Sansei Landic Co.,Ltd

The Group operates a real estate sales business involving rights adjustment for land with leasehold interests (sokochi) and properties with existing tenant fixtures (ikinuki), and is therefore susceptible to economic and interest rate trends. If the economic outlook deteriorates, interest rates rise significantly, or officially assessed land prices decline, the basis for calculating purchase prices and rental income may be impaired, potentially affecting the Group's business results and financial position. The Group conducts its business operations while closely monitoring domestic and international social and economic conditions, but situations may arise where it is difficult to respond to fluctuations beyond expectations.

Since the Company primarily raises funds for real estate acquisition through borrowings from financial institutions, its dependence on interest-bearing debt is high. As of the end of FY2025 (ending December 2025), the balance of interest-bearing debt was ¥25,144,706 thousand (as stated in the original in thousand-yen terms), and the interest-bearing debt ratio rose to 61.8% from 55.9% in the previous period. If fundraising is constrained due to changes in interest rate levels, shifts in monetary policy, or a decline in the Company's creditworthiness, this may affect business results and financial position. Going forward, the Company intends to work on diversifying its funding methods and strengthening its equity capital.

The sales prices, occupancy rates, and rents of real estate for sale held as inventory and rental real estate are susceptible to economic trends, real estate market conditions, tax system changes, and local rental supply-demand relationships. There is also a risk of damage to or loss of real estate due to natural disasters such as a major earthquake directly beneath the Tokyo metropolitan area, fires, or accidents; although fire insurance and other coverage is in place, damage exceeding the insurance coverage limits or situations not covered by insurance may occur. If these risks materialize, they could affect the financial position and business results through decreased rental income and impairment of asset value.

The majority of the Company's real estate sales business requires rights adjustment for monetization, and rights adjustment may not proceed smoothly due to leaseholders refusing to negotiate sales for sokochi (land with leasehold interests) or lessees refusing to negotiate vacating premises for ikinuki (properties with existing tenant fixtures). If negotiations become protracted and fail to result in monetization, earnings volatility may occur, and there is also an inherent risk of the situation developing into litigation or other claims. The Company responds by re-formulating rights adjustment methods according to the negotiation situation, but cannot completely eliminate the possibility of encountering situations that are difficult to resolve.

Real estate registration in Japan does not have conclusive legal effect, and for sokochi (land with leasehold interests), which the Company mainly handles, there are cases where the rights relationships are not accurately reflected in the registry, or where repeated inheritances have complicated the rights, requiring time to accurately ascertain them. There is a risk that, after acquisition, third-party rights, restrictions under administrative laws and regulations, or the existence of unexpected rights holders may come to light; if situations arise that are difficult to address, this may affect operating results and financial position. The Company addresses this through registry checks at the time of purchase as well as by gathering information on rights relationships through real estate brokers, tax accountants, and others.

In the real estate sales business, the success of property acquisition is directly linked to sales, so stably securing quality properties is a prerequisite for business continuity. If it becomes difficult to acquire quality properties due to changes in real estate market conditions or intensifying competition for property acquisition, this may affect the Group's business results. The Company intends to strive to secure property acquisitions by, among other things, expanding its information-gathering channels.

The real estate industry is subject to legal regulations such as the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the City Planning Act, and the Act on Land and Building Leases, and major amendments, abolitions, or new legislation may necessitate a review of business plans. The real estate brokerage license (Minister of Land, Infrastructure, Transport and Tourism (5) No. 6282, valid until May 17, 2027) is essential for principal business activities, and if the license is revoked or lapses due to disqualification from renewal for any reason, this would cause serious disruption to principal business activities. The Company states that, at present, no facts exist that would constitute grounds for revocation or disqualification.

Changes in real estate-related tax systems may affect business results through increased costs of holding, acquiring, or selling assets, or through reduced customer purchasing intent. In particular, for sokochi (land with leasehold interests), which the Company mainly handles, the occurrence of inheritance among landowners is often a factor driving property acquisition, so tightening or easing of regulations under the inheritance tax system directly affects the volume of acquisitions. Depending on the direction of tax system changes, both positive and negative fluctuations in business results may occur.

The Group holds a large amount of personal information and management information concerning landowners, leaseholders, and others; if information leakage or unauthorized use occurs, this may lead to loss of trust and damages, potentially affecting business results. The Company states that it takes thorough measures through establishing a management structure, developing internal regulations, and strengthening system-based security measures, but the risk of external leakage cannot be completely eliminated.

The rights adjustment work for sokochi (land with leasehold interests) and ikinuki (properties with existing tenant fixtures) requires highly specialized personnel with broad knowledge of real estate-related laws and regulations and high communication skills, and securing personnel at the appropriate time is essential for responding to business expansion and diversification of operations. If the securing and development of personnel does not proceed as planned, or if existing personnel leave the Company, this may hinder business activities and affect business results. The Company is working to establish recruitment and development systems, but there is a risk that intensifying competition in the labor market could make it difficult to achieve its plans.