3252.T

Historical 4-Year Growth Highlights

• Since the current CEO took office 4 years ago, net income has grown 2.4x, assets under management (AUM) for Jinushi Private REIT has grown 1.9x, annual acquisition volume has grown 3.1x, the number of tenant counterparties has grown 1.8x, and dividend per share has grown 2.2x.
• The company achieved its 2025 medium-term plan net income target one year ahead of schedule, and Jinushi Private REIT is on track to hit its 300 billion yen AUM target within the 2026 December term as planned.

Core Growth Strategies

• The company maintains three core growth strategies unchanged: diversification of tenant industries, expansion of business operating areas, and scaling of the newly renamed JINUSHI Leaseback (formerly land sale & leaseback) offering.
• Acquisition growth is driven by two core pillars: new development projects, and JINUSHI Leaseback that addresses corporate real estate (CRE) needs. Social trends including Tokyo Stock Exchange reform, investor demands for improved balance sheet efficiency, and rising construction costs are acting as tailwinds accelerating acquisition volume.
• To scale JINUSHI Leaseback, the company launched a dedicated cross-functional team combining sales and finance to strengthen outreach to financial institutions, PE funds, and CFOs of operating companies, with the CEO personally leading C-level outreach to accelerate deal closing, given that CRE decisions rely heavily on top executive approval.
• For exit channel diversification, the company will continue to use Jinushi Private REIT as the core exit channel, supported by the Jinushi Fund (which handles medium- and long-term bottom land management to meet customized institutional investor demands) and Jinushi Club (which offers real estate financial products for retail investors), to serve diverse investor needs and support the new medium-term plan's 500 billion yen+ AUM target.

Operational Update

• The company has already received increasing inquiry volume for 2026 acquisitions. For new development, joint development with residential developers continues amid rising construction costs, with more tenants requesting Jinushi to retain land ownership. Multiple JINUSHI Leaseback deals are currently under negotiation.

• Fiscal 2026 (ending December 2026) Full-Year Guidance: The company projects 100 billion yen in total revenue, 12 billion yen in operating profit, 9 billion yen in ordinary profit, and 8 billion yen in net income, representing a sixth consecutive year of profit growth and planned revenue and profit increase. Most of 2026 profit will be recognized in the fourth quarter, with lower year-over-year progress expected in the first half compared to the prior year, though sale certainty centered on Jinushi REIT is high. The company has beaten its initial guidance by an average of 15.3% over the past 5 consecutive fiscal years, and is targeting to exceed the 8 billion yen net income guidance again in 2026.
• Dividend Guidance: Following the company's progressive dividend policy, the company plans to increase the annual dividend per share by 20 yen to 130 yen for 2026, continuing to raise dividends alongside profit growth.
• New Medium-Term Management Plan (2026-2028) Guidance: The plan sets targets of 10 billion yen+ net income and 500 billion yen+ AUM for the final 2028 fiscal year. Target reference metrics are approximately 15% ROE and approximately 30% equity ratio. The company will maintain its progressive dividend policy and continue raising dividends with profit growth.
• Acquisition Guidance: The company's core policy is to achieve stable, continuous annual acquisitions of over 100 billion yen, with a long-term goal of exceeding the prior year's acquisition volume every year. The 2025 142 billion yen acquisition level was driven by overlapping deal timing, so some annual fluctuation is expected, with the 100 billion yen+ annual base as the priority target.

The full consolidated financial results for the 2025 December term are as follows: total revenue was 76.3 billion yen, operating profit was 8.6 billion yen, ordinary profit was 7.1 billion yen, and net income was 7.3 billion yen. Net income hit an all-time high, beating the existing medium-term management plan's 7.0 billion yen net income target one year early. Total assets at the end of the term reached 146.3 billion yen, an increase of 30.9 billion yen compared to the end of the prior term, driven by an 8.6 billion yen increase in real estate for sale (to 79.2 billion yen) from accelerated property acquisitions, plus fixed asset recognition for properties acquired for the long-term rental business. The equity ratio was 34.1%, in line with the company's target financial discipline level of approximately 30%. For property acquisitions in 2025, there were 115 contracted properties with a total contracted value of 142 billion yen, far exceeding the initial annual acquisition target of 70 billion yen. Revenue contribution percentages for individual business segments are not provided in the transcript.

• Acquisition volume has inherent volatility from deal timing, so even if the second half of 2025 hit 50 billion yen per quarter, consistent quarterly 50 billion yen acquisition levels are not guaranteed for 2026.
• Rising long-term interest rates have created funding difficulties for some private REITs in the market, and Jinushi REIT is not immune to the impact of rising rates that could affect its acquisition capacity.
• Adding inflation/interest rate-linked clauses to existing long-term lease contracts faces implementation hurdles, and rapid company-wide rollout is not expected in the near term.
• Immediately reaching 100 billion yen annual acquisition capacity for Jinushi REIT is considered a high bar that cannot be achieved quickly, requiring gradual growth supported by other exit channels.

Q: How should we understand the acquisition target of securing 100 billion yen in annual acquisitions while targeting to exceed the prior year's 142 billion yen? What is the outlook?

A: The 142 billion yen in 2025 was the result of overlapping deal timing. While the company will continue aiming to exceed prior year acquisition volume, some fluctuation across years is expected. The core priority policy is to achieve stable, continuous annual acquisitions of over 100 billion yen. To deliver this, the company will continue implementing the three core strategies (diversifying tenant industries, expanding business areas, and scaling JINUSHI Leaseback), capitalize on social changes including TSE reform, investor demands, and rising construction costs, and work continuously to hit over 100 billion yen annually while outperforming the prior year's volume.

Q: Can we consider the 10 billion yen 2028 net income target achievable if the company delivers 100 billion yen in annual acquisitions for three consecutive years?

A: If the company achieves 100 billion yen in continuous annual acquisitions, 10 billion yen net income is achievable. Management has focused on delivering continuous net income growth historically, and is fully committed to achieving this target.

Q: With the launch of Jinushi Fund, exit channel risk has largely been resolved. From the perspective of recurring management fee revenue, expanding Jinushi REIT is critical. If the company hits 100 billion yen in annual acquisitions, would Jinushi REIT need to absorb a similar volume, and if not, why? Is 100 billion yen in annual acquisitions for Jinushi REIT difficult at present?

A: Jinushi REIT is a core strategic asset for the group, and currently has annual acquisition capacity of 50 billion to 60 billion yen. The REIT itself is strongly focused on expanding this capacity, and is currently prioritizing开拓 of pension investors seeking long-term stable returns, building on 10 consecutive years of successful capital increases and a strong track record. Beyond Jinushi REIT and Jinushi Fund, external sales are also available; even in the current rising rate environment, there is strong investor demand for the company's products at ~3% yields. Management will prioritize growing Jinushi REIT while also using external sales to deliver steady profit growth. Reaching 100 billion yen in annual acquisitions immediately is a high hurdle based on historical performance, so the company will grow gradually by leveraging Jinushi Fund and bridge functions rather than targeting 100 billion yen immediately.

Q: Based on the 100 billion yen 2026 revenue guidance, flow business profit margins appear to be declining. How should we interpret this potential margin decrease?

A: As the company has previously noted, JINUSHI Leaseback (which carves out land from existing facilities) has the benefit of starting ground rent revenue immediately upon acquisition, but has structurally lower profit margins compared to new development projects. Because of this dynamic, management does not focus excessively on individual project profit margins, and instead prioritizes growing total acquisition volume to deliver steady growth in total profit and net income each period.

Q: After the announcement of the Jinushi Fund concept last year, have you received inbound interest from other investors?

A: Yes, there is significant inbound interest. When the company first launched its bridge scheme with leasing companies, it started with 2 partners, and now has 7 to 8 leasing company partners. Management expects the same trajectory for Jinushi Fund: the first partnership is with Mitsubishi HC Capital Realty, but many investors have already expressed interest in partnering with Jinushi to build out the bottom land market that the company created, and active discussions are already ongoing for additional new Jinushi Fund formations.

Q: Rising long-term rates have left some private REITs struggling with funding. Is Jinushi REIT at risk, and what is the outlook for equity demand for Jinushi REIT? Do you need to take proactive countermeasures?

A: While management does acknowledge and monitor the impact of rising rates, only 4 to 5 out of 61 domestic private REITs are able to consistently raise 40 billion to 50 billion yen in new equity annually for acquisitions, and Jinushi REIT is one of them. Jinushi REIT has unique, unmatched strengths: it focuses exclusively on bottom land, has an LTV of ~30%, 300 billion yen in AUM, and ~4% property yields, built on 10 years of proven operating performance. Every year brings new investor participation, the REIT has growing reputation among investors, and referrals from existing investors are an increasing source of new capital. Market changes actually represent an opportunity for Jinushi REIT; management will continue steady, consistent outreach to investors, grow gradually, and target early achievement of the 500 billion yen AUM target.

Q: What is the current update on 2026 acquisitions?

A: The company is seeing growing inquiry volume. For new development, joint development with residential developers continues amid rising construction costs, and more tenants are requesting Jinushi to retain land ownership. Multiple JINUSHI Leaseback deals are currently in active discussion. The company will work to convert these opportunities into closed acquisitions, continue delivering over 100 billion yen in annual acquisitions, and aim to exceed 2025's volume.

Q: In 2025 results, is there a difference in profit margin between sales to Jinushi REIT and external sales?

A: Jinushi REIT holds a right of first offer on all the company's products, and management prioritizes growing Jinushi REIT to build recurring management fees, with the long-term goal of becoming Japan's largest private land owner unchanged. If terms or timing do not align in negotiations with Jinushi REIT, the company will sell externally. Historically, ~70% of sales go to Jinushi REIT and ~30% go to external buyers. While individual project margins vary, external sales do tend to have higher profit margins.

Q: How does the holding period (acquisition to exit) for JINUSHI Leaseback compare to traditional new development projects? Will it be longer, shorter, or similar?

A: JINUSHI Leaseback starts generating ground rent immediately upon acquisition, so it allows for faster profit recognition than new development. Management will assemble profit plans by combining sales to Jinushi REIT, Jinushi Fund, bridge schemes, and external sales based on overall acquisition volume and desired net income levels.

Q: Is there a possibility of adding inflation-linked clauses to your fixed-term land lease contracts with tenants, following the broader adoption of CPI-linked clauses in office rents? Can this be implemented this year?

A: The company has held internal discussions about introducing inflation/interest rate-linked clauses in response to rising rates. However, the core value proposition of the company's products is long-term stability and low-maintenance exposure, focused on delivering stable portfolio support for investors rather than chasing excessive upside or capital gains. This characteristic is well understood by the company's investor base, and the product remains attractive, with many investors increasing allocations for its stability in volatile markets. A small number of projects already have inflation clauses implemented, but full company-wide rollout still faces hurdles. JINUSHI Leaseback projects have more room to implement these clauses, and negotiations are already proceeding with this framework in mind.

Q: The market is concerned that you will need additional capital increases to achieve your 100 billion yen+ annual acquisition target and hit the new medium-term plan targets. Is additional capital increase required? What is the acceptable range for your equity ratio target?

A: Management is not planning any additional capital increases. The 2024 public capital increase was completed to strengthen the balance sheet in preparation for growing JINUSHI Leaseback acquisitions driven by TSE reform. While the acceleration of acquisitions was slightly delayed, the 2025 142 billion yen acquisition volume demonstrates that the capital from the 2024 increase has been fully deployed. The balance sheet is already sufficiently strong, and the Jinushi Fund concept was launched to support accelerated acquisitions. The 10 billion yen+ 2028 net income target is achievable without additional capital increases. For the equity ratio, a fluctuation of +/-5% around the 30% target is considered acceptable, but 30% remains the intentional appropriate level from a risk management perspective.

Q: How will quarterly profit look in 2026, given that most profit comes from sale gains that vary in timing across quarters? Is there a risk of profit shifting into 2027?

A: As disclosed, most 2026 profit will be recognized in the fourth quarter. Progress through the first half is expected to be lower year-over-year than the prior period, but sale certainty centered on Jinushi REIT is high so investors need not be concerned. The company has beaten initial guidance for 5 consecutive years, and is again targeting to deliver net income above the 8 billion yen guidance for 2026.

Q: 2025 had 58.1 billion yen in acquisitions in Q3 and 55.3 billion yen in Q4, so it looks like 50 billion yen per quarter is possible. Can we expect ~50 billion yen per quarter in 2026? The 142 billion yen 2025 acquisition and 100 billion yen 2026 sales guidance implies over 60 billion yen in carryover, which can be considered a store of future profit, correct?

A: The company remains focused on delivering over 100 billion yen in full-year 2026 acquisitions and exceeding 2025 volume. While the second half 2025 performance naturally leads to expectations of 50 billion yen per quarter, acquisition volume inherently has volatility from deal timing, so the full-year 100 billion yen+ target is the official guidance. The 142 billion yen in 2025 acquisitions includes both real estate for sale (to be sold in 12-18 months) and fixed assets for the long-term rental business, even the fixed asset acquisitions can be sold later as part of portfolio rebalancing, so yes, this can be correctly interpreted as a store of future profit that will contribute to earnings in coming periods.