Loadstar Capital K.K.

The real estate industry is highly susceptible to economic conditions such as business trends, interest rate trends, and land price trends, and changes in economic conditions may make it impossible to secure the originally expected profits. As a countermeasure, the Company focuses primarily on Tokyo, which has the highest liquidity, and generally sets long-term borrowing periods for real estate-secured loans to avoid the impact of short-term economic fluctuations.

Since funds for property acquisition are primarily raised through borrowings from financial institutions, a rise in market interest rates or an increase in the risk premium for the real estate industry or the Company could increase interest expenses and other costs, potentially adversely affecting business performance. As a countermeasure, the Company avoids dependence on specific financial institutions by soliciting financing on a property-by-property basis, and is also considering diversifying its fundraising methods, including equity financing.

Sales from property sales in the Corporate Funding Business are recognized on a delivery basis, and since the sales amount per property represents a large proportion of the total, the timing of delivery may cause imbalances in quarterly performance, or expected sales and profits may be carried over to the following period. As a countermeasure, in addition to controlling settlement timing through speedy decision-making, the Company strives to expand the proportion of stock revenue (rental income and asset management fees) by building up its real estate stock balance and AUM.

Securing excellent personnel to support sustainable growth is important, but if personnel cannot be secured as planned due to changes in employment conditions and other factors, this may affect business operations and performance. As a countermeasure, in addition to strengthening recruitment, the Company strives to prevent staff attrition by fostering an open corporate culture and providing a work environment where individuals can grow.

The Company acquires and holds confidential information and personal information of customers and business partners in the course of its business activities, and if an unforeseen event results in an external leak, this may lead to liability for damages or loss of credibility, affecting business operations and performance. As a countermeasure, the Company has established regulations for handling personal information, established a management structure, appointed a personal information manager, and thoroughly disseminated related norms to officers and employees.

The Company is subject to regulations such as the Building Lots and Buildings Transaction Business Act, the Financial Instruments and Exchange Act, the Real Estate Investment Advisory Business Registration Rules, and the Money Lending Business Act. If these regulations are reinterpreted or amended, or if new laws are enacted, this may affect business content changes or new costs, thereby impacting performance and business operations. As a countermeasure, the Company thoroughly implements anti-social forces checks, contract reviews, and advertising reviews by in-house lawyers, conducts regular legal and compliance training, and communicates with regulatory authorities and consults external lawyers as needed.

If natural disasters such as earthquakes, storms, or floods, or man-made disasters such as war, terrorism, or fire occur, the value of owned real estate could be significantly impaired. In addition, since owned real estate is concentrated in the Tokyo metropolitan area, there is a risk that a large-scale disaster or deterioration of the regional economy in that area could directly affect business performance. As a countermeasure, the Company selects properties meeting the new earthquake resistance standards or higher, conducts earthquake risk assessments (PML) at the time of acquisition, and reduces losses by taking out earthquake insurance on almost all properties.

The Group holds multiple licenses and permits, including a Building Lots and Buildings Transaction Business license, Financial Instruments Business registration, Money Lending Business registration, and Comprehensive Real Estate Investment Advisory Business registration. If any of these are revoked or expire due to legal violations or other reasons, it may become impossible to continue the relevant business, potentially having a material impact on performance. Each license and permit has a validity period (for example, the Building Lots and Buildings Transaction Business license is renewed every 5 years, and Money Lending Business registration every 3 years), requiring ongoing management of renewal procedures.

Multiple subsidiaries, including Loadstar Investments K.K. (investment management business and investment advisory/agency business), Loadstar Funding K.K. (money lending business), and Hash DasH Inc. (Type I and Type II Financial Instruments Business), operate under different regulatory frameworks, creating a risk that deterioration in the business environment or failure in regulatory compliance at any one company could spread to affect the Group's overall performance. Each subsidiary must individually obtain and maintain its own licenses and permits, requiring the maintenance of a compliance management structure across the entire Group.