■Business Overview and Features

1. Business Overview

The company group operates four services as an Asset Management platform business, categorized by investment entities, investment amounts, and investment targets: 'CREAL,' 'CREAL PRO,' 'CREAL PB,' and QITABANKUAI. While pursuing business concepts aligned with the investment and operation policies of target customers for each service, the operation is unified with the aim of creating synergies between services, hence it is considered a single segment for business purposes. The revenue composition by service for the second quarter of the fiscal year ending March 2025 shows that 'CREAL' accounts for 34.8%, 'CREAL PRO' for 46.2%, 'CREAL PB' for 18.1%, and QITABANKUAI for 0.9%.

2. Characteristics of Each Service

(1) 'CREAL'

'CREAL' is an online market service for Real Estate Investment funds aimed at individual investors, utilizing crowdfunding, allowing for investment from 0.01 million yen. It is suitable for investments intended to utilize surplus funds in the short term (within 5 years). As of the end of February 2024, the average expected yield of the funds organized and operated by CRIAL <2998> is 4.3%, with no principal loss as of the end of November 2024. After the formal adoption of the 'Asset Income Doubling Plan' under the Kishida administration in November 2022, the new NISA scheme will commence in January 2024, lowering the barriers to individual investment. There are few asset management products that can achieve a yield of around 4-5% in a short term and based in yen, indicating that the market environment is favorable. This service is distinguished by the fact that it is operated by Asset Management professionals, enabling investments in a variety of properties from ESG Real Estate such as nurseries, residences, hotels, and offices, which is a significant differentiator from competitors. The gross profit of 'CREAL' is based on GMV × take rate *, forming a revenue structure where the growth of GMV greatly contributes to the profit expansion of this service.

* The ratio of revenue earned by the operating company from GMV.

'CREAL' is a fund that invests in specific properties, which gets established and starts operation when a certain amount of investment capital is raised within the fundraising period. Rental income earned from operations is distributed to investors in proportion to their investment amounts, and upon the completion of operations, the invested principal is returned through property sales. 'CREAL' sets a predetermined expected Dividends yield as a return target, allowing investors to invest from 0.01 million yen in various real estate properties, with the entire process from investor registration to execution being completed online. The management of properties post-investment, operations, and the selling process are entrusted to the company, which has advanced real estate investment know-how and IT technology, allowing investors to manage Real Estate Investment funds without the need for cumbersome tasks, time, or extensive knowledge.

"CREAL" places great importance on "transparency of information," featuring details such as fundraising amounts, expected returns (breakdown of income and capital gains), anticipated management duration, expected initial Dividends date, and detailed information about the target real estate on the product information page, along with interview videos with the operators. Furthermore, not only does it clearly state the overview and location of the target real estate, but it also discloses investment risks associated with the project and their accompanying measures, as well as reports from experts such as real estate price survey reports and engineering reports. Additionally, it provides an overview of the property operators, the area where the investment is located, macro Market Overview conditions, examples of similar properties for rental and sale as references for investment returns, and offers a fundraising and usage overview related to the fund, as well as a simulation function for investment returns.

"CREAL" has been focusing on creating investment projects in the ESG real estate sector, including kindergartens, schools, and local revitalization areas, which have been considered difficult for funding since the service's inception. ESG real estate has a small investment scale and lacks a track record as an asset management target, making it less appealing to Institutions until now. The company uses crowdfunding via "CREAL" as a pipeline Interface Inc for supplying investment funds from individual investors, successfully balancing social impact and investment product characteristics.

The investment record in ESG real estate can be said to clearly express the company's management policy, which emphasizes SDGs. As an ESG company, it has been successful in developing its main services under this concept while securing broad support from various investors, including individuals, along with good operational performance, which our company sees as rare in the Asset Management support sector. This is one of the characteristics of the company and "CREAL."

Additionally, from the perspective of investor protection, the investment shares are divided into a priority portion and a subordinated portion funded by the company. Investors in "CREAL" invest in the priority portion, establishing a system where they receive Dividends and other returns preferentially over the company's subordinated portion (approximately 5%). This structure means that if the expected profits do not materialize, the company bears the risk, limited to the subordinated investment amount. The company's commitment to invest alongside client investors in the subordinated portion enhances the certainty of Dividends on the priority portion and principal repayments, fostering trust and confidence in the company among client investors.

A notable point about "CREAL's" movements is the capital and business alliance established with SBI Holdings, which has led to a significant increase in client referrals from SBI Securities starting in the fiscal year ending March 2024, becoming a driving force behind "CREAL's" rapid growth. Additionally, there has been active introductions of properties to SBI Money Plaza's clients in the real estate sales sector.

(Writer: FISCO analyst Tomoichi Murase)