Overview of Jaylease <7187> Business.

1. Rent guarantee debt. Rent guarantee debt is a mechanism where a specialized guarantee company takes on the role that a joint guarantor has played in the rental of residences, shops, or offices to ensure a smooth contractual relationship among the three parties of the prospective occupant, real estate company, and real estate owner. For the prospective occupant, the benefit is that they are able to enter into a lease agreement even if they cannot secure a joint guarantor, and if payment is delayed or missed, they can maintain a good relationship with the landlord through smooth reimbursement. Additionally, in the rental guarantee for business purposes, initial costs can be reduced by lowering the security deposit. For the real estate owner, not only does it provide rental guarantee if defaults occur, but it also allows difficult-to-rent units to be rented out, thus reducing the vacancy rate. Furthermore, for the real estate company, an increase in brokerage fees and revenue from administrative fees can be expected. With the benefits for all three parties, rent guarantee debt is a service that matches the needs of the times.

2. Overview of the rent guarantee debt market. According to the company, the size of the residential rental guarantee market is estimated to be approximately 224 billion yen, with a guarantee utilization rate of around 75%. The utilization rate of rental guarantee debt companies in rental contracts has increased significantly over the past decade, from 39% in 2010 (Ministry of Land, Infrastructure, Transport and Tourism). The reason for this is the amended Civil Code (Creditors' Rights) implemented in April 2020. Under this amendment, the maximum amount guaranteed by joint guarantors is set, which has lowered the collateral value of joint guarantors. In addition, due to the COVID-19 pandemic, awareness of rent delinquency has increased, resulting in an increase in real estate owners who require the utilization of rental guarantee debt companies. In addition, although the size of the business rental guarantee market is relatively small at 31 billion yen, high growth can be expected as the utilization rate of the guarantee is approximately 21%. The company is a major player with a 3.4% share in the residential market with around 200 competitors and a 10.3% share in the business market with around 20 competitors, and its strong expertise in both markets is a characteristic.

Jaylease <7187>'s Business Overview

According to the company, the size of the residential rent guarantee market is 224 billion yen, with an estimated guarantee utilization rate of about 75%. It can be seen that the utilization rate of the rent obligation guarantee company in the rental contract has increased significantly in the past decade, as it was 39% in 2010 (Ministry of Land, Infrastructure, Transport and Tourism). The reason for this is the revised Civil Code (Debt Law) enacted in April 2020. Under this revision, the maximum amount (upper limit) of the amount guaranteed by the joint guarantor is set, which reduces the collateral value of the joint guarantor. In addition, there has been an increase in awareness of rent delinquency due to the spread of COVID-19, which has led to an increase in real estate owners who require the use of rent obligation guarantee companies. It should be noted that the size of the business rent guarantee market is relatively small at 31 billion yen, but high growth is expected due to its guarantee utilization rate of around 21%. The company is a leading player in the residential market, where about 200 companies compete for a 3.4% share, and in the business market, where about 20 companies compete for a 10.3% share. It is characterized by having advanced expertise in both markets and conducting business expansion.

(Written by FISCO Guest Analyst, Hideo Kakuta)