Simulation of bank loan repayment when funding a 3.0 Billion JPY self-construction project via 100% debt financing (1.5% fixed interest, 20-year principal and interest amortizing loan), compared against a 10-year lease cash flow (1,800 tsubo, ~9 Million JPY/month).
| Repayment Metric | Estimated Amount | Remarks |
|---|---|---|
| Monthly Payment (Principal + Interest) | 14.48 Million JPY / Month | Principal ~10.73M–12.28M JPY; Interest ~3.75M–2.20M JPY |
| Annual Debt Service | 173.76 Million JPY / Year | 12 Monthly Payments |
| 10-Year Cumulative Repayment | 1.7376 Billion JPY | At 10-Year Mark (10 Years Remaining) |
| Total Interest Paid (20-Year Full Term) | 475.2 Million JPY | Total Debt Service over 20 Yrs: 3.4752 Billion JPY |
| Remaining Balance at Year 10 | Approx. 1.618 Billion JPY | Approx. 46% of Principal (3.0B JPY) Repaid |
Under debt financing, monthly rent is replaced by debt service (principal + interest), plus real estate property taxes and facility maintenance.
* Lease Baseline: 1,800 tsubo × 5,000 JPY/tsubo (Rent + CAM) = 9.0 Million JPY / Month (108 Million JPY / Year)
| Cash Outflow & Cost Item | ① Self-Constructed (Debt Financed) | ② Leased Facility (10-Year Lease) | Variance / Remarks |
|---|---|---|---|
| Initial Equity (CAPEX / Deposit) | 0 JPY (100% Debt Financed) | 0.12 Billion JPY | ② 6-month deposit (refundable) + Fit-out |
| Monthly Outflows (10-Yr Total) | 1.738 Billion JPY (Debt Service) | 1.080 Billion JPY (Rent + CAM) | ① 14.48M JPY/mo × 120 mos ② 9.0M JPY/mo × 120 mos |
| Property Taxes (10-Yr Total) | Approx. 0.280 Billion JPY | 0 JPY | ① Land and building real estate taxes |
| Maintenance & Insurance (10-Yr) | Approx. 0.150 Billion JPY | Approx. 0.060 Billion JPY | ① Structural maintenance, inspections & insurance |
| 【10-Year Total Cash Outflow】 | 2.168 Billion JPY | 1.260 Billion JPY | Cash Outflow Difference: ① is +0.908B JPY higher |
| Property Asset Value (Year 10) | 1.500 Billion JPY (Land Value) | 0 JPY | ① Assumes land value remains constant |
| Outstanding Debt (Year 10) | ▲ 1.618 Billion JPY (Loan Balance) | 0 JPY | ① 10 remaining years of loan principal |
| 【Net Equity Impact at Year 10】 | ▲ 0.118 Billion JPY | 0 JPY | Assets 1.50B JPY − Debt 1.618B JPY |
| 【10-Year Real Economic Burden】 | 2.286 Billion JPY (Cash Outflow 2.168B + Net Deficit 0.118B) |
12.60 Billion JPY | Real economic cost including net equity change |
• Monthly Outflow Comparison:
• Conclusion: Over the first 10 years, self-construction requires approx. 9.0 Million JPY/month (~100M JPY/year) more cash outflow. For companies preserving operating liquidity, leasing is significantly safer.
• Post-Payoff Inversion (Year 21+):
Selecting "Leasing" saves over 900 Million JPY in net cash outflows over the first 10 years, freeing ~100M JPY/year in liquidity to fund material handling automation, regional expansion, product development, or hiring.
Selecting "Self-Construction (Debt Financed)" delivers major long-term advantages as annual fixed occupancy costs plunge post-payoff (Year 21+). This is the optimal strategy when corporate cash reserves and bank credit lines are substantial.