RISE Inc.

The real estate business is highly susceptible to economic conditions and the real estate market. In periods of unstable economic trends, there is a risk that commercial facility tenants' business operations may be disrupted, leading to requests for rent reductions. In addition, the spread of new lifestyle norms may reduce occupancy rates at leased properties, which could adversely affect the Group's business performance. No specific countermeasures are disclosed, indicating a structure with a high degree of dependence on the external environment.

There is no guarantee that lease contracts will be renewed upon expiration, and cases may arise in which contracts are terminated even during their term. Should such circumstances occur, this would lead directly to a decrease in leasing business revenue and affect the Group's business performance. Managing the contract retention rate is important for maintaining a stable revenue base.

The Group owns real estate used for the leasing business, and there is a risk that damage to properties caused by large-scale earthquakes, typhoons, or other natural disasters could make it difficult to continue the leasing business. While the Group implements certain risk mitigation measures such as regular maintenance inspections and the procurement of casualty insurance, the impact on business performance and financial condition from unforeseen large-scale disasters remains.

While it is currently disclosed that there are no ongoing litigation matters that would materially affect business performance, there is a possibility that lawsuits could be filed by business partners, customers, or residents near owned properties in the course of future business activities. Should litigation arise, this could result in costs incurred until resolution and adverse effects on business performance. At present, this is managed as a potential risk.

Promoting the Real Estate Management business requires specialized personnel with know-how in facility maintenance management and sales activities to improve occupancy rates. Amid an expected turnover and increase in managed properties, there is a risk that business promotion could be hindered if the necessary personnel cannot be secured. While the Group states that it is working to develop diverse human resources, details of specific recruitment and retention measures are not disclosed.

The Group's real estate business is subject to laws and regulations such as the National Land Use Planning Act, the Building Lots and Buildings Transaction Business Act, the Building Standards Act, and the City Planning Act. If these regulations are amended or abolished, or if new legal regulations are introduced, constraints on business operations may increase, which could affect the Group's business performance and financial condition. Continuous monitoring of regulatory trends is required.