FaithNetwork Co.,Ltd

Business Details

Focusing on Setagaya, Meguro, and Shibuya wards (the 3 southern wards) as the primary area, the company plans, develops, and sells the Newly Built Whole-Building RC Condominium "GranDuo" Series and the Luxury Rental Residence "THE GRANDUO" Series. It provides a one-stop service covering everything from land acquisition to design, construction, tenant recruitment, and property management, and sells to affluent individuals and institutional investors through a pull-type sales approach. In FY2026 (ending March 2026), the company sold 22 real estate properties and 4 construction products, and both sales and profit exceeded the prior period.

Recent Overview

Achieved increased sales (+10.1%) and increased segment profit (+25.0%)

In FY2026 (ending March 2026), the company sold 22 real estate products, 4 construction products, and other items, achieving net sales of ¥31,994 million (up 10.1% year on year) and segment profit of ¥5,433 million (up 25.0% year on year). Against a backdrop of soaring prices for newly built condominiums for sale in the greater Tokyo area, demand for investment in residential rental real estate in Tokyo remained at a high level, and the company's efforts to increase property scale and actively promote development of both the "GranDuo" and "THE GRANDUO" series proved successful. During the period, there was no single customer accounting for 10% or more of net sales, reflecting progress in customer diversification.

Key Products

Growth Drivers

• Expanding demand for investment rental real estate driven by robust rental demand amid declining supply and soaring prices of newly built condominiums for sale in the greater Tokyo area (average price up 15.3% in FY2025, reaching ¥93.83 million)
• Advantage in land information gathering capability and brand strength due to concentrated development area in the 3 southern wards and extensive development track record
• Cost reduction and maximization of property value through one-stop service covering land acquisition, design/construction, tenant recruitment, and property management
• Deepening of the pull-type sales system and acquisition of affluent clients through strengthened collaboration with financial institutions and major real estate brokerage firms
• Improved average selling prices and profitability through the promotion of larger-scale properties
• Expansion of the high-value-added product lineup through the development of the "THE GRANDUO" series
• Expansion of product offerings through the launch of new concept brands under the new medium-term management plan "NEXT VISION 2029"

Risks

• Uneven quarterly performance (second-half weighted structure) due to concentration of property completion and handover timing
• Rising procurement and construction costs due to persistently high land prices, soaring construction material costs, and increased labor costs
• Increased borrowing costs due to policy interest rate hikes and their impact on demand for purchasing investment real estate
• Risk of declining investment demand due to fluctuations in supply and demand in the greater Tokyo condominium market and economic downturn
• Amortization burden of goodwill (¥503 million), with annual amortization of ¥112 million
• The number of construction products sold decreased from 7 units in the prior period to 4 units, and changes in product mix may affect performance
• Geopolitical risks (such as the situation in the Middle East) leading to risks of soaring energy prices and delays in material procurement

Business Details

This business manages and operates real estate owned by real estate owners who purchased properties sold by the company, as well as real estate owned by the company itself (property management). It provides a one-stop service including tenant recruitment, move-in/move-out procedures, complaint handling, payment management, asset value enhancement measures, maintenance, and preparation of reports for owners. Using the rental brokerage brand "3-Ward miraie" as a point of contact, the company conducts tenant recruitment specialized for its own developed properties, aiming to improve the profitability of real estate owners. In some cases, management operations are also conducted in a sublease (master lease) format.

Recent Overview

Achieved increased sales and increased profit despite the headwind of a decrease in managed units, with improved profit margin

For the full year of FY2026 (ending March 2026), although the number of managed units decreased due to the termination of management contracts for properties sold in bulk to funds during the COVID-19 pandemic, the company achieved net sales of ¥923 million (up 6.1% year on year) and segment profit of ¥199 million (up 16.4% year on year). The rate of profit increase (16.4%) exceeded the rate of sales increase (6.1%), demonstrating the effect of cost reduction through operational efficiency improvements. Robust rental demand in the 3 southern wards area, driven by soaring prices of condominiums for sale, supported the earnings base.

Key Products

Growth Drivers

• Continued increase in the number of managed units due to the completion and handover of newly sold properties by the Real Estate Investment Support Business
• Maintenance of high occupancy rates through the "3-Ward miraie" rental brokerage brand specialized in self-developed properties
• Leverage effect from cost and SG&A expense containment through efficient business operations
• Continued robust rental demand in the 3 southern wards area against the backdrop of soaring condominium prices for sale

Risks

• Risk of a slowdown in the pace of increase in managed units due to a decrease in the number of units sold by the Real Estate Investment Support Business
• Risk of a sharp decrease in managed units due to termination of large-scale management contracts, such as the bulk sale properties for funds during the COVID-19 pandemic
• Risk of management contract cancellations due to deteriorating profitability of real estate owners amid rising interest rates
• Risk of increased management operation costs due to labor shortages and rising labor costs
• Risk of deteriorating profitability of real estate owners due to rising vacancy rates in managed properties