Revenue and operating income both hit record highs for a first quarter; capturing demand for investment-grade residences in the Jonan 3 Wards, with gross margin reaching 23.7%

Key Positives From The Results

Revenue of JPY 4,735M (+60.2% YoY) and operating income of JPY 252M, swinging to profitability from a loss in the year-ago quarter—both record highs for a first quarter. Larger-scale property development and higher sales volume drove results, with initiatives to enhance property value translating directly into improved profitability.

• Real Estate Investment Support:
  Revenue of JPY 4,495M (+66.0% YoY), segment profit of JPY 190M versus a loss of JPY 104M in the prior year, returning to profitability. Sales of 3 real estate products and 1 construction product, augmented by larger-scale properties
• Gross Margin At Record High:
  Gross margin of 23.7% (+0.3pt YoY), a 1Q record. The integrated one-stop model continues to suppress outsourcing costs while the value-add strategy sustains margin improvement
• Robust Pipeline:
  7 land acquisitions completed, with 40 development projects in progress. A well-stocked pipeline for next fiscal year and beyond, with new brands "TOKYO MODULE" and "MIDHOUSE" also launching
• High Occupancy Maintained:
  Occupancy rate of 97.4% as of FY27.3 1Q, remaining at a high level. Units under management increased by 56 from FYE to 2,654 units

Key Concerns From The Results

The equity ratio declined to 29.4% (down 6.4pt from 35.8% at FYE) as borrowings for property development elevated financial leverage. Interest expense of JPY 101M (+21.9% YoY) is expected to face continued upward pressure in a rising rate environment, warranting close monitoring of the impact on recurring profit margins.

• Balance Sheet Expansion Accelerating:
  Total borrowings of JPY 24,159M (+JPY 6,142M from FYE), inventories of JPY 28,134M (+JPY 5,727M from FYE)—inventory risk is growing in the event of a real estate downturn
• Rising Funding Costs:
  Non-operating expenses of JPY 137M (+34.8% YoY), of which interest expense of JPY 101M accounts for the bulk. In a rising rate environment, higher funding costs structurally weigh on recurring profit
• Occupancy Dip:
  Occupancy of 97.4% is down 1.6pt from 99.0% at FYE. This appears to be a transient factor as newly completed properties are still in the leasing-up phase, but the trend bears watching
• Fixed Cost Increases In SG&A:
  SG&A of JPY 869M (+17.8% YoY) includes an increase of JPY 42M in rent from the headquarters relocation and JPY 64M in brokerage commissions—monitoring whether these are commensurate with revenue scale expansion is warranted
• Heavily 4Q-Weighted Earnings Structure:
  Full-year results are back-end loaded (10 buildings completing in 4Q, JPY 32.2B of the revenue plan concentrated in 2Q–4Q), leaving execution uncertainty

Focus Areas / Items To Monitor Going Forward

• Progress of the back-end-loaded completion schedule and pipeline sufficiency including sales via financial institution referrals (~40% of total sales value). Cost management amid rising construction materials and labor costs will be key to full-year margins
• Ramp-up of orders and sales for new brands "TOKYO MODULE" (urban tenant properties) and "MIDHOUSE" (hotel residences). Impact on the business portfolio from differences in customer segments and margins versus the existing GranDuo / THE GRANDUO lines
• Funding strategy in a rising rate environment and balancing financial discipline with the equity ratio below 30%. Consistency with the share buyback program (up to JPY 100M)

Key Financial Highlights

The year-ago quarter posted an operating loss of JPY 46M, a recurring loss of JPY 148M, and a net loss of JPY 112M, resulting in a swing to profitability at every profit line. Gross profit grew +62.2% against a +60.2% revenue increase, indicating margin expansion alongside top-line growth.

Performance By Business Segment

The Real Estate Investment Support segment delivered sharp revenue growth and a return to profitability on the back of higher sales volume and larger-scale properties. The Real Estate Management segment saw a modest revenue decline YoY due to the termination of bulk property management for a fund, but achieved profit growth through operational efficiency gains.

Segment Performance Table

Progress Versus Full-Year Guidance

The 1Q revenue progress rate of 12.8% appears low, but the company has a structurally 4Q-weighted earnings profile (10 buildings completing in 4Q, JPY 32.2B of planned revenue concentrated in 2Q–4Q), and progress is tracking in line with plan. In the prior year (FY26.3), 1Q revenue represented only 9.0% of the full year, with results concentrated in 4Q. The 4.0% operating income progress rate similarly reflects this seasonality, and at this stage we assess the risk of a guidance miss as limited.

• The business structure concentrates property completions and deliveries in 4Q. For FY27.3, 10 buildings (total floor area of 6,712 sqm) are planned for completion in 4Q, with 2Q–4Q revenue planned at JPY 32.2B, accounting for 87.2% of the full year

Changes To Guidance

No change to full-year guidance. Forecasts published on May 15, 2026 are maintained.

Commentary On Shareholder Returns

A progressive dividend policy is in place. The FY27.3 annual dividend forecast is JPY 45.00 (JPY 42.50 in the prior year, +JPY 2.50), marking the 7th consecutive year of dividend increases on a forecast basis. No change to the dividend forecast. Concurrent with the earnings release, the board resolved a share buyback program (up to 160,000 shares / JPY 100M, from August 17 to November 13, 2026). The stated purpose is to utilize shares as M&A consideration and to enhance capital efficiency.

Financial Position

Inventory buildup to JPY 28,134M has driven borrowing expansion, with the equity ratio declining to 29.4%. However, the well-stocked development pipeline supports future revenue and earnings, and the company is in a phase of actively utilizing financial leverage.

News Released Alongside The Earnings Announcement

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

None