HASEKO Corporation

The Group is highly dependent on condominium construction business in the Greater Tokyo, Kinki, and Tokai areas, and there is a risk that orders received may fluctuate significantly due to changes in new supply volume, sales conditions, interest rates, housing tax systems, and other factors. Supply restrictions and price surges in construction materials caused by the situation in the Middle East may lead to delivery delays and price increases, potentially depressing the condominium market through reduced consumer purchasing willingness. In response, the Group is promoting diversification of its revenue base by expanding into construction-related, real estate-related, and management/operation business areas and regions.

There is a risk that rapid increases in construction material and labor costs, procurement difficulties, and declines in production capacity due to difficulty securing subcontractors could push up construction costs and adversely affect business performance. Delays in material procurement caused by the situation in the Middle East could also directly lead to delays in delivery schedules. The Company strives to strengthen cost competitiveness through a centralized purchasing system managed by head office functional departments and overall procurement based on future construction start timing.

There is a risk that revisions, abolitions, or new enactments of a wide range of laws, including the Building Standards Act, the Construction Business Act, the Real Estate Brokerage Act, and the Antimonopoly Act, as well as stricter building confirmation and inspection requirements, could result in major changes to business plans or delays in construction starts. In particular, consolidated subsidiary Haseko Reform received an on-site inspection from the Japan Fair Trade Commission in March 2025 on suspicion of violating the Antimonopoly Act in relation to orders received for large-scale renovation work, and depending on the outcome of the investigation, there are concerns about adverse effects on business performance and financial condition. The Company conducts ongoing awareness activities on legal compliance for officers and employees and is fully cooperating with the Fair Trade Commission's investigation.

In real estate development involving diverse asset types such as rental apartments and detached houses, there is a risk that unforeseen events such as legal amendments, drastic changes in economic conditions, and natural disasters could cause delays in business schedules and cost increases. The rise in construction material prices caused by the situation in the Middle East could worsen project profitability, and material supply restrictions could cause schedule delays. The Company seeks to minimize such impacts through advance risk identification, analysis, and countermeasure planning.

Inventory real estate (mainly condominiums for sale) and fixed assets (mainly rental apartments) are subject to market value fluctuation risk and liquidity risk, and there is a possibility that the expected recovery amount or cash flow may not be obtained due to delays in business plan progress or deterioration of rental terms. As a result, valuation losses, impairment losses, or losses on sale may occur, potentially adversely affecting business performance and financial condition. The Company manages this risk by making acquisitions based on an investment plan that sets investment ceilings for each investment area.

In fund procurement through borrowings and bond issuance, there is a risk that rising interest rates or credit rating downgrades could increase procurement costs and affect business performance and financial condition. Syndicated term loan and commitment line agreements include financial covenants (maintenance of equity capital and securing of ordinary income), and if these are breached, the Company could lose the benefit of the time limit on repayment and be required to repay the remaining principal early. The Company mitigates this risk by fixing interest rates on some borrowings.

A large portion of management resources are concentrated in the Greater Tokyo, Kinki, and Tokai areas, and there is a risk that earthquakes, storms, floods, infectious diseases, or other events occurring in these regions could simultaneously cause construction delays, reduced consumer purchasing willingness, and damage to held assets. While the Company is working to expand its business areas to major regional cities, regional concentration risk remains at this time. The Company is also focusing on enhancing its business continuity planning (BCP) system for disasters and developing disaster-resistant condominiums.

As a decarbonization transition risk, construction and development costs are expected to rise due to the introduction of carbon taxes and stricter regulations, while as a physical risk, there is a possibility of reduced on-site productivity due to rising summer temperatures and construction delays and disaster costs to held properties due to more frequent weather-related disasters. In December 2021, the Company established the

There is a risk of information leakage due to cloud/server troubles or criminal activity involving the large volume of personal information of housing purchase customers and residents of condominiums under management contracts, as well as sales and procurement data managed in the cloud. If an information leak occurs, in addition to damage to social credibility and corporate image, there is a possibility of adverse effects on business performance and financial condition. The Company is thoroughly managing information through the development of regulations based on the Personal Information Protection Act, establishment of regulations related to the Individual Number (My Number) system, and development of security policies by department.

In corporate acquisitions aimed at business expansion and strengthening of the revenue base, there is a risk that failure to integrate the target business into management strategy, inefficient use of management resources, or sudden changes in market conditions could result in failure to achieve initially expected effects, leading to impairment of goodwill and other losses. While the Company conducts objective investigations of target companies and business environments by third-party experts to improve the accuracy of decision-making, integration risk cannot be completely eliminated.