8887.T

• Overall Financial Performance

  • For the 9-month cumulative period ended Q3 FY2026 May Term, SYLA HD reported 27.741 billion yen in total consolidated revenue, 2.376 billion yen in operating profit, 1.539 billion yen in ordinary profit, and 6.373 billion yen in net profit attributable to parent shareholders. Progress against full-year guidance is 80.4% for revenue, 98.5% for operating profit, and 114% for ordinary profit, with ordinary profit already exceeding the full-year target. The sale of the entire Kawasaki II PJ building was the main contributor to stronger-than-expected earnings.
  • The completed merger with SYLA Technologies has centralized management of management resources and optimized capital allocation; the company's share buyback program has been completed, with 11% of total outstanding shares acquired as of the quarter end.
  • Key balance sheet metrics: Total assets of 66.729 billion yen, net assets of 18.601 billion yen, equity ratio of 26.6%, ROE of 35.2% (driven largely by merger effects), and total shareholder return including buybacks reached 97.1% for the period.

• Strategic Focus & Geographic Concentration

  • Post-merger integration with Kumika has allowed the company to focus development on the Tokyo metropolitan area, specifically Tokyo 23 wards, central Kawasaki, central Yokohama, and southern Saitama, exiting broader national expansion to prioritize high-demand core markets.
  • The company pursues a mixed business model: developing investment real estate for sale or holding to generate stable

• Full-year guidance is maintained at existing levels with no upward revision despite overachievement on profit targets through 9 months, due to uncertainty from the Hormuz Strait conflict. Management will issue an update once full transaction completion and clear visibility on supply chain impacts are confirmed.
  • The company expects to reach 113 managed buildings by the end of FY2026, with stable base (rock) revenue from rent exceeding 20 billion yen, covering more than 60% of annual selling, general and administrative costs.
  • The pipeline of completed projects for FY2027 and beyond is fully secured, with all delivery and sale contracts already signed for projects through next fiscal year.
  • Management updated long-term target metrics: ROA increased by 1% and ROE increased by 5% from previous targets, with management confident these updated targets are achievable under current market conditions.

1. 総合不動産事業 (Comprehensive Real Estate Business): 23.921 billion yen in revenue, 3.913 billion yen in segment profit, contributing 86.2% of total cumulative consolidated revenue for the 9-month period. 2. 不動産管理事業 (Real Estate Management Business): 2.05 billion yen in revenue, 0.684 billion yen in segment profit, contributing 7.4% of total cumulative consolidated revenue. As of the end of Q3, the segment manages 109 buildings and 4,064 rental units, with an average rent increase rate of 6.79%. 3. 建設事業 (Construction Business): No positive segment profit reported (net negative for the period). The segment currently has 6 active construction sites, most of which are for in-house projects, with only 2 third-party projects accepted. 4. 再生可能エネルギー事業 (Renewable Energy Business): No specific absolute financials disclosed. The first utility-scale storage facility is scheduled to start operation in August 2026, with an expected base yield of ~20% on investment, with upside potential reaching 50% in current market conditions.

• The Hormuz Strait geopolitical conflict poses long-term supply chain risks for the entire Japanese construction and real estate development industry, as many building materials and interior components are derived from crude oil. Most of SYLA's current and next fiscal year projects are already fully contracted, so no material impact is expected through the first half of FY2027 Q3, but there is risk of interior work completion delays for late FY2026 projects if supply issues persist.
  • If the conflict results in a prolonged shutdown of crude oil supplies, overall construction costs could rise, and the ability to fully offset increased costs with higher rent and property prices is not guaranteed. The company estimates that only ~14% of total project costs are directly exposed to crude price volatility, so any impact is expected to be manageable, but full visibility on long-term cost trends is not available.
  • Geopolitical uncertainty makes long-term project planning difficult, so the company has paused new land acquisition for future projects pending clearer market conditions. Project delivery timelines from land acquisition to completion (average 1 year and 8 months) could be extended if supply chain disruptions persist.
  • Interest rate rises have limited negative impact, as management already priced in up to a 1% rate increase in projections, and actual increases through Q3 have been only ~0.25%. Changes to inheritance tax rules have no material impact, as the company has very little sales focused on inheritance tax planning.

Q: What impact will the Hormuz Strait conflict and related crude supply disruptions have on SYLA's business? Why has the company not upgraded full-year guidance despite already exceeding ordinary profit targets? / A: Management confirms long-term industry-wide impact is unavoidable, but there is no direct impact on FY2026 results as all projects are already completed or contracted. There is limited risk of delayed completion for the final quarter of FY2026 due to potential interior material shortages, and no impact is expected through the first half of next fiscal year. Management holds to its long-standing policy of only updating guidance when 100% certainty on outcomes can be assured, so no upward guidance change will be made until all transactions are completed and geopolitical risks become clearer. Management also confirmed there are no plans for large special losses in Q4.

Q: What is the strategic purpose of the detailed IR disclosure for the Koyasu Project sale, and how does this new project structure work? / A: Traditional real estate development requires 2+ years from land purchase to sale, but the Koyasu Project structure allows SYLA to shorten inventory turnover by accepting contracted land with already-approved building permits, handling design and construction, and offering equity co-investment, asset management, and post-completion property management for clients. This structure reduces project timelines, locks in profits early, improves ROIC, and allows SYLA to act as an infrastructure provider for other developers facing construction shortages, while earning profits across construction, development, and management.

Q: How does the productivity improvement tax policy affect the company's grid storage battery business, and what is the company's strategic direction for this new segment? / A: The tax policy provides very positive benefits: it allows for accelerated depreciation, and tax benefits can be claimed over a longer period, increasing project profit margins above initial forecasts. The policy confirms strong government support for grid storage investment amid tight energy supply. The company will continue to pursue a balanced strategy, both building and selling storage facilities and retaining ownership of projects to generate long-term yield. Management reports strong inbound interest from investors and large corporates to partner on storage projects and will actively expand the segment.

Q: What is the current dynamic for supply and demand of investment condominiums in the Tokyo area, and how does this benefit SYLA? / A: Tokyo's population continues to grow by more than 60,000 people annually, but supply of single-person condominiums has fallen to 30-year lows, driven by historical zoning restrictions on small-unit development. This has created a very tight supply-demand balance that continues to push rents higher. SYLA's portfolio of 300 billion yen in owned fixed assets benefits directly from rising rents, which is absorbing most current construction cost increases, with no material impact on project gross margins.