Paraca Inc.

Leased Parking Lots, which account for the majority of the Company's operated parking lots, depend on a business model of leasing land from landowners. If the real estate market becomes more active due to rising land prices or tax reforms, landowners may have increased options for effective land utilization, potentially making it more difficult to secure sites for parking lots. As a countermeasure, the Company owns Owned Parking Lots with a book value of ¥39,696 million, which carry no cancellation risk, and continuously monitors trends in land utilization.

Lease agreements for Leased Parking Lots generally have an initial term of two to three years, with automatic annual renewal thereafter, and if a large number of contracts are cancelled at the landowners' discretion, it could have a material impact on the Company's business results. As of the end of the fiscal year ending September 2025 (Reiwa 7), Leased Parking Lots had reached 42,459 parking spaces (2,265 properties), and the risk of business scale contraction in the event of concentrated cancellations is significant. As a countermeasure, the Company seeks to reduce this risk through regular communication with landowners.

While there are currently no legal regulations specific to the operation of pay parking lots, if related laws such as the Parking Lot Act, Road Traffic Act, and Garage Act are amended, this could affect the Company's business results. In particular, if legal amendments are made to restrict automobile use in urban areas, there is a risk that this could lead to a decrease in demand for parking lots in the Company's operating areas. As a countermeasure, the Company obtains information on amendments to relevant laws and regulations at an early stage, and thoroughly examines the impact and ensures compliance.

Funds for acquiring Owned Parking Lots are financed mainly through long-term borrowings from financial institutions, and total long-term borrowings as of the end of the fiscal year ending September 2025 (Reiwa 7) reached ¥24,215 million (of which ¥2,788 million is scheduled for repayment within one year). While most of the borrowings are procured at fixed interest rates with a 20-year borrowing period, sudden changes in financial conditions could affect the Company's financial position and business results. In addition, the equity ratio stood at 42.2% in the fiscal year ending September 2025, the lowest level in the past five fiscal years, indicating a rising trend in financial leverage.

Against total assets of ¥49,440 million, the Company holds land (including real estate trust beneficiary interests) with a book value of ¥39,747 million, with business-use land accounting for the majority of its assets. If it becomes necessary to record impairment losses on fixed assets due to future declines in land prices or profitability, this could have a material impact on the Company's financial position and business results. As a countermeasure, the Company avoids excessive dependence on specific parking demand at the time of land acquisition, and carefully verifies the basis for sales forecasts in cases where the acquisition price is high relative to indicators such as the rosenka (roadside land price).

The business-use land held by the Company is, in principle, premised on continuous ownership and business use; however, if land becomes unnecessary due to a decline in sales or a major change in business strategy and is sold, losses may arise depending on land price trends at the time, which could affect business results. Given that the Company holds land assets with a book value of ¥39,747 million, the financial impact in the event of a loss on sale would be significant. As a countermeasure, the Company seeks to reduce this risk through rigorous verification of the basis for sales forecasts at the time of acquisition.