DEAR LIFE CO.,LTD.

Business Details

Operated by Dear Life Co., Ltd. and its group companies. The business develops urban residences (rental apartments targeting single occupants and DINKS households) primarily within Tokyo's 23 wards, engages in Asset Design & Resale (ADR) (converting properties into suitable development sites), and conducts value-up and sale of income properties (residences, offices, hotels, and commercial properties). It serves a broad customer base including real estate investment companies, developers, and general business corporations, and is the core segment accounting for approximately 86% of group revenue.

Recent Overview

Revenue declined sharply by 46.6% in H1, but active acquisitions of 42 properties aim for recovery in H2

In the Real Estate Business for H1 FY2026 (ending March 2026) (October 2025 to March 2026), revenue was ¥11,999 million (down 50.5% year on year) and segment profit was ¥1,048 million (down 59.2% year on year), representing a significant decline in both revenue and profit. This fluctuation stems from the timing of real estate transaction recognition; during the period, the company acquired 42 properties including development land and income properties, such as the "Kotake-Mukaihara III Project" and "DeLCCS Higashi-Shinjuku," and completed 7 additional acquisition contracts. Inventory increased by ¥25,914 million, with the real estate for sale balance rising substantially to ¥35,118 million compared to the previous fiscal year-end. The company continued active acquisition investment funded by increases of ¥3,395 million each in capital stock and capital surplus from a public offering (payment completed December 26, 2025) and ¥26,494 million in long-term borrowings, laying the groundwork for revenue recognition in the second half. The full-year performance targets (ordinary profit of ¥10,000 million, net income of ¥6,800 million) remain unchanged.

Key Products

Growth Drivers

• Continued population inflow into Tokyo's 23 wards and rising demand for rental residences (shift toward rentals due to soaring prices of newly built condominiums)
• Robust investment appetite from domestic and foreign investors for Tokyo real estate (yield gap advantage sustained by continued low interest rates and weak yen relative to Europe and the US)
• Continued high level of demand for hotel and similar development driven by increasing numbers of inbound foreign visitors
• Expansion of the Asset Design & Resale business, minimizing construction risk and improving capital efficiency
• Strengthened financial base and expanded acquisition capacity through public offering (payment completed December 26, 2025), with capital stock and capital surplus each increasing by ¥3,395 million
• Groundwork for second-half revenue recognition through active acquisition performance of 42 properties and 7 completed acquisition contracts during the current interim period

Risks

• Risk of quarter-to-quarter revenue fluctuation dependent on the timing of real estate transaction recognition (H1 FY2026, ending March 2026 revenue of ¥11,999 million, down 50.5% year on year)
• Rising difficulty in acquiring development land and increasing acquisition costs due to sustained high land prices and construction costs (intensifying acquisition competition)
• Risk of rising borrowing costs due to additional interest rate hikes by the Bank of Japan (fixed long-term borrowings balance of ¥27,013 million, a substantial increase from the previous fiscal year-end)
• Sharp increase in inventory (real estate for sale of ¥35,118 million plus real estate for sale in progress of ¥7,421 million) accompanying large-scale acquisition investment, and risk of delayed sales
• Risk of rising financial leverage due to declining equity ratio (59.3% at previous fiscal year-end to 47.8% at interim period-end)
• Risk of fluctuating demand from foreign investors due to Middle East tensions, European geopolitical risk, US-China economic slowdown, and tariff increases
• Risk of revenue concentration on specific customers (FY2025, ended September 2025: revenue of ¥10,369 million from special purpose company Regi Properties Four accounted for 13.2% of total)