ENVALITH
ファーストブラザーズ株式会社 logo

First Brothers Co.,Ltd.

3454・Standard Market・Real Estate

Official website
ファーストブラザーズ株式会社 logo
First Brothers Co.,Ltd.3454

Business

First Brothers Co., Ltd. is a comprehensive real estate investment company established in 2004 and listed on the TSE Standard Market. The group consists of 24 consolidated subsidiaries and 1 equity-method affiliate. In its core Investment Banking Business, the company acquires carefully selected small- and mid-sized rental properties nationwide on a proprietary basis, conducting portfolio management to generate sales gains and rental income after value-up initiatives. In the Investment Management Business, the company forms and manages private funds focused on prime urban and large-scale properties for institutional investors, earning AM fees. In the Facility Operations Business, the company handles operations of lodging facilities and other properties in-house, capturing inbound demand. The Investment Banking Business accounts for approximately 90% of net sales, and the company continues to expand its portfolio through a reinvestment cycle driven by gains on real estate sales.

Business Model

In the Investment Banking Business, the company acquires rental real estate by leveraging shareholders' equity and financial institution borrowings (borrowings balance of ¥56,484 million, equity ratio of 29.1%), implements measures to maximize property value during the holding period, and sells the assets at the optimal timing. The resulting gains on sale are allocated toward funding subsequent acquisitions, adopting a cyclical model that sustainably expands the portfolio. The Investment Management Business supplementarily secures stable income through AM fees, while the Facility Operations Business accumulates direct income from operational assets.

Company Strengths

In FY2025 (ending November 2025), the Investment Banking Business achieved net sales of ¥17,193 million (up 13.7% year on year) and operating profit of ¥6,289 million (up 66.0% year on year). By executing large-scale, high-margin real estate sales, the segment operating profit margin reached approximately 36.6%. High profitability is confirmed relative to segment assets of ¥82,383 million.

By targeting investment nationwide rather than limiting to the Tokyo metropolitan area, the company carefully selects and acquires high-quality small and medium-sized rental real estate, securing portfolio yields. Total capital expenditure at the end of FY2025 (ending November 2025) was ¥3,563 million, comprising ¥2,017 million in construction in progress for development real estate and ¥1,180 million in acquisitions of rental real estate, etc. The company maintains an investment discipline of not engaging in easy early sales aimed at short-term profit smoothing.

Since its establishment in 2004, the company has held numerous licenses and registrations, including Investment Management Business, Investment Advisory and Agency Business, Type II Financial Instruments Business, Real Estate Brokerage Business, General Real Estate Investment Advisory Business, and Money Lending Business. It has built a track record of steadily strengthening its credibility in the capital markets, listing on the Tokyo Stock Exchange Mothers market in 2015, being promoted to the TSE First Section in 2016, and transitioning to the Prime Market in 2022.

ENVALITH's Perspective

Net income attributable to owners of the parent for the first half of FY2026 (ending November 2026) came in at ¥2,437 million (up 988.3% year on year), an extremely strong figure. Meanwhile, the full-year forecast is set at net sales of ¥17,730 million (down 7.0% year on year), operating income of ¥4,150 million (down 21.6%), and net income of ¥2,620 million (up 49.7%), with the first half already achieving 93% of the full-year net income forecast. Given the business's characteristic of large seasonal and deal-driven fluctuations, close attention should be paid to property sale trends in the second half, which will determine the full-year outcome.

Following the Bank of Japan's additional rate hike announced in June 2026, short-term interest rates—the primary benchmark for the company's borrowing costs—are on a gradual upward trend. Interest expenses for the interim period increased to ¥453 million (up 16.3% year on year), and for a company carrying a high level of interest-bearing debt (total long-term borrowings of ¥53,644 million), rising rates represent a factor that will squeeze earnings. In addition, declining real estate yields in central urban areas are making new property acquisitions increasingly selective, raising concerns about the pace of portfolio expansion.

The equity ratio at the end of the first half of FY2026 (ending November 2026) improved to 31.8% (versus 29.1% at the end of the previous fiscal year), and net asset value per share also rose to ¥2,003.57 (versus ¥1,864.16 at the end of the previous fiscal year). While net assets increased to ¥28,209 million, interest-bearing debt (total of short-term and long-term borrowings) stood at ¥54,047 million, accounting for approximately 61% of total assets of ¥88,333 million. While the high degree of financial leverage is to some extent unavoidable given the nature of the real estate investment business, its high sensitivity to changes in the interest rate environment remains a risk factor that investors should continue to monitor closely.

Growth Strategy

Pursuing mid-to-long-term growth through three pillars: deepening real estate investment, expanding business domains, and strengthening financial discipline

Continuing the cycle of carefully selected acquisitions of small- and mid-sized rental real estate nationwide and reinvestment of gains on sales. In the first half of FY2026 (ending November 2026), the company actively executed property acquisitions and sales from the start of the period, recording net sales of ¥9,508 million and operating profit of ¥3,164 million. The company will continue to pursue new property acquisitions to expand the scale of the portfolio.

In February 2026, the company made Makino Corporation a consolidated subsidiary, entering the brewed beverage manufacturing business that was succeeded together with real estate from a regional revitalization perspective. The resulting increase in goodwill was ¥215 million. The company will continue to actively explore investment opportunities beyond real estate to promote diversification of its business portfolio.

Following the Bank of Japan's interest rate hike in June 2026, the company is monitoring investment criteria and financial discipline with even greater caution. The business plan for the current period already incorporates a certain degree of interest rate increases. The company has been repaying long-term borrowings (¥6,151 million repaid in the first half) and improved its equity ratio from 29.1% at the end of the previous fiscal year to 31.8%.

Triggered by a significant reduction in goodwill amortization expenses following impairment recognized at the end of the previous fiscal year, the Facility Operations Business turned profitable (operating profit of ¥40 million in the first half). While steadily capturing inbound demand, the company continues to address rising costs from inflation and improve operational efficiency, aiming to develop this segment into a stable contributor to earnings.

Last updated: July 17, 2026