J-LEASE CO.,LTD.

Business Details

This segment centers on Rent Guarantee (Residential) and Rent Guarantee (Business Use) in real estate leasing agreements, while also offering Medical Expense Guarantee and Child Support Guarantee. Based on guarantee entrustments from tenants, the segment provides credit enhancement to real estate owners and operators through subrogated payments. It also provides the Payment Collection Agency Service, forming a cumulative revenue structure comprising continuing guarantee fees, subrogated payment fees, and payment collection agency fees. In FY2026 (ending March 2026), this core business accounted for ¥19,319 million of the Group's total revenue of ¥21,574 million (approximately 89.5%).

Recent Overview

Revenue up 26.7% on K-net consolidation, Greater Tokyo sales strengthening, and branch expansion; margin declined

In FY2026 (ending March 2026), the Guarantee Business achieved revenue of ¥19,319 million (up 26.7% year on year), driven by the revenue contribution from the consolidation of K-net Co., Ltd. (April 2025), strengthened sales activities in the Greater Tokyo area, and favorable trends in both residential and business-use rent guarantees. However, operating profit rose only to ¥3,535 million (up 7.9% year on year), as goodwill amortization of ¥147 million arising from the K-net acquisition, increased administrative fees payable to real estate companies amid intensifying competition, and an increase in advances for subrogated payments (¥8,577 million, up ¥1,705 million year on year) pushed the operating margin down from 21.5% in the prior period to 18.3%. New branches were opened in Mie, Yamagata, Aomori, and Akita, expanding the network to cover 41 prefectures.

Key Products

Growth Drivers

• Increased preference for renting amid rising housing prices and resilient demand for rental housing
• An increasing trend in the use of rent guarantees for business-use properties (offices, tenant spaces, etc.)
• Sales expansion through the deployment of personnel, talent development, and external alliances in the Greater Tokyo area
• Expansion of the customer base and scale in the Kinki region and the incorporation of building-wide guarantee services through the consolidation of K-net Co., Ltd. as a subsidiary (April 2025)
• Expansion to a 41-prefecture network and deepening of region-focused services through new branch openings (Mie, Yamagata, Aomori, Akita)
• Expansion of new business for Medical Expense Guarantee leveraging a nationwide store network
• Increase in guarantee fee revenue accompanying rent increases (guarantee fees are linked to rent levels)
• Further expansion of market share in the Guarantee Business through the equity-method application of Wellon Solutions

Risks

• Increasing pressure on administrative fees payable to real estate companies (cost of sales) due to intensifying competition
• Risk of increased advances for subrogated payments and bad debt-related expenses accompanying the expansion of contract volume and rising prices
• Profit pressure from increasing goodwill amortization expenses (¥147 million per period) associated with M&A (K-net, etc.)
• Fund management and receivables collection risk associated with the growing balance of advances for subrogated payments (¥8,577 million)
• Risk that revenue recognized from guarantee fee revenue, which depends on estimates of the average guarantee period, may fluctuate upon changes in assumptions
• The impact of rising prices and interest rates on personal consumption and tenants' ability to pay
• Risk of increased financial leverage from M&A-related borrowings, as the ratio of cash flow to interest-bearing debt deteriorated significantly from 1.2 years in the prior period to 6.2 years