November 13, 2020
To whom it may concern
Company name: Pressance Corporation Co., Ltd.
Representative:

Yutaka Doi, President and Representative Director(TSE First Section Code No. 3254)

Contact:

Kyosuke Ichikawa, Executive Officer, Deputy General Manager of Management Division andGeneral Manager of Accounting Department
TEL: +81-6-4793-1650

Notice Regarding the Issuance of New Shares through Third-Party Allotment

Pressance Corporation Co., Ltd. (“Company”) hereby announces that at the Board of Directors meeting held this day, theCompany approved a resolution to issue offered shares of the Company’s stock to be allotted to Open House Co., Ltd.
(“Open House”) through third-party allotment (the “Capital Increase through Third-Party Allotment”), as detailed below.
Please note that as described in “Notice Regarding Expression of Opinion Concerning the Tender Offer for Our Share
Certificates by Open House Co., Ltd. and Execution of Agreement Concerning Amendment, Etc. to Capital and Business
Alliance Agreement with Open House Co., Ltd.,” the Company also approved a resolution, at the Board of Director’s
meeting held this day: (i) to execute an agreement (the “Agreement”) with Open House to amend etc. the capital andbusiness alliance agreement (the “Current Capital and Business Alliance Agreement”; and the capital and business allianceunder the Current Capital and Business Alliance Agreement shall hereinafter be referred to as the “Current Capital andBusiness Alliance”) dated April 6, 2020, (the amended Capital and Business Alliance pursuant to the Agreement shallhereinafter be referred to as the “New Capital and Business Alliance”); and, under the Agreement, (ii) to express an opinion
supporting the tender offer (with the tender offer period commencing on November 16, 2020 and ending on January 14,
2021, the offer price of 1,850 yen, no lower limit of the number of shares to be purchased, and the upper limit of thenumber of shares to be purchased of 19,881,500 shares; the “Tender Offer”; and the Tender Offer and the Capital Increase
through Third-Party Allotment shall collectively be referred to as the “Transaction”) for common stock of the Company(the “Company’s Stock”) by Open House, and to leave the decision of whether to tender shares of stock in the Tender Offer
to the judgment of the Company’s shareholders.
1. Overview of Placement(1)

Paying period(2)

Number of new shares tobe issued

From January 15, 2021 to January 19, 2021
3,508,772 shares of common stock(3)

Issue price

1,425 yen per share (“Pay-in Amount”)(4)

Amount of proceeds

5,000,000,100 yen(5)Placement or allotment

Third-party allotment

method (Allottee)(3,508,772 shares to Open House)(6)(i) The Capital Increase through Third-Party Allotment is subject to the satisfaction
Other mattersof certain conditions precedent, such as the completion of the Tender Offer.
(ii) The Capital Increase through Third-Party Allotment is subject to notification
through a securities registration statement required by the Financial Instruments andExchange Act becoming effective.

12. Purpose of and Reasons for Placement
The Company was established in October 1997 in Chuo-ku, Osaka City, as Nikkei Prestige Co., Ltd. whose purpose
was to engage in the business of real estate sales.

In November 1998, the Company commenced the sale ofcondominiums under its own brand. Later, in April 2002, the Company changed its trade name to Pressance Corporation
Co., Ltd. In December 2007, the Company listed its stock on the Second Section of the Tokyo Stock Exchange Co., Ltd(the “Tokyo Stock Exchange”). In October 2013, the Company’s stock was designated to the First Section of the Tokyo
Stock Exchange.
The Company group consists of the Company and its 11 subsidiaries and 3 affiliates. The Company’s main businessis planning, developing, and selling one-room condominiums (i.e., condominiums for investment which are made available
for rent mainly to single-person households) and family condominiums (i.e., condominiums intended for use by families).
Since its foundation in October 1997, the Company has focused on the realization of a richer, more comfortable life forthose who live in its condominiums, by consistently sticking to highly convenient locations and by providing
condominiums with higher asset values. With its corporate philosophy of “Shine Light into a Corner”(Note) in mind, theCompany aims to provide condominiums by making use of its unique development capabilities as an independent
condominium developer handling a wide range of condominiums from urban- to family-type condominiums, and has
operated its business across extensive geographical areas from the Tokyo metropolitan area to Kyushu, having provided alarge number of condominiums particularly in the Kinki region and the Tokai-Chukyo region.
Furthermore, in recent years the Company: (i) has focused on further increase in its market share in the existing major
geographical markets, mainly in Osaka, Kyoto, Kobe, Nagoya, the Tokyo metropolitan area, and Okinawa; (ii) has further
strengthened its market position in the geographical markets newly entered by the Company, such as Hiroshima, Hakata,and other cities; and (iii) has promoted increases in the number of sales and in resulting proceeds, by increasing the numberof supplied products with high customer satisfaction in price and in location and other aspects of quality, by reinforcing thecompany structure in such aspects as site purchase and sales activities.
However, in December 2019 an unfortunate situation arose where the Company’s former President and Representative
Director Mr. Shinobu Yamagishi (“Mr. Shinobu Yamagishi”) was arrested for suspected embezzlement. Under thecircumstances, the Company, thinking that it must recover its trust promptly, had an opportunity in early March 2020 tohave a talk with Open House to which the Company was introduced through a financial institution. The Company
sympathized with the philosophy and strategy of Open House, which had achieved a stable growth in the same real estateindustry as the Company for more than two decades. Therefore, the Company started its discussions with Open House
towards the realization of the Current Capital and Business Alliance. During such discussions, the Company eventuallyentered into the Current Capital and Business Alliance Agreement with Open House on April 6, 2020, with the belief that
the Company would be able to contribute to the maximization of benefits for both the Company and Open House and theirrespective customers, shareholders, employees, business partners, and other stakeholders, by enhancing the Company’s
credit through alliance with Open House to promptly eliminate concerns of the Company’s customers, shareholders,
employees, business partners, and other stakeholders, and by realizing business synergies, such as mutual complement ofgeographical areas in which the two companies operate their respective businesses, and expansion of product lineups,
through combining the two companies’ respective management resources and management know-how.
(Note) “Shine Light into a Corner” means a philosophy that each one of us should do our very best in our own
environment and should shine a light around us by working for others as well, and that this will eventually shine alight on society as a whole and will lead to the realization of peace and happiness for people around the world.
On the other hand, the Open House group consists of Open House and 18 affiliated companies (excluding nonconsolidated subsidiaries and non-equity method affiliated companies), and is engaged mainly in a single-family homesrelated business, as well as condominiums, income-producing real estate, and other businesses.
The Open House group celebrated its 20th anniversary in the fiscal year ended September 2017, and formulated the “Hop
Step 5000” Mid-Term Business Plan aiming for further growth in the future of which final fiscal year is the fiscal year
ended September 2020. During the fiscal year ended September 2020, which was the final fiscal year of the Mid-TermBusiness Plan, the sales mainly in the single-family homes related business and the income-producing real estate business2continued to grow steadily until the third cumulative quarter consolidated period, and drove the growth of the businessperformance. The Open House group continues to acknowledges that: (a) strengthening the competitiveness of singlefamily homes related business, which is the core of its business; (b) building a business portfolio based on changes in theexternal environment; (c) reinforcing the management infrastructure that supports the growth of the company; and (d)acquiring new business opportunities related to changes in the environment caused by the spread of COVID-19 are issues
that need to be addressed, and has steadily been working toward them. In accordance with the changes of lifestyles inJapan, including women’s advancement in society since 2000 and an increase in the number of dual-income households,
more people tend to seek reasonably priced houses in highly convenient urban areas. Even amid the declining population,
the number of households in urban areas is expected to increase in the future. In light of these business conditions
surrounding the Open House group, the Open House group has, in order to continue to provide a stable and efficient supplyof affordable single-family homes in central Tokyo, enhanced its product competitiveness by conducting business
operations that integrate production and sales upon establishing a system that can complete all functions within the OpenHouse group, in addition to the brokerage function it has been offering from the time of its foundation, from purchase ofland, design to construction with respect to its core single-family homes related business. Furthermore, Open House’ssingle-family homes related business has steadily increased market share along with high profitability and high efficiency
by thoroughly implementing an “aggressive” marketing strategy that makes pinpointed approach to customers with a focus
on specific areas and by developing a dominant strategy that intensively supplies single-family homes in major urban areas.
In addition, currently, in the real estate industry to which Open House belongs, the rents have declined and theconditions in the real estate trading market have deteriorated due to the spread of COVID-19 around the world, including
Japan. Nevertheless, as new needs for housing arise from an increase in the number of hours families spend in theirhomes triggered by a change in environment due to the spread of COVID-19 and increase in teleworking opportunities, theOpen House group believes that the utility value of single-family homes will expand, and that this will be a new business
opportunity for the Open House group and that it will be its social mission to respond to such new needs. As noted above,even under an environment where COVID-19 is spreading, the business performance and the issues to be addressed under
the Mid-Term Business Plan for the fiscal year ended September 2020 have steadily progressed, driven by single-family
homes related business, the core business of Open House.
The Open House group has promoted M&A as its corporate policy as a part of its “Building of business portfolio basedon changes in the external environment” set forth in the Mid-Term Business Plan above, has aimed for growth of the entire
Open House group and on alliance basis that can realize business synergies, and has been actively engaged in M&A. For
example, Open House made Open House Architect Co., Ltd. (former Asakawa Home K.K.; “OHA”) its wholly-owned
subsidiary in January 2015, and made Hawk One Corporation (“Hawk One”) its wholly-owned subsidiary in October 2018,
respectively. Both OHA and Hawk One have been able to increase their revenues as a result of significant increase in thenumber of houses ordered and other factors ever since they became a consolidated subsidiary of Open House. OHA and
Hawk One have also achieved substantial growth in operating income as a result of lowering procurement cost andstreamlining procurement by realizing economies of scale as the Open House group; and furthermore, they have succeededin recruiting more personnel by mutually utilizing recruitment know-how and resources of the Open House group. As
such, Open House has steadily enhanced business performance and improved management effectiveness as the entire OpenHouse group through M&A.
In addition, Open House executed the Current Capital and Business Alliance Agreement (for a summary of the Current
Capital and Business Alliance, please refer to “Synergies Contemplated under the Current Capital and Business Alliance”
below) with the Company on April 6, 2020 in order to maximize the interests of both companies and their customers,
shareholders, employees, business partners, and stakeholders, aiming to build regional and product complementarity and byrealizing business synergies from combining management resources and management know-how of Open House and theCompany. Subsequently, Open House acquired 8,018,300 shares from Pacific and 12,602,800 shares from Mr. Shinobu
Yamagishi, a total of 20,621,100 shares of the Company’s Stock, through off-market trading at 1,100 yen per share on May
8, 2020 and acquired voting rights equivalent to 31.91% of total voting rights (as of March 31, 2020) of the Company, andmade the Company an equity-method affiliate of Open House.
3Since the execution of the Current Capital and Business Alliance Agreement, Open House and the Company have held
numerous discussions in order to realize the synergies initially contemplated in the Current Capital and Business AllianceAgreement, by mutually providing management know-how. Specifically, with respect to the planning, development, andsales of condominiums for investment that is being conducted by the Company in the Kinki and Chukyo regions, though it
was difficult to expand business in the Kanto region because it was not easy for the Company to acquire land on its own,
Open House and the Company concluded in the middle of June 2020 that, with the cooperation of Open House, which has
a strong real estate network in the Kanto region, the Company could actively expand business in the Kanto region.
In addition, with respect to the real estate fund business, after the execution of the Current Capital and Business
Alliance Agreement, Open House and the Company commenced discussions on the possibility of jointly establishing an
asset management company and supplying real estate properties, planned and developed by the two companies, as
investment products to institutional investors and the financial market.
On the other hand, in order for Open House and the Company to cooperate as described above and to further promote
the Current Capital and Business Alliance, it was recognized in the beginning of September 2020 that it is necessary tofurther strengthen the capital relationship because there are restrictions under laws, such as the Act on Prohibition of Private
Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947; as amended, the “Anti-monopoly Act”), which
imposes restrictions on cooperative activities between entities that conduct the same type of business, with respect tosmoothly promoting the integrated business activities of the two companies under the current capital relationship between
Open House and the Company.
Under such circumstances, in the beginning of September 2020, Open House exchanged a broad range of views with
the Company on prospects of the current business climate and financial condition of the Company and its relationship with
its financial institution partners, including financing, etc., in light of the significant changes in the external environment
caused by the COVID-19 pandemic. Accordingly, amid uncertainties in the outlook of the market condition due to the
COVID-19 pandemic, the Company’s current business environment is still affected by the arrest of the Company’s former
President and Representative Director in December 2019, causing the Company’s financial institutions to keep taking acautious attitude towards providing finance to the Company. In addition, the spread of COVID-19 infection has not yet
subsided, leaving a possibility that a further spread of the infection in the future may aggravate the effect of the COVID-19
pandemic. In addition, at the aforementioned meeting, Open House and the Company came to an understanding that, inorder to ensure the sustainability of the Company’s business operations, the acquisition of land for the smooth resumptionof new projects and commencement of new business activities by the Company is necessary, and in order to assure thestability of financing required thereby, credit enhancement through the strengthening of the capital relationship with OpenHouse, such as making the Company a consolidated subsidiary of Open House, is important. Open House and theCompany have come to hold a common understanding that, upon strengthening the capital relationship between the twocompanies, it would be extremely important to maintain to a certain extent the unique corporate culture and management
autonomy that the Company had thus far cultivated as an independent condominium developer in order to continuously
improve corporate value and shareholder value through the sustainable development of the Company; and that it was
desirable to keep the Company listed as a consolidated subsidiary of Open House, rather than making it a wholly owned
subsidiary of Open House, as deeper cooperation between the two companies while respecting the Company’s autonomous
management would be effective with respect to enhancing the corporate value of Open House and the Company. In
addition, as stated above, since Open House and the Company had previously recognized the necessity of further
promoting the capital and business alliance between Open House and the Company, and the necessity of further enhancing
the capital relation therefor, Open House and the Company had begun specific examinations and discussions regarding theconsolidation of the Company by Open House and further promotion of the Current Capital and Business Alliance from the
beginning of September 2020.
Thereafter, while Open House conducted the due diligence on the Company from the middle of September 2020 (suchdue diligence was completed in the middle of October 2020), Open House has repeatedly conducted verification of
methods for the consolidation of the Company and of the synergies between the two companies. During such verification,
Open House reaffirmed the current business climate of the Company, and in the middle of October 2020, Open House
recognized that making the Company a consolidated subsidiary of Open House by acquiring the Company’s Stock is4

necessary and effective (i) to enhance the credit and stabilize the financing of the Company, and (ii) to further enhance thefeasibility of the following synergies contemplated under the Current Capital and Business Alliance. As the specificmethod for acquiring the Company’s Stock, a method by way of a tender offer, that provides the general shareholders of theCompany with the opportunity to sell shares and that does not dilute the Company’s Stock was mainly considered;however, in light of the current business climate of the Company, it is also important to conduct capital financing in order toexpand the income scale and realize the continuous business growth of the Company, and Open House believes that OpenHouse’s direct investment of funds will support the Company’s financing and will show that Open House is willing tostrongly promote the New Capital and Business Alliance; thus, it would be desirable to conduct the Capital Increase
through Third-Party Allotment together with the Tender Offer, and strengthen the financial base of the Company by OpenHouse subscribing thereto. In such case, upon considering the existing shareholders, Open House recognized that it isnecessary to keep the scale of the Capital Increase through Third-Party Allotment at a level that can avoid the substantial
dilution of the Company’s Stock. Accordingly, in the middle of October 2020, Open House conveyed to the Company
that it is desirable to make the Company a consolidated subsidiary of Open House, and that, as a specific method to acquire
the Company’s Stock, it is desirable to combine the capital increase through third-party allotment with the tender offer, andcommenced to review and discuss the Transaction.
Synergies Contemplated under the Current Capital and Business Alliance(a) Regional complementarity(i)

Establishment of the Company’s business in the Kanto region
By utilizing Open House’s real estate network in the Kanto region, Open House aims to promote sales, in the Kanto

region, of the Company’s business of developing and selling investment condominiums, which has been conducted by theCompany mainly in the Kansai region, and to expand this business into the Kanto region.
(ii)

Establishment of Open House’s business in the Kansai region
By utilizing the Company’s real estate network in the Kansai region and receiving information within a scope that does

not compete the single-family homes sales business operated by the Company or its subsidiaries, Open House aims topromote sales, in the Kansai region, of its single-family homes business that it has been conducting mainly in the Kanto
region, and to expand this business into the Kansai region.
(iii)

Collaboration in other regions
In other regions as well, both companies will explore potential opportunities for collaboration and will consider offering

a wider range of products, including implementing joint projects.
(b) Product complementarity(i)

Expansion of product lineup
From the viewpoint of expanding the lineup of investment products, both companies will bring together investment

products, which they are capable of providing, such as investment condominiums, overseas real estate and other incomeproducing real estate, and provide a wide range of investment products to current and potential investors to respond to theirneeds; thereby aiming to further expand the businesses of both companies.

(ii) Promotion of product development
Through collaboration between the product development divisions of the two companies, we will promote productdevelopment that meets the various needs of customers (currency diversification, inheritance tax measures, expansion of
earnings, etc.) and flexibly provide products to customers by implementing joint projects, etc.
(c) Management and administration of lease properties and properties for sale
By sharing the Company’s business platform and know-how in the recurring revenue business, which the Company
5

obtained through lease management and property management of the properties it developed, Open House will provide
similar services for its sales properties and will aim to develop its own recurring revenue business.
(d) Cost reduction
The purchasing divisions of both companies will aim to reduce costs by standardizing parts and materials andincreasing the transaction volume.
Subsequently, Open House and the Company continued to review and discuss the Transaction, and in the middle of
October 2020, reaffirmed their understanding that ensuring the Company’s credit enhancement and the stabilization offinancing by making the Company a consolidated subsidiary of Open House through the Transaction, and at the same time,
deepening the cooperation between both companies while respecting the independence of the Company’s management,
will promote the capital and business alliance between the two companies and will contribute to the enhancement of thecorporate value of both companies.
With respect to the total subscription price of the Capital Increase through Third-Party Allotment, Open House has
reviewed the amount that is expected to be applied to the acquisition of land by the Company, while avoiding significant
dilution of the Company’s Stock, and with respect to the maximum number of shares to be purchased through the Tender
Offer, to the extent that (i) the ratio of share certificates, etc. that may be held by Open House after the Tender Offer will beless than two-thirds so as to protect Open House from the statutory obligation to purchase all tendered shares or to offer topurchase all classes of shares, and that (ii) the maximum number of shares to be purchased is able to be set, Open House set
a policy that the percentage of voting rights held by Open House after the Transaction will be around 65% at maximum,from the perspective of providing as many of the Company’s shareholders as possible with opportunities to sell their shares,
while respecting the Company’s independent management (Open House plans to maintain and respect the autonomy of theCompany’s management after the Tender Offer, and the number of officers, which officers and the roles of the officers
Open House will assign to the Company at the 24th Ordinary General Meeting of Shareholders of the Company to be heldin June 2021 (the “Ordinary General Meeting of Shareholders”) have not yet been decided and will be discussed in goodfaith with the Company after the settlement of the Tender Offer, but the discussions will be conducted on the premise that
two to three personnel will be assigned.). In the middle of October 2020, Open House proposed to the Company that (i)the aggregate amount to subscribe in the Capital Increase through Third-Party Allotment be 5 billion yen, (ii) thepercentage of voting rights of the Company held by Open House after the implementation of the Capital Increase through
Third-Party Allotment and the Tender Offer be around 65%, (iii) the Tender Offer Price be set at 1,750 yen, and (iv) theissue price of the Capital Increase through Third-Party Allotment be the price discounted by 10% against the closing priceof the Company’s Stock on the First Section of the Tokyo Stock Exchange on the business day prior to the date ofannouncement of the Transaction, as an amount that does not fall under “particularly favorable amount” as set forth in theJapan Securities Dealers Association’s “Guidelines Concerning Treatment of Capital Increase through Third-Party
Allotment” (dated April 1, 2010). In response, in late October 2020, the Company requested Open House to reexaminesuch proposal for the reason that the Company viewed that setting the Tender Offer Price at 1,750 yen would not be enoughto add a reasonable premium, as compared to the level of premiums in tender offer cases where the target company isintended to remain listed. Thereafter, following discussions with the Company, Open House made a final proposal andreached an agreement in early November 2020 providing that the Tender Offer Price will be set at 1,850 yen and the issue
price of the Capital Increase through Third-Party Allotment will be the price discounted by 10% against the closing price of
the Company’s Stock on the First Section of the Tokyo Stock Exchange on the business day prior to the date ofannouncement of the Transaction. Open House also approached Pacific and Mr. Shinobu Yamagishi in late September
2020 with the sale of the Company’s Stock, and made a proposal to them in early November 2020 to set the Tender Offer
Price at 1,750 yen. Thereafter, as part of continuing discussions, the Company made a subsequent proposal in the middleof November to set the Tender Offer Price at 1,850 yen. As a result, an agreement was reached at such price with Pacificand Mr. Shinobu Yamagishi in the middle of November 2020, with a tender offer application agreement being executedwith each of them as of November 13.
Following such discussions and negotiations, Open House resolved, at the Board of Directors meeting held on
6

November 13, 2020, to implement the Transaction in order to make the Company a consolidated subsidiary of Open House,and executed the Agreement with the Company on the same date.
As described above, the Company, since starting specific investigations and discussions in early September 2020 on
Open House’s proposed making of the Company its consolidated subsidiary, has carefully investigated into, and discussedwith Open House, the particulars of the Agreement, the necessity and terms of the Capital Increase through Third-Party
Allotment, and the tender offer price and other terms and conditions of the Tender Offer. As described above, OpenHouse aims to further increase the feasibility of synergies in (a) regional complementarity, (b) product complementarity, (c)management of properties for lease and sale, and (d) cost reduction, all of which were intended in the Current Capital andBusiness Alliance. In early September 2020, the Company considered that the above policy contemplated by Open House
was in line with the direction in which the Company intended to proceed, and that, in order for the Company to continue toincrease its corporate value and shareholder value on a mid- to long-term basis through continuing, as before, the provisionof condominiums with high asset value and the realization of a rich, comfortable life for those who live in them, it was also
necessary for the Company to further increase the feasibility of the above described synergies, and it was essential for theCompany to promote its business through building stronger capital and cooperative ties with Open House by becoming its
consolidated subsidiary instead of its equity-method affiliate, as the Company is at the moment.
In addition, in early September 2020, the Company considered that, while it was necessary for the Company to promote
its business through building stronger capital and cooperative ties with Open House, it was extremely important to maintain,
to a certain extent, the Company’s own corporate culture and autonomy in management that the Company has cultivatedthus far as an independent condominium developer, in order to continue to increase the corporate value and shareholder
value of the Company through its continuous development, and that, in strengthening the capital ties between the twocompanies, it was desirable to maintain the Company’s listed status by making the Company a consolidated subsidiary ofOpen House instead of its wholly-owned subsidiary, in order to allow the two companies to deepen cooperation between
them while respecting the Company’s autonomous management.
Furthermore, amid uncertainties in the outlook of the market condition due to the COVID-19 pandemic, the Company’s
current business environment is still affected by the arrest of the Company’s former President and Representative Director
in December 2019, causing the Company’s financial institutions to keep taking a cautious attitude towards providing
finance to the Company. In addition, the spread of COVID-19 infection has not yet subsided, leaving a possibility that afurther spread of the infection in the future may aggravate the effect of the COVID-19 pandemic. The Company realizes
that, in order to achieve increase in the size of its proceeds and to realize its continuous business growth under thesecircumstances, the Company needs to increase its funds for site acquisition by making financial arrangements of a capitalnature. The Company believes that making these arrangements will, at the same time, lead to a prompt improvement of
the financial institutions’ attitude towards financing the Company and to a realization of permanent business operations of
the Company, through increasing its own capital. Based on these facts and considerations, in late September 2020 OpenHouse and the Company reached the conclusion that, among specific methods for making the Company a consolidated
subsidiary of Open House, the most appropriate method is to combine the Tender Offer and the Capital Increase through
Third-Party Allotment, because allowing the Company to raise funds by implementing the Capital Increase through ThirdParty Allotment in addition to the Tender Offer by Open House will further increase the Company’s financial strength,
resulting in an increase in its management stability, and will also further improve the Company’s reputation among
financial institutions, allowing the Company to increase its fundraising capabilities and to achieve increase in the size of its
proceeds and to realize its continuous business growth by further strengthening purchase of sites for condominium
buildings, which will, in turn, contribute to increasing the corporate value and shareholder value of the Company.
The dilution of shares that will result from the Capital Increase through Third-Party Allotment and its effects on theexisting shareholders are as described in “(2) Basis for Judgment that the Number of Shares to be Issued and Extent of
Share Dilution are Reasonable” under “5. Reasonableness of Conditions of Issuance, Etc.” below.
3. Amount, Use and Planned Time of Expenditure of Proceeds
7(1) Amount of Proceeds(i)Total pay-in amount

5,000,000,100 yen(ii)

Rough estimate of expenses of issuance

35,000,000 yen(iii)

Rough estimate of net proceeds

4,965,000,100 yen(Note 1)

The rough estimate of expenses of issuance does not include consumption tax, etc.

(Note 2)The expenses of issuance include advisory fees, attorneys’ fees, registration-related expenses, and other expenses.

(2) Specific Use of Proceeds
The amount of rough estimate of net proceeds specified in “(1) Amount of Proceeds” above is planned to beappropriated to purchase of sites for condominiums. The specific use and scheduled time of disbursement are as follows.
Specific use

Amount (in millions of

Scheduled time ofyen)

disbursement

Purchase of sites for condominiums

4,965Jan. 2021 - Mar. 2022

Total

4,965

-

(Note) The funds will be deposited in bank or otherwise managed in a highly safe manner until disbursed.

A more detailed explanation of the use of the proceeds from through the Capital Increase through Third-Party Allotment
is provided below.
The Company group, whose main business is planning, developing, and selling one-room condominiums forinvestment and family-oriented condominiums, aims to further increase its market share in the Kinki region, the TokaiChukyo region, the Tokyo metropolitan area and Okinawa, where the Company group already has solid operating bases.
The Company group intends to appropriate the proceeds to the purchase of sites for condominiums, which is deemed by theCompany group to be one of the most important measures for the aforementioned aim.
In addition, a capital increase through the issuance of new shares will further increase the Company’s financial strength.
An improvement in capital adequacy ratio and other financial aspects will result in an increase in the Company’s
management stability, and will also further improve the Company’s reputation among financial institutions, allowing theCompany to increase its fundraising capabilities and to achieve increase in the size of its proceeds and to realize its
continuous business growth by further strengthening purchase of sites for condominiums.
The Company believes that appropriating the proceeds to the purchase of sites for condominiums as described above
will lead to a further increase in the corporate value and shareholder value of the Company group.
As the Company intends to utilize the proceeds in purchasing sites for condominiums in an agile manner, the Company
is unable to specify the timing at which the funds will be used as described above or the particulars of the property on
which the funds will be spent as described above.
4. Company’s View on Reasonableness of Use of Funds
As described in “(2) Specific Use of Proceeds” under “3. Amount, Use and Planned Time of Expenditure of Proceeds”
above, if the Capital Increase through Third-Party Allotment is implemented, the funds raised through it will beappropriated to the purchase of sites for condominiums. The Company judges that, as described in “2. Purpose of andReasons for Placement” above, allowing the Company to raise funds by implementing the Capital Increase through ThirdParty Allotment will further increase the Company’s financial strength, resulting in an increase in its management stability,
and will also further improve the Company’s reputation among financial institutions, allowing the Company to increase its
fundraising capabilities and to achieve increase in the size of its proceeds and to realize its continuous business growth byfurther strengthening purchase of sites for condominium buildings, which will, in turn, contribute to increasing thecorporate value and shareholder value of the Company. Consequently, it is the Company’s judgment that the use of funds
as described in “(2) Specific Use of Proceeds” under “3. Amount, Use and Planned Time of Expenditure of Proceeds”
above is reasonable.
85. Reasonableness of Conditions of Issuance, Etc.
(1) Basis for Calculating Pay-in Amount and Details Thereof
The Pay-in Amount has been set at 1,425 yen in consultation with Open House. The Pay-in Amount (1,425 yen)represents a 10% discount from the closing price (1,583 yen) of the Company’s Stock on the Tokyo Securities Exchange on
November 12, 2020, which is the business day immediately preceding the date on which the resolution for the Capital
Increase through Third-Party Allotment was approved at the Board of Directors meeting of the Company (November 13,2020).
The “Guidelines on Handling of Third-Party Allotment” (dated April 1, 2010) of the Japan Securities Dealers
Association (JSDA) require that when shares are issued through third-party allotment, the pay-in amount thereof, inprinciple, be at least 90% of the share price on the business day immediately preceding the date on which the issuer’s boardof directors adopts a resolution for the third-party allotment. Since the Pay-in Amount is in conformity with said
guidelines, the Company judges that the Pay-in Amount does not constitute a “particularly favorable amount” as set forth in
Article 199, paragraph 3 of the Companies Act.
Please note that Mr. Kotaro Wakatabi, who is an outside director of the Company and concurrently serves as a directorof Open House, did not participate in the deliberation or vote at the aforementioned Board of Directors meeting of theCompany or in discussions or negotiations with Open House in any capacity representing the Company, in order to avoid
any suspicion of conflict of interest.
Further, at the Company’s Board of Directors meeting held this day, the Audit and Supervisory Committee expressed its
opinion that the Pay-in Amount is in conformity with the JSDA’s “Guideline on Handling of Third-Party Allotment” (dated
April 1, 2010), is adequate and reasonable considering the Company’s most recent financial conditions and business results,
and thus does not constitute a “particularly favorable amount.”(2) Basis for Judgment that the Number of Shares to be Issued and Extent of Share Dilution are Reasonable
The number of new shares to be issued through the Capital Increase through Third-Party Allotment is 3,508,772 shares(35,087 units of voting rights), which corresponds to 5.37% of the total number of issued shares of the Company as of
September 30, 2020 (65,336,739 shares) and 5.42% of the total number of voting rights of the Company as of the samedate (647,724 units). As such, the Capital Increase through Third-Party Allotment will result in some share dilution.
However, as described in “(2) Specific Use of Proceeds” under “3. Amount, Use and Planned Time of Expenditure ofProceeds” above, the Company intends to appropriate the proceeds from the Capital Increase through Third-Party
Allotment to the purchase of sites for condominiums. In addition, as described in “2. Purpose of and Reasons forPlacement” above, the Company believes that allowing the Company to raise funds by implementing the Capital Increase
through Third-Party Allotment in addition to the Tender Offer by Open House will further increase the Company’s financial
strength, resulting in an increase in its management stability, and will also further improve the Company’s reputation
among financial institutions, allowing the Company to increase its fundraising capabilities and to achieve increase in thesize of its proceeds and to realize its continuous business growth by further strengthening purchase of sites forcondominium buildings, which will, in turn, contribute to increasing the corporate value and shareholder value of theCompany.
Consequently, it is the Company’s view that the Capital Increase through Third-Party Allotment will be carried out only
to the extent necessary to increase the corporate value of the Company through it, and that the Company’s becoming a
consolidated subsidiary of Open House through the Transaction will, over the medium-to-long term, lead to an increase in
the Company’s corporate value and shareholder value that will outstrip the dilution described above. Therefore, it is theCompany’s judgment that the number of shares issued and the extent of share dilution that will result from the Capital
Increase through Third-Party Allotment are reasonable.
6. Reasons for Choosing the Allottee(1) Overview of the Allottee
9

(i)

Name

Open House Co., Ltd.

(ii)

Address

2-4-1 Marunouchi, Chiyoda-ku, Tokyo(iii)

Representative’s namePresident and Representative Director: Masaaki Araiand title(iv)

Contents of business

Single-family homes related business, condominiums business, income-producing
real estate business, and other businesses(v)

Capital amount

19,741,000,000 yen (as of September 30, 2020)(vi)

Date of incorporation

November 22, 1996

(vii)

Number of outstanding
shares125,819,100 shares (as of September 30, 2020)(viii)

Fiscal year-end

September 30(ix)

Number of employees(Consolidated) 2,876 (as of September 30, 2020)(x)

Main customers

General individuals

(xi)
(xii)

Main banks

Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd., Resona Bank,
Limited, MUFG Bank, Ltd.

Major shareholders and

Masaaki Arai

43.38%

their stakes (as of MarchMSIP CLIENT SECURITIES

31, 2020)(Standing Proxy: Morgan Stanley MUFG Securities Co., Ltd.)

4.26%

The Master Trust Bank of Japan, Ltd. (trust account)

3.51%

Japan Trustee Services Bank, Ltd. (trust account)

3.01%

TAIYO FUND, L.P.
(Standing Proxy: MUFG Bank, Ltd.)

2.09%

Hitoshi Imamura(Standing Proxy: Mizuho Securities Co., Ltd.)

1.81%

Hiroyuki Hiratsuka

1.45%

BNYM TREATY DTT 15(Standing Proxy: MUFG Bank, Ltd.)

1.39%

SSBTC CLIENT OMNIBUS ACCOUNT(Standing Proxy: The Hongkong and Shanghai Banking Corporation

1.32%

Limited, Tokyo Branch)
TAIYO HANEI FUND, L.P.

1.15%

(Standing Proxy: MUFG Bank, Ltd.)(xiii)

Relationship between
Company and Allottee(as of September 30, 2020)
Number of shares in the Allottee

Capital relationship

Not applicableheld by the Company
Number of shares in the Company

20,621,100 shares

held by the Allottee
Personal relationshipTransactional
relationship
Related parties(xiv)

Mr. Kotaro Wakatabi, who is an outside director of the Company, is concurrently
serving as a director of Open House.
Open House’s consolidated subsidiary Open House Development Co., Ltd. andthe Company engage in transactions in which Open House Development Co., Ltd.
purchases land from the Company.
Since the Company is an equity-method affiliate of Open House, the Company isa related party of Open House.

Consolidated business results and consolidated financial conditions for the past three years

10Fiscal Year Ended Sep.
2018

Fiscal Year Ended Sep.
2019

Fiscal Year Ended Sep.
2020

Consolidated net assets

113,486 million yen

138,067 million yen

233,723 million yen

Consolidated total assets

393,367 million yen

445,904 million yen

569,066 million yen

960.22 yen

1,246.15 yen

1,855.88 yen

Consolidated revenue

390,735 million yen

540,376 million yen

575,951 million yen

Consolidated operating income

47,304 million yen

57,781 million yen

62,129 million yen

Consolidated ordinary income

46,052 million yen

54,928 million yen

77,357 million yen

Net income attributable toowners of the parent

31,806 million yen

39,407 million yen

59,491 million yen

285.08 yen

351.22 yen

525.36 yen

98.00 yen

126.00 yen

80.00 yen

Fiscal Year

Consolidated net assets per
share

Consolidated net income per
share
Dividends per share(Note 1) The numerical values representing the Allottee’s consolidated business results and consolidated financial conditions for the fiscal year ended September
2020 have not been audited by the accounting auditors.
(Note 2) Since Open House implemented a stock split effective as of October 1, 2019 at the rate of two-for-one share of common stock, the consolidated net assets
per share and the consolidated net income per share were calculated assuming that the stock split took place at the beginning of the fiscal year ended
September 2018.
(Note 3) Since Open House is listed on the First Section of the Tokyo Stock Exchange, the Company has confirmed from the statement in the “Basic Policy on the
Rejection of Antisocial Forces and Status of its Development,” which is contained in the Corporate Governance Report submitted by Open House to theTokyo Stock Exchange (last updated on December 20, 2019), that “the company group maintains a system for eliminating any relationships with
antisocial forces that may occur for any reason, under the philosophy that the company group has a social responsibility as a corporate citizen to strive toeliminate any relationships with antisocial forces that pose a threat to the order and safety of civil society, and to thereby contribute to the sounddevelopment of society as well as the company group’s business operations. The company group strives to increase its employees’ awareness about theelimination of relationships with antisocial forces by providing instructions about the readiness expected of a company to eliminate such relationships,
through setting forth the group’s policy for dealing with antisocial forces in its ‘Employee Code of Conduct,’ ‘Rules for Prevention of Intervention by
Antisocial Forces,’ etc. Further, the company group thoroughly ensures that its employees will strongly deal with any situation where they haveinevitably to face an antisocial force, by establishing the ‘Guidelines for Dealing with Antisocial Forces’” on the Tokyo Stock Exchange’s website. Thus,
the Company’s judgment is that neither Open House nor its officers have any ties to antisocial forces.

(2) Reason the Allottee Was Chosen
As described in “2. Purpose of and Reasons for Placement” above, the Company chose Open House as the allottee
because the Company concluded that ensuring enhancement of the Company’s credit standing and the stability of its
financing by making the Company a consolidated subsidiary of Open House through the Transaction is extremely effective
as a means to promote the capital and business alliance between the two companies and to contribute to the enhancement of
the corporate value of both companies.
(3) Allottee’s Share Ownership Policy
The Capital Increase through Third-Party Allotment will be carried out as part of the Consolidation by Open House, andthe Company has confirmed that Open House’s intended policy is to retain the shares acquired through the Capital Increase
through Third-Party Allotment over a long term. It should be noted that the Company intends to obtain a written pledge
securing Open House’s agreement that, in cases where Open House has assigned all or some of its shares of the Company’s
Stock within two years of the pay-in for the Capital Increase through Third-Party Allotment, Open House will make awritten report of the particulars to the Company, the Company will report such reported particulars to the Tokyo Stock
Exchange, and such reported particulars will be made available for public review.

11(4) Confirmation that the Allottee Has Assets Sufficient for Pay-In
With respect to Open House’s assets required to be paid in, the Company has confirmed that the Open House group hasa sufficient amount of cash and deposits (150,662,000,000 yen) from the Third Quarterly Report for the fiscal year ended
September 2020 submitted by Open House to the Director-General of the Kanto Local Finance Bureau (submitted August
14, 2020), and the Company recognizes no circumstances that would pose a concern that such finances might havesignificantly deteriorated thereafter. Accordingly, the Company judges that there are no issues in regard to the certainty ofOpen House’s pay-in for the Capital Increase through Third-Party Allotment.
7. Major Shareholders and Shareholding Ratios After Placement
Before Placement (as of September 30, 2020)

After Placement

Open House Co., Ltd.

31.56%

Open House Co., Ltd.

35.05%NOMURA PB NOMINEES TK1 LIMITED

10.97%NOMURA PB NOMINEES TK1 LIMITED

10.42%(Standing Proxy: Nomura Securities Co., Ltd.)(Standing Proxy: Nomura Securities Co.,
Ltd.)

K.K. Pacific

7.07%

K.K. Pacific

6.71%

The Master Trust Bank of Japan, Ltd. (trust

3.43%

The Master Trust Bank of Japan, Ltd. (trust

3.25%

account)

account)

NPBN-SHOKORO LIMITED

3.37%

NPBN-SHOKORO LIMITED(Standing Proxy: Nomura Securities Co., Ltd.)

3.19%(Standing Proxy: Nomura Securities Co.,Ltd.)

Morgan Stanley MUFG Securities Co., Ltd.

2.67%

Morgan Stanley MUFG Securities Co., Ltd.

2.53%

MSIP CLIENT SECURITIES

2.28%

MSIP CLIENT SECURITIES

2.17%(Standing Proxy: Morgan Stanley MUFG

(Standing Proxy: Morgan Stanley MUFG

Securities Co., Ltd.)

Securities Co., Ltd.)

Custody Bank of Japan, Ltd. (trust account)

2.15%

Custody Bank of Japan, Ltd. (trust account)

2.04%

NORTHERN TRUST GLOBAL SERVICES

1.40%

NORTHERN TRUST GLOBAL SERVICES

1.33%

SE, LUXEMBOURG RE LUDU RE:UCITS

SE, LUXEMBOURG RE LUDU RE:UCITS

CLIENTS 15.315 PCT NON TREATY

CLIENTS 15.315 PCT NON TREATYACCOUNTACCOUNT(Standing

Proxy:

The

Hongkong

and(Standing Proxy: The Hongkong andShanghai Banking Corporation Limited,

Shanghai Banking Corporation Limited,Tokyo Branch)

Tokyo Branch)

BNYM SA/NV FOR BNYM FOR BNY

1.31%

BNYM SA/NV FOR BNYM FOR BNYGCM CLIENT ACCOUNTS M LSCB RD

GCM CLIENT ACCOUNTS M LSCB RD(Standing Proxy: MUFG Bank, Ltd.)(Standing Proxy: MUFG Bank, Ltd.)(Note 3)

1.24%

Shareholding ratios are rounded off to the second decimal place.

8. Prospects Going Forward
With respect to the effects of the Transaction on the Company’s business performance, a detailed analysis is currently
underway. If it becomes necessary to revise results forecasts or if any matters that should be published occur, theCompany will promptly disclose the same.
9. Matters Concerning Procedures under the Code of Corporate Conduct
The Capital Increase through Third-Party Allotment is not subject to the procedure for the receipt of an opinion from an
independent third party or for confirmation of shareholder intent as set forth in Rule 432 of the Securities Listing
Regulations stipulated by the Tokyo Stock Exchange, because (i) the dilution rate is less than 25%, and (ii) it does not
involve any change in the controlling shareholders.
1210. Business Performance and Equity Finance for the Past Three Years(1) Business Performance for the Past Three Years (Consolidated)

Fiscal Year ended Mar.
2018

Fiscal Year ended Mar.
2019

Fiscal Year ended Mar.
2020

Consolidated revenue

134,059 million yen

160,580 million yen

224,011 million yen

Consolidated operating income

20,362 million yen

27,118 million yen

32,609 million yen

Consolidated ordinary income

19,858 million yen

26,531 million yen

31,985 million yen

13,757 million yen

18,296 million yen

21,892 million yen

Consolidated net income per share

232.58 yen

296.43 yen

347.45 yen

Dividends per share

29.40 yen

40.50 yen

39.00 yen

1,221.10 yen

1,493.54 yen

1,791.63 yen

Net income attributable to owners of
the parent

Consolidated net assets per share(2) Numbers of Outstanding Shares and Potential Shares as of the Present Time (as of September 30, 2020)
Ratio against the number of

Number of shares
Number of outstanding shares

outstanding shares

65,336,739

100.0%

1,913,500

2.9%

-

-

-

-

Number of potential shares at thecurrent conversion price (exercise
price)
Number of potential shares at thelowest conversion price (exercise
price)
Number of potential shares at thehighest conversion price (exercise
price)(3) Recent Share Prices
a. For the Last Three Years

Fiscal Year ended Mar.
2018

Fiscal Year ended Mar.
2019

Fiscal Year ended Mar.
2020

Opening price

1,345 yen

1,614 yen

1,384 yenHigh price

1,716 yen

1,871 yen

1,834 yen

Low price

1,212 yen

1,226 yen

859 yen

Closing price

1,616 yen

1,377 yen

953 yenb. For the Last Six Months(Note)June

July

AugustSeptember

OctoberNovemberOpening price

1,284 yen

1,189 yen

1,163 yen

1,382 yen

1,412 yen

1,445 yenHigh price

1,358 yen

1,329 yen

1,415 yen

1,456 yen

1,561yen

1,626 yen

Low price

1,120 yen

1,151 yen

1,160 yen

1,357 yen

1,390yen

1,441 yen

Closing price

1,185 yen

1,165 yen

1,397 yen

1,391 yen

1,422 yen

1,583 yen

The share prices for November are as of November 12, 2020.

c. Share Price on the Business Day Preceding the Issuance Resolution Date

13

November 12, 2020
Opening price1,600 yenHigh price1,600 yen

Low price

1,573 yen

Closing price

1,583 yen

(4) Equity Finance for the Last Three Years
Not applicable
11. Issuance Summary(1) Number of new shares to be

3,508,772 shares of common stock

issued(2) Issue price

1,425 yen per share(3) Amount of proceeds

5,000,000,100 yen(4) Capitalization amount

712.5 yen per share(5) Total capitalization amount

2,500,000,050 yen(6) Placement or allotment

Third-party allotment

method(7) Allottee

3,508,772 shares to Open House(8) Application period

January 14, 2021

(9) Payment period

From January 15, 2021 to January 19, 2021

(10) Special notes(i) The Capital Increase through Third-Party Allotment is subject to the satisfaction ofcertain conditions precedent, such as the completion of the Tender Offer.
(ii) The Capital Increase through Third-Party Allotment is subject to notification througha securities registration statement required by the Financial Instruments and Exchange
Act becoming effective.

12. Other Matters
It is expected that Open House will become the Company’s parent company as a result of the Transaction, but because
the number and percentage of voting rights held by Open House after this change will vary depending on the results of theTender Offer, the Company will announce these changes as soon as they are determined.

End

14