Latest / Investor Exchange / From Food Processing To Japanese Real Estate – Yamada Green Resources Q2 FY2026

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From Food Processing To Japanese Real Estate – Yamada Green Resources Q2 FY2026 · Investor Exchange

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Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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Welcome back to the Deep Dive. So today we are digging into a company called
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Yamada Green Resources. Yeah.
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And I have to say, when you hear a name like that, you make certain assumptions.
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Right. Yeah. You definitely think agriculture. Exactly. You think sustainability.
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You think farming, basically. Naturally.
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And I mean, historically, you would have been totally right about that.
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This is a company that built its entire identity on things like She Talk mushrooms and bamboo shoots.
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Right. The food business. Yeah. But then I opened their latest financial report this morning.
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Specifically, the unaudited, condensed, consolidated financial statements for
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the six months ended December 31st, 2025.
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The February 2026 report. Yeah, that one. And honestly, looking through it,
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I felt like I was reading a document for a completely different entity.
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I'm scanning the pages looking for crop yields or, I don't know, harvest data.
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And instead, I'm seeing rental income and investment properties.
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It is a bit of a shock to the system. It really is.
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So, just to set the baseline for you listening before we get into the heavy
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numbers, are we even looking at a food company anymore? The short answer is no.
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Absolutely not. If you are tuning in today for an update on fungi cultivation,
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you are going to be pretty disappointed.
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So the mushrooms are officially gone. Gone.
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The document confirms a total identity shift.
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Their food processing business effectively ceased operations back in June 2024.
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Wow. Okay, so what are they now? They are now an investment holding company.
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The green resources part of their name is essentially just a legacy artifact at this point.
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Our mission today is to analyze them as what they actually are, a landlord.
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A landlord, got it. Exactly. And specifically a landlord with a bit of a split personality right now.
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Half of their operation is based
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in Fuzhou, China, and the other half is aggressively expanding into Japan.
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Okay, so that sets the scene for us. We're looking at a property developer bird
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disguised as a mushroom farm.
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And we want to look at this strictly from an investor's perspective today.
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Because, you know, on the surface, this pivot sounds kind of exciting.
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Real estate in Japan definitely has a ring to it.
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It does. But then I look at the actual bottom line in this report,
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and I see a massive drop in net profit.
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So my big question for you is, is this pivot actually paying off?
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Or are they just trading one set of agricultural problems for a new set of real estate problems?
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That is exactly the right question to ask. And to answer it,
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we really have to break down the quality of the money coming in,
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not just the raw quantity.
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Let's start with the top line then. Revenue. For the six months ended December
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31, 2025, they brought in 7.936 million renminbi.
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Oh, and we should note the reporting currency here is RMB. Right, RMB.
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And that revenue figure is, well, it's fine. Is it just fine?
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Because it's basically slack compared to last year.
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It is up like 0.5% from 7.894 million. If I am an investor and you tell me you
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were doing this massive strategic overhaul, entering brand new markets,
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taking on debt, shouldn't I expect to see some actual top line growth?
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You would certainly hope so. But you have to peel back the layers and look at
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the composition of that revenue.
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The revenue from their legacy properties in the People's Republic of China actually dropped.
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Yeah, it went from about 7.74 million down to 7.29 million RMB.
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That tells you the PRC market is actively shrinking for them.
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OK, so the core business over there is bleeding a little bit. Exactly.
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And here's the interesting part. For the first time, we see a brand new line item appear.
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Japan revenue. Okay, how much? It came in at 486,000 RMB.
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Less than half a million RMB. I mean, that is barely a blip on the radar.
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It is small, yes. But it is their first real proof of concept.
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Last year, that specific number was zero. So while the total revenue is basically
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flat, the actual source of the revenue is shifting.
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They're replacing Chinese revenue with Japanese revenue. Precisely.
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They are transitioning from a struggling leasing market in China to a brand
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new market in Japan. They're essentially trying to plug the leak in the boat with Japanese yen.
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All right, let's talk about the profitability of that revenue,
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because this was the one number in the entire report that actually caught my eye in a good way.
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Their gross profit increased by almost 16% to 5.79 million RMB. Which is a solid jump.
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And the gross profit margin hit 73%, up from 63.3% last year.
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Now, play devil's advocate for a second. A 73% gross margin is software company territory.
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That is not normal for real estate. How does a landlord get margins that high?
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Did they just aggressively jack up the rent?
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Actually, no, they didn't. Remember, their overall China revenue dropped,
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so they definitely didn't increase prices there.
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This margin expansion is almost entirely driven by the cost side of the equation.
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So they just spent less? Exactly.
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The report explicitly states they had lower property costs and lower government
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taxes incurred during the specific six-month period.
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So they didn't actually make more money from their tenants. They just spent
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less keeping the lights on. Correct.
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It is a story of efficiency, not pricing power. And while that obviously looks
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fantastic on a gross profit line, it doesn't necessarily mean the underlying
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rental business is suddenly booming.
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It just means their tax and property bill was lighter this quarter.
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And honestly, that becomes painfully obvious when you scroll further down the P&L to the bottom line.
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Because if your gross margins are up that much, your net profit should be soaring.
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But it isn't. It absolutely crashed. It was a tough quarter for the bottom line.
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Net profit attributable to owners plunged to just 626,000 RMB.
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That is down from 1.858 million the previous year.
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That's a drop of roughly 66%. So where did all the money go?
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If they save money on taxes and property costs to get that 73% margin,
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where is it linking out further down the sheet?
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It is linking out in three distinct places. And each one tells you something
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really important about how this company is transitioning.
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First up, administrative expenses.
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They are up nearly 10% to 4.3 million RMB. Why the jump in admin?
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Staff salaries. Think about it. When you expand into a completely new jurisdiction
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like Japan, you can't just rely on your old team sitting in Fuzhou.
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You need local boots on the ground. Right. You need people who actually speak Japanese.
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Exactly. You need people who speak the language, understand Japanese property
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law, and can actively manage those assets in places like Osaka.
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And specialized talent like that is expensive.
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Okay, so that is just the standard cost of doing business in a new country. What is the second leak?
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The second LEIT is the big hitter. It's under other operating expenses.
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This line item basically skyrocketed 240% to 1.915 million RMB.
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240%. What do they do? Remodel the corporate lobby with solid gold.
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No, they didn't spend a single dime of it on physical goods.
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Almost that entire amount is a foreign currency exchange loss of 1.9 million RMB.
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Okay, let's pause right here. Because forex loss is one of those phrases that
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makes a lot of investors' eyes just glaze over.
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Break this down for us simply. Why is a company that just rents out buildings
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losing almost 2 million RMB on currency fluctuations?
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You have to look at their corporate structure. They are incorporated in Singapore.
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They report their financial numbers in Chinese renminbi.
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But now they are holding physical assets and taking on debt in Japanese yen.
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That is a lot of different currencies moving around. It is. And during this
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specific reporting period in late 2025, the currency markets were incredibly volatile.
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So if the RMB weakens against the currencies where they owe money or strengthens
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against the currencies where they hold their assets, the accounting math changes dramatically.
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Got it. So the value of their Japanese
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debt basically got heavier when translated back into RMB. Exactly.
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Or their cash holdings and other currencies lost value on paper when translated.
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It is mostly an accounting translation. If you actually strip out that 1.9 million
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Forex hit, their operational profit picture would look vastly different.
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That is a really critical distinction for you to note if you are analyzing this stock.
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The underlying business of collecting rent is actually holding up okay.
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It is the currency exposure that totally punched them in the face this quarter. Precisely.
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But, and this is a very big but, as they continue to expand aggressively into
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Japan, this currency risk is not just going to magically disappear.
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It is becoming a structural, permanent part of their business model.
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They are officially a multi-currency play now. Right, which has a whole new
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layer of risk. You mentioned three leaks, though.
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What was the third reason profit dropped? Oh, just a decrease in other income.
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Back when they were transitioning out of the food business, they were selling
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off scrap and old equipment.
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That provided a nice little income boost last year. But you can only sell the
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old Munchkin tractors once.
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Exactly. That revenue stream is dried up now. All right. Let's move away from
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the P&L and look at the balance sheet.
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Because as the saying goes, profit is an opinion, but cash is a fact.
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And looking at their cash position, I am seeing a trend that makes me a little
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nervous. You're looking at the cash burn.
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Yeah. In June 2025, they had 20.8 million RMB sitting in cash and bank balances.
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By December, just six months later, that was down to 10.0 million.
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They essentially burned through half their liquidity. Well, I think burned implies
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they just wasted it. I would argue they deployed it. Semantics.
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The money is no longer in the bank account. Where did it go?
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It is in concrete now. They spent 19.9 million RMB acquiring new investment properties.
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They also spend another $1.3 million on property, plant, and equipment.
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They are taking their liquid cash and actively converting it into income-generating assets in Japan.
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Okay, fair enough. But you still can't pay your admin staff salaries with a
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brick building in Osaka.
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You need actual liquidity to run the business. And 10 million RMB is not exactly
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a massive war chest for a company operating across three different countries.
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It really isn't. And management knows that, which is exactly why they're leveraging up.
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If you look at their non-current liabilities, that number jumped 50% to over
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33.2 million RMB. They are taking on new debt to keep this transition moving
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forward. Let's dig into that debt.
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Because in the current global interest rate environment, borrowing money can
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be absolutely lethal to a company's margins.
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Who are they borrowing from? They secured a couple of new loans.
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The big one is a mortgage loan from Rezona Bank in Japan for $120 million JPY.
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They were using that to buy land and a building in Toynaka City, Osaka.
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What are the terms on that? It's a 20-year tenure, and the interest rate is
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floating between 1.875% and 2.70%. Wow.
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1.8% to 2.7%. See, this is where the Japan strategy starts to make a lot of sense.
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If you tried to borrow commercial real estate money in the U.S.
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Or Europe right now, you would be paying double or triple that rate easily. Exactly.
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It's essentially the carry trade logic applied directly to commercial real estate.
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They borrow in a very low-interest currency, the yen, to buy physical assets
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that will hopefully yield significantly more than 3% in rental income.
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As long as that spread stays positive, the math works beautifully.
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But there is a massive catch there, right?
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They are borrowing in yen to buy yen assets, but they report everything in RMB.
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If the yen suddenly appreciates, that debt becomes way harder to service in RMB terms.
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Which brings us right back to the forex loss we discussed earlier.
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That currency risk is now firmly embedded in their balance sheet for the next two decades.
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They didn't just borrow in Japan, though. They also took on debt in China.
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Yes, they secured a credit facility with Industrial Bank for up to 10 million RMB.
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During this period, they actually drew down about $6 million of that for general working capital.
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And the interesting part here is what they used as collateral. Let me guess.
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The old mushroom facilities. The very same. The loans are secured by their legacy
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factory properties in Fuso.
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So they are essentially using the carcass of the old food business to fund the
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working capital for the new landlord business.
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It is clever, but it also kind of highlights that they are scraping the barrel for collateral.
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It definitely shows they are utilizing every asset they have left to make this pivot work.
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Speaking of assets they have left. Yeah. We need to talk about the absolute
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elephant in the balance sheet.
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Ah, you mean the Wang Xing receivable. I do. We glossed over this in the intro,
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but I want to stop and focus on it now because the numbers involved here are just staggering.
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We just established that Yamada has about 10 million RMB in cash,
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right? But if you look at the company level balance sheet, there is a line item
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for other receivables from a former subsidiary called Wangsheng.
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How much is that receivable for? The total contractual amount owed to them is 177.4 million RMB.
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177 million RMB. That is nearly 18 times their entire current cash position.
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This isn't just a quirky side note. This receivable is a whole ballgame.
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If this money doesn't actually materialize, what is Yamada Green Resources really worth?
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Significantly less. To give you some context on how this happened,
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when they decided to exit the food business, the attitude that took it over,
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Wang Sheng, couldn't just pay a massive lump sum for it.
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So Yamada agreed to a long-term repayment plan. A repayment plan.
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It is a 17-year mortgage. It basically is, yes.
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Wang Sheng is scheduled to pay this back over 17 years. Look,
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as an investor, that terrifies me. You are essentially acting as an unsecured,
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long-term bank for a company operating in the exact same agricultural sector
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that you just fled because it wasn't profitable enough.
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If Wangsheng has a bad harvest or crop disease or just goes bust,
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Yamada doesn't just lose a client.
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They lose an asset that is arguably larger than their entire current property portfolio.
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That is the ultimate nightmare scenario for them, without a doubt.
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However, we have to look objectively at the facts for this specific reporting period.
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Did Wang Sheng actually pay what they owed? The report says they repaid 7.0
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million RMB during this six-month period. Right. So the checks are currently clearing.
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And management explicitly stated in the report that they assessed the credit
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risk of this receivable and decided not to recognize any expected credit loss.
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Meaning internally, they are confident the money is good.
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Confident for now. But it permanently ties their financial fate to the very
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food business they spent years trying to escape.
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They might be out of the food business operationally, but financially they are
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absolutely still married to it. That is a very fair assessment.
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It acts as a long-term drip feed of liquidity.
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Getting 7 million RMB every six months certainly keeps the lights on,
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but it is a very slow bleed if they suddenly need a huge chunk of capital for
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a major property acquisition in Japan.
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Okay, let's look forward now. We have covered the debt, the cash burn,
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and the massive receivables risk.
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Let's look at their actual strategy going forward. I noticed they are trying
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to sell off an asset in Singapore to double down on Japan.
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Why? The report mentions an investment property they hold in Singapore valued
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at about 7.86 million RMB.
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They've reclassified it as an asset held for sale.
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The group plans to either syndicate it or sell it off entirely within the next
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12 months. Why dump a Singapore property?
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Singapore real estate is universally seen as the gold standard for stability
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in Asia. It is incredibly stable, but it's also very low yield and high cost right now.
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Singapore has strict cooling measures and high transaction taxes.
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Japan, and specifically the Osaka region they are targeting,
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is offering them something Singapore can't right now, real growth potential
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and higher rental yields.
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The report heavily cites Expo 2025.
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Is that their entire investment thesis? Just, hey, people are coming for a big
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party, so let's buy condos. It is a bit more sophisticated than that.
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They are specifically targeting Sakai City, Osaka City, and Toyonaka City.
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The report cites market data expecting Osaka rents to grow between 3% to 6% in 2026.
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And the vacancy rates there are quite low, hovering around 6% to 8%.
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That is a pretty tight market.
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Exactly. The Expo is just the catalyst.
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It brings massive infrastructure investment from the government,
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and it brings global attention.
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Plus, Japan is seeing steady net migration into its major urban centers like Osaka.
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Yamada is basically betting heavily that the Osaka regional economy is on a
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sustained upswing. And again, the cost of borrowing that money to buy in Osaka is only 2%. Right.
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If you buy an apartment building yielding 5% and you only pay 2% on the mortgage,
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you pocket that 3% spread.
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In Singapore, you might buy at a 3% yield and borrow at 4%, which means you lose money every month.
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The fundamental math just favors Japan right now.
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So the Japan expansion is clearly the list for this company. What is the drag?
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China. The report is actually surprisingly blunt about the situation in the PRC.
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They describe the property market there as challenging, and they use the phrase
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heightened macroeconomy uncertainty.
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Which is just polite corporate speak for the economy is really shaky right now. Very shaky.
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They explicitly mention that the leasing environment is so tough that landlords
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are being forced to offer competitive leasing incentives just to get businesses to sign leases.
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Let me guess, that means aggressively lowering rents. Lowering rents or offering
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extended rent-free periods, like sign a one-year lease, get the first two months
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completely free, that absolutely destroys your effective rental yield.
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So what is management's response to that? Are they just taking the hit?
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They are playing defense.
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The report outlines that they are prioritizing occupancy over high rent.
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They are using tailored lease plans.
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Basically, they would rather have a tenant locked in paying 80% of the market
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rate than have a unit sitting empty paying zero. Well, that's smart management,
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but it really confirms that the China side of the business is just a dead weight
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on their growth right now.
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It is not going to drive the share price up. It is just there to provide baseline
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survival cash flow. Correct.
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The entire growth narrative for Yamada is pinned on whether this Japan expansion works fast enough.
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Which brings us to the ultimate shareholder experience dividends.
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Did they pay one? None. Zero. Nothing at all. No dividend was declared for this six-month period.
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They stated they want to review the distribution policy at the end of the full
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financial year. I guess that is prudent, honestly.
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If you are borrowing millions of yen to buy buildings and burning through half
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your cash reserves in six months, you really shouldn't be writing dividend checks to shareholders.
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It sends a clear signal that they are in pure accumulation mode.
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They are hoarding every bit of cash they can to reinvest in the transition.
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If you are an income investor looking for a steady, reliable dividend yield,
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this report is a giant red flag.
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If you are a growth investor, it might be a signal that management genuinely
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believes they can get better returns by buying more Japanese property right now.
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So let's pull all of this together. We have Yamada Green Resources,
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a company with a very confusing agricultural name, a massive,
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scary receivable from a former subsidiary, and a really bold strategic bet to
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swap Chinese factory space for Japanese apartments.
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It is the absolute definition of a company in the messy middle of a major transition.
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If you had to summarize the bull case and the bear case for our listeners,
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based strictly on this document, what are they?
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The bull case is that the Japan pivot is brilliant timing.
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They are borrowing incredibly cheap yen to buy high-quality,
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yielding assets in Osaka right ahead of an economic boom driven by Expo 2025.
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The huge jump in their gross margin shows they are finally running a tight ship,
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and once the one-off currency translation hits stabilized, the net profits will really start to flow.
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Plus, the Wangsheng payments continue to act as a steady, reliable annuity.
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Okay, and what is the bear case?
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The bear case is that they are becoming over-leveraged and widely exposed to
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currency risks they have zero control over.
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The China market continues to soften, forcing their rental yields lower and lower.
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And that Wangsheng receivable, that 177 million RMB, is a ticking time bomb.
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If that former subsidiary hits a bad agricultural cycle and fails,
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Yamada's entire balance sheet implodes. And right now, they're burning cash
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too fast to survive a major macroeconomic shock. It really feels like a race against the clock.
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Can they build up enough stable, high-yield income in Japan before the legacy
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issues in China drag the whole ship down?
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That is the ultimate question. And looking at that 66% drop in net profit this
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quarter, you have to say the race is getting harder, not easier.
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It is a fascinating look at a company trying to literally reinvent itself in real time.
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It is not about bamboo shoots and mushrooms anymore, folks. It is all about
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interest rate spreads, currency translation, and occupancy levels. Indeed.
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A very complex financial puzzle to put together.
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And it leaves you with a really provocative thought to mull over.
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We talked about the carry trade borrowing cheap yen to buy higher yielding assets.
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But what happens if the Bank of Japan aggressively hikes interest rates to combat their own inflation?
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Right. Well, China's property market continues to stagnate. If Yamada is locked
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into 20 years of debt, their cheap financing edge evaporates instantly,
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while they are still entirely dependent on a 17-year payout from a Chinese agriculture firm.
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If that spread flips, the whole landlord strategy could unravel.
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Definitely something to explore on your own. A very real risk in this macroeconomic
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climate. Well, before we sign off, we do need to do the legal housekeeping. Right.
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This content is intended to serve strictly and only as an informational,
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independent, objective summary of recent events and should in no way be interpreted,
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construed or relied upon by any party as inside information or financial advice.
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Always read the fine print.
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Thanks for joining us on The Deep Dive. We will catch you next time.