Japan Property Management Center Co.,Ltd.

If the supply-demand balance for rental housing deteriorates due to declining birthrate and aging population, population decline, or urban concentration, there is a risk that profitability will decline. If the number of households decreases significantly or regional disparities progress more than expected, this could impact business performance. The Company strives to secure profitability by responding to diverse household needs and differentiating from competing properties through appropriate rent setting.

If revisions to real estate taxation or a sharp rise in interest rates lead to a decline in the profitability outlook of rental housing owners' properties, there is a risk that their investment appetite will decrease, changing demand for the Company's services. The Company primarily handles existing properties and believes it can provide sufficient yields through combinations of sublease and value-added products, but a rapid change in economic conditions could impact business performance.

The Group operates its business under licenses such as the Building Lots and Buildings Transaction Business Act and construction business licenses. If a license is revoked or an administrative penalty is imposed due to a legal violation or misconduct, there is a risk of a decline in social credibility. In addition, restrictions on the scope of business or increased cost burdens due to abolition or amendment of laws and regulations, or the establishment of new ones, could impact business performance. The Company addresses this by strengthening its compliance promotion system under its corporate governance framework.

In the rental housing market, there is a risk that the competitive environment will change significantly due to competition with major housing manufacturers and non-partner rental management companies, as well as new entrants from other industries. If the Company is unable to gain an advantage in competition with other companies, this could impact business performance. The Company promotes a differentiation strategy leveraging its unique business model and distinctive services.

The Company's business model is premised on collaboration with a nationwide partner network and financial institutions, with partner companies playing important roles such as sales activities to expand the number of managed units and management of operated properties. If partner companies or financial institutions change their policies or their competitiveness declines, this could have a direct impact on the Company's business performance. The Company is strengthening its network through training and support for partners and enhancing its partnerships with financial institutions.

While securing and developing excellent and diverse human resources is important for corporate value growth, there is a risk that the continuous securing and development of necessary personnel will become insufficient due to intensifying competition for talent and diversification of individual values. If human resource acquisition and development are insufficient, the quality of services may decline, impacting business performance. The Company plans to address this through enhancing its personnel systems and improving operational efficiency through the use of DX.

Growing interest in climate change issues may lead to increased costs due to the introduction of regulations, the emergence of reputational risk, and decreased revenue or increased expenses due to abnormal weather. The Company believes the impact on its business is relatively small, but it will continue to monitor the impact going forward.

The Group promotes business operations utilizing IT and AI and conducts data-utilization businesses, handling a large amount of confidential information including personal information. If an information security incident occurs due to a cyber attack, virus infection, etc., or if confidential information is leaked externally, this could impact business performance through loss of social credibility or claims for damages. The Company addresses this by ensuring compliance with relevant laws and regulations and appropriate handling of information.

Since the property management business and its associated operations are premised on residents making timely rent payments, if arrears occur in succession, this could impact the Company's financial position through bad debts or an increase in the allowance for doubtful accounts. The Company strives to avoid credit risk through appropriate information gathering and, when necessary, receivables preservation measures.