Open House Group Co., Ltd.

The consolidated balance of interest-bearing debt as of the end of September 2025 stood at ¥720,063 million (up ¥108,291 million from the previous fiscal year-end), representing 51.0% of total assets. As the Company primarily relies on financial institution borrowings to fund the acquisition of business land and properties, rising interest rates would increase financial costs and directly impact business performance. If sudden changes in financial conditions prevent sufficient fundraising, there is a risk that business operations themselves could be disrupted.

As of the end of September 2025, the Company held real estate for sale of ¥167,551 million and real estate for sale in process of ¥602,444 million (totaling ¥769,995 million), and there is a risk that significant valuation losses could arise from declines in real estate values or deteriorating market conditions. Prolonged development delays could extend inventory holding periods, and combined with deteriorating market conditions, could simultaneously result in the recognition of inventory valuation losses and delays in revenue recognition. Margin compression from discounted sales could also have a material adverse effect on business performance and financial condition.

The Company has pursued aggressive M&A, including making Meldia Co., Ltd. a wholly owned subsidiary in November 2023 and Presence Corporation a wholly owned subsidiary in April 2025, and integration risks exist such as delays in business integration, failure to realize synergies, departure of key talent, and difficulty maintaining compliance standards. The Company has recorded substantial goodwill, which also carries future impairment risk. Concentration of resources on M&A-related work may also strain ordinary business activities.

Performance in the real estate industry is closely linked to macroeconomic factors such as economic trends, interest rate levels, land prices, and foreign exchange rates, and rising mortgage rates, consumption tax hikes, demographic changes, and tax reforms directly affect demand for home purchases. These are external factors beyond the Group's control, and a sharp decline in demand would have a material impact on both revenue and profit.

As the majority of sales depend on the Greater Tokyo Area, the Company's performance structure is highly susceptible to disasters such as earthquakes and typhoons, as well as to deterioration in the regional economy. The Greater Tokyo Area has many competitors, and there is a risk that the Company's land procurement and sales capabilities could relatively decline due to the emergence of competitors with superior procurement, sales, and brand strength. While the Company is expanding into the Nagoya, Fukuoka, and Kansai areas, it also faces competition in these regions.

There is a risk that land acquisition prices will rise due to a shortage of property supply in urban areas of the Greater Tokyo Area, and procurement costs account for a significant portion of development costs. In addition, rising prices of lumber and building materials due to exchange rate fluctuations and country risk, as well as rising labor costs stemming from the labor shortage in the construction industry, are compounding factors. If these cost increases cannot be passed on to sales prices, they could have a material adverse effect on business performance.

Construction of newly built detached houses is, in principle, outsourced to contractors through separate orders excluding construction supervision work, while condominium construction, including supervision, is largely outsourced to construction companies. Insufficient availability of subcontractors, construction quality issues, poor management performance, or construction delays could affect business performance and financial condition. As a seller bearing a 10-year warranty liability and liability for non-conformity with contracts, such issues could also lead to increased repair costs and a decline in creditworthiness.

Business expansion centered on detached housing-related operations requires the continuous recruitment and development of highly capable personnel, but there is a risk that securing excellent talent will become difficult amid a labor shortage across the construction and real estate industries as a whole. Attrition of existing personnel and rising recruitment costs could also affect business development and performance, compounded by the risk of talent attrition at M&A target companies.

The Company is subject to a wide range of legal regulations, including the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the City Planning Act, the Construction Business Act, the Money Lending Business Act, and environmental regulations, and revisions or abolition of related laws, or the introduction of new regulations, could affect the business model and profit structure. Although the Company states that it strives to comply with laws and regulations, there is a risk that any violation could lead to revocation of licenses, making it difficult to continue operations.

The Company holds large amounts of personal information on prospective and existing customers through its various businesses, and is subject to regulations such as the Act on the Protection of Personal Information. Should an external leak occur, it could result in damages and a loss of social credibility, affecting business performance and development. While each Group company states that it manages such information with the utmost care, specific details of the technical measures taken are not disclosed.