaries. Managed company housing stood at 63,000 units and benefit-club membership at 2.84 million as the group prepared its largest move yet.

In June 2019 Relo Group consolidated BGRS, the world’s third-largest global relocation firm, intending to support Japanese companies’ expatriates abroad as well as at home. Interest-bearing debt went from ¥17.8bn to ¥69.3bn. Then COVID-19 stopped international assignment almost entirely. A ¥9.5bn goodwill impairment was taken on BGRS in FY2019 — one year after the purchase — and net profit fell from ¥13.0bn to ¥3.8bn.

The 2022 combination of BGRS with SIRVA, in which Relo took 23% of the merged holding company and pulled roughly ¥20bn of cash back out, was meant to fix it. Instead the merged company carried about $600m of debt from earlier private equity ownership, and could not pay it down through a pandemic; then US monetary tightening raised its interest cost sharply while higher mortgage rates cut the number of relocations. SIRVA was downgraded to CCC in March 2024, Relo wrote off ¥47.6bn of SIRVA-related assets in full, and net profit swung from ¥20.8bn to a ¥27.8bn loss, with equity ratio briefly at 13%. The stake was sold in August 2024.

The domestic businesses moved the opposite way throughout. FY2024 brought record revenue of ¥142.9bn and operating profit of ¥30.4bn, hitting the ¥30bn target of the third Olympic Operation. Between FY2010 and FY2024 managed company housing rose from 63,000 to 278,000 units, rental management from 18,000 to 122,000, benefit-club members from 2.84 million to 7.27 million, and hotel guests twenty-three-fold — the group taking share from competitors for whom outsourcing was a side business while they were weakened by the pandemic. The fourth Olympic Operation, from FY2026, points the balance sheet freed by the overseas exit at domestic stock businesses and at buying regional hotels and inns whose owners have no successor.