risks

Among the matters related to the state of business and financial affairs disclosed in the securities report, the principal risks recognized by management as having the potential to significantly impact the company’s financial position, operating results, and cash flow are as follows.
Please note that forward-looking statements in this document reflect the Company’s judgment as of the end of the current fiscal year.

Demand for the self-storage facilities we operate is susceptible to the impact of social conditions, including the economy and real estate market conditions, as well as industry-wide demand trends and legal regulations. As a result, rapid changes in the external environment could lead to a significant decline in demand, reduced occupancy rates, and an increase in rent delinquencies, which could adversely affect our operating results and financial position.

To counter these risks, the Company will regularly monitor economic trends and real estate market conditions, while at the same time mitigating risks by developing a market perspective tailored to each area, scale, use, and property characteristics, and by enhancing investment judgment and leasing capabilities.

In our self-storage business, we are advancing the opening of asset-based indoor “land-included storage” facilities, which involve purchasing land and constructing buildings, and our policy is to own real estate and expand our self-storage services nationwide. We also purchase leased land through land rights consolidation business and hold it as real estate for sale.

The acquisition and holding of real estate for these businesses tend to be susceptible to declines in land prices and other factors due to deteriorating real estate market conditions. Therefore, worsening domestic and international economic conditions in the future could impact our operating results and financial position due to reduced investment appetite for real estate, decreased real estate transactions, stricter lending standards for individuals, and significant declines in rental income.

To counter these risks, the Company will regularly monitor economic trends and real estate market conditions, while at the same time mitigating risks by carefully evaluating property selection based on location factors and surrounding market conditions to meet customer needs.

In the event of natural disasters, including a major earthquake – a future concern – as well as storms, floods, and other such occurrences, the value of the real estate properties managed and operated by the Company could be significantly impaired. Furthermore, depending on the affected region, there is a possibility of a substantial decline in occupancy rates and having to pay repair costs for restoration. These factors could impact the Company’s operating results and financial position.

To counter such risks, the Company is purchasing properties in locations less susceptible to damage. Should natural disasters or similar events occur, we will utilize the business continuity procedures established for each operation to ensure critical business functions are not interrupted or can be restored promptly even during a disaster.

Regarding our self-storage business and land rights consolidation businesses, since there are no patents or similar legal protections that can exclude competitors, and the business models are straightforward, there is a distinct possibility that competition could intensify due to other companies entering the market.

To counter this risk, the Company will strive to mitigate it by raising the profile of its “Hello Storage” brand and by developing new products and services to carve out its own niche and win new customers.

The number of outdoor container-type rental storage rooms we operate as part of our self-storage business, including those of our competitors, is rapidly increasing.

Since being notified by the Ministry of Land, Infrastructure, Transport and Tourism that building confirmation applications based on the Building Standards Act are required, we have generally applied for building confirmation for newly installed containers. However, if a further tightening of regulations makes it necessary for existing installed containers to comply with building standards, this could give rise to unforeseen costs and potentially impact our business performance and financial condition.

To counter this risk, the Company will prioritize measures focused on the safety of customers and local residents, while at the same time working to mitigate risks through efforts such as raising awareness about container safety and strengthening patrol and maintenance systems.