Corporation Information

Corporate Data（As of March 31, 2010）

Members of Board of Directors（As of June 25, 2010）

Company Name : Leopalace21 Corporation
Head Office : 2-54-11 Honcho, Nakano-ku, Tokyo

President and CEO

TEL: +81-3-5350-0001 (Main Line)

Eisei Miyama

Executive Director

President and CEO : Eisei Miyama

of Management

Tadahiro Miyama

Director

Hiroyuki Miyata

Director

Yoshikazu Miike

Director

Kou Kimura

Director

Fumiaki Yamamoto

Director

Yuzuru Sekiya

Number of Employees : 8,582 (Consolidated basis) 7,739 (Non-consolidated basis)

Director (Outside)

Tetuji Taya

Building lots and buildings transaction business license :Minister of Land, Infrastructure and Transport Permit (9) No. 2846

Standing Auditor

Yoshinori Uehara

Standing Auditor

Shinya Watanabe

Established : August 17, 1973
Common Stock : ¥ 55,640.66 million
Number of Shares Outstanding : 159.54 million shares
Operations : Construction, leasing, and sales of apartments, condominiums,
and residential housing; development and operation of resort
facilities; hotel business; broadband business; Silver business, etc.

Auditor (Outside)
Koichi Fujiwara
Construction business permit :Minister of Land, Infrastructure and Transport Permit (Special-20) No. 11502
Auditor (Outside)
Masahiko Nakamura
Civil engineering works permit :Minister of Land, Infrastructure and Transport Permit (Special-21) No.11502
Registration of Class-1 architect office : Tokyo Governor Registration 36122
Loan business registration :Kanto Finance Bureau Chief Registration (8) No. 00581
Shareholder Composition（As of March 31, 2010）
Memberships: Japan Association of Home Suppliers
Financial Instruments
Japan Financial Services Association
Business Operators
Treasury Stocks
Japan Prefabricated Construction
4,568 thousand shares/2.86% 2,845 thousand shares/1.78%
and Manufacturers Association

Corporate Structure（As of March 31, 2010）

Business Corporations andother legal entities
6,017 thousand shares/3.77%

Toyo Miyama Kogyo Co., Ltd.
(Manufacturing and Sales of Housing Materials)

Financial Institutions
42,730 thousand shares
26.78%

Leopalace21 Business Consulting (Shanghai) Co., Ltd.
(Consulting services in China)

Hotel and Resort Division
LEOPALACE GUAM CORPORATION(Hotel/resort operations in Guam)
Leopalace Travel, Ltd.
(Travel Agency)

Other Business
Leopalace Finance Co., Ltd.
(Financial Business)
Leopalace Insurance Co., Ltd.
(Small amount/short term insurance business)
Leopalace Smile Co., Ltd.
(Agency/Special subsidiary)

Individuals and Other
51,728 thousand shares
32.42%

Foreign Corporations
51,644 thousand shares
32.37%

Leasing Division
Leopalace Leasing Corporation(Company housing agency and real estate agency)

Major Shareholders (Top 10)（As of March 31, 2010）
Name of shareholder% of
No. of shares outstanding
sharesYusuke Miyama

18,135,774 11.37%

Japan Trustee Service Bank, Ltd. (for trust)

8,783,300

5.51%

The Master Trust of Japan, Ltd. (Trust Account)

8,549,500

5.36%

Leopalace21 Corporation

4,568,887

2.86%Bank of New York GCM Client Account JPRDISGFEAC
Standing Proxy, Bank of Tokyo-Mitsubishi UFJ

4,089,086

2.56%

Trust & Custody Services Bank, Ltd.
(Pension Trust Account)

3,975,700

2.49%Japan Trustee Service Bank, Ltd. (for trust 9)

3,775,100

2.37%

Stockholding Association for Leopalace21's
Business Connections

3,125,100

1.96%

Sumitomo Mitsui Banking Corporation,
Trust Account3,098,500

1.94%

Toyo Kanetsu K.K.

2,745,900

1.72%

Note : Apart from the companies listed above, there are two companies (100% owned
indirectly by Leopalace21) with operational permits

Domestic Consolidated Subsidiary
Foreign Consolidated Subsidiary
Equity-method affiliates

For the year ended March 2010

Government andLocal Publick Organizations
8 thousand shares/0.01%

Leopalace21 Corporation
Apartment Construction Subcontracting Division

Investors Guide

Leopalace21 Corporation
2-54-11 Honcho, Nakano-ku, Tokyo 164-8622
TEL: +81-3-5350-0001 (Main Line) FAX: +81-3-5350-0058

Leopalace21 Corporation
Code No. 8848

http://www.leopalace21.co.jp

Message from President

Medium-term Management Plan-1

Restructuring of Business Models Designed to
Implement Flexible and Accurate Responses for Drastic
Changes in Business Environments

Medium-term Management Plan: Corporate Vision【 Corporate Vision 】
1. We strive to become a Total Support Enterprise, providing a diverse range of products and services in accordance with solutions relating
to "Effective Use of Land" and "High Quality Housing," as well as market needs.

2. We will make work operations and financial content those of a market leader, form a "Corporate Quality" that responds to the social
responsibility of the Company as a "Corporate Citizen" and build a "Corporate Brand" deserving of trust and appreciation.

Medium-term Management Plan: Basic Policies

I would like to thank you, our shareholders and investors, for your continued exceptional support.
I would like to take this opportunity to introduce myself: I am Eisei Miyama, appointed to the postof President and CEO as of February 5, 2010. I would like to cordially ask for your guidance andcooperation.
We expect conditions to be difficult under the anticipated continuing severe businessenvironment during the fiscal term ending March 2011 (our 38th Term). Given such a situation
the company announced in May, 2010, a three-year management plan (for the fiscal terms

Shift to a stable earnings structure with earnings balanced between the Apartment Construction
Subcontracting Business and the Leasing BusinessWe will improve the business structure with a new business model centered on the stock of units under management (Leasing Businessdivision), with the goals of stabilizing earnings and regaining a growth track.

1．Shift to a Focus on the Stock of Units under Management, and Improve the Earnings Balance

Based on our “New Area Strategy” designed to maximize earnings in the Leasing Business, we will establish a sustainable and stablebusiness foundation by achieving an earnings balance between the Apartment Construction Subcontracting Business and the Leasing
Business.

ending March 2011 to March 2013). The targets set according to the figures formulated during
the previous fiscal term were significantly amended, reflecting our emphasis on revenue.
With regards to my background in the company, it has been 33 years since I first joined thecompany in 1977. During this period I spent 14 years, about half of my career at the company,
handling sales of rental properties. My dealings with rental properties started when the company

2．Organization Restructuring and Rebuilding of Governance Focused on Establishing a New Earnings
Management Structure

We established a Business Structure Reform Headquarters to clarify responsibilities and authority, and strengthen internal controls. We
will promote business restructuring in order to establish an earnings-management structure that achieves balanced earnings in thecore businesses overall from the standpoint of the Leasing Business.

decided to specialize in the Leasing Business at the time, out of necessity to make rentals a
President and CEO

Eisei Miyama

major business line for the company, when the current business model, the “Model of Synergies
between Apartment Construction Subcontracting and Leasing”, was established. The number

3．Shift to a Low-Cost Structure

We will strategically optimize the highly profitable Apartment Construction Subcontracting Business, and fundamentally revise thecost structure. Specifically, we will lower consolidated SG&A expenses from ¥79.3 billion (SG&A ratio of 12.8% ) in the fiscal year ended
March 2010, to ¥52.7 billion (9.6% ) in the fiscal year ending March 2013.

of units under our management at the time I was assigned to the task in November 1996 wasabout 80,000 units. Since then this number has multiplied by about seven fold, with the current
number of units under our management standing today at about 550,000 units, which makes mymemories of the time seem quite a world apart from today.

4．Manage Related Businesses from the Standpoint of Concentrating Management Resources on Core Businesses
We will manage related businesses with priority on synergy with core businesses, in order to maximize consolidated earnings andefficiency.

The maintenance and management of rental apartment units, inventory of which has
become so enormous, is difficult to achieve using conventional methodologies. For the past
few years we have tried to improve the level and accuracy of revenue management for rental

5．Stabilize the Financial Position

We will continue to focus on Motazaru Keiei* (“non-ownership management”) to tighten the balance sheet, reduce interest-bearing
debt, and emphasize cash flow in operations.

properties. With measures implemented to deal with the financial crisis finally over, we are about
to implement a fundamental reevaluation of business models during the fiscal term ending* The Company’s model for core businesses is based on construction of apartments on behalf of property owners and entering master-lease agreements with theseapartment owners. We then lease apartments to individual tenants. This model enables us to continue growing our business and earnings without requiring theCompany to own the underlying assets or take on debt.

March 2011.
We have been listening to the various opinions of our shareholders and investors withregards to the future vision of the company and it is the understanding of the company that tomerely continue our past business activities is not enough. It is our intention to shift the focus ofBalance of Operating Income from Core Businesses under Medium-term Management Plan

our business to that of a stock business, which will by its nature involve growing pains and wemust be prepared to deal with such difficulties.
My mission is to restore the growth potential of this company. Although recovery in
our business performance may take some time, it is the common intention of executives andemployees alike, to undertake reforms with unyielding resolve, in order to ensure that thecompany continues to grow in a socially-responsible and sustainable manner, while remaining
responsive to the expectations of our shareholders and investors.

Operating income from Apartment Construction Subcontracting Business
Operating income from Leasing BusinessTotal operating income from Leasing Business and Apartment Construction Subcontracting Business（100 million yen)
1,000

Apartment Construction Subcontracting Business

750

500

I cordially ask from the bottom of my heart for our shareholders and investors to extend
their support and their understanding regarding the management of the company .

250

0Corporate
Philosophy

We aim to create new value through housing

-250

Basic
Policies

1. We view the apartment business as a social undertaking, which realizes the effective use of land and supply of high-quality
housing (CSR management).

-500

Leasing Business2. We believe that successful leasing operations are our top priority in the apartment business.
3. We develop and introduce unique products based on a pioneering spirit.
4. We pursue client-first marketing approaches as well as prompt and systematic proactive operations.

01
Leopalace21 Investors Guide 2010-750

2007/3
record2008/3
record2009/3
record2010/3
record2011/3plan

02
Leopalace21 Investors Guide 20102012/3plan

2013/3plan

Medium-term Management Plan-2

Overall Image of Medium-term Management Plan
The “Medium-term Management Plan” calls for a shift in our business management to detailed
marketing methodologies that enable us to maximize the number of new tenants, according to the“One-stop Strategy”, which is based on the “Demographic Dynamics” and the “New Area Strategy”,
based on “Demographic Shifts”.
So far the company has adapted the business tactics and strategies embodied in its medium-term management plans with a high degree of
accuracy by relying on macro indices, such as “Demographic Dynamics” and “Demographic Shifts”. This type of business practice will remain
and continue in our current Medium-term Business Plan. However, in the future partial improvements will be made in our methodologies foranalyzing indicators of “Demographic Shifts”, in order to raise the level of certainty.

Transition of Net Sales and Operating Income for the "New Medium-term Management Plan
Economic Trends in Japan
March 2007
Construction of Toyota Motor
Corporation headquarters completed
July 2007
Sub-prime Loan Crisis occurs

September 2008
Collapse of Lehman Brothers management

November 2009
Dubai Crisis occurs

December 2008
Temporarily contracted employee crisis occurs due to production
adjustments implemented by manufacturing industries

February 2010
Greece Crisis occurs

Strategies based on “Demographic Dynamics”
The “Demographic Dynamics” mentioned indicate significant

In response to such changes in the demographic dynamics, thetrends for “Declining Birth Rates” and the “Aging Population”.
Single-person households for persons below 35 years are declining,
while demand for new tenant groups are emerging for single

company is promoting the “One-stop Strategy” (offering fullproduct line), which comprehensively integrates demand for
new tenant groups by developing and supplying large studiomales and females aged 35 and over, due to the tendency ofthe population to get married later in life, as well as couples andfamilies in their 30s and 40s.

apartments and family oriented products, and by deemphasising
the strategy of offering conventional studio apartment-type
products that target young single persons.

Strategies based on “Demographic Shifts”
The company has in the past utilized the “number ofpeople moving in” as a principal index for determining thestatus of the “Demographic Shifts” and areas of focus havepeople, itself caused by a deteriorating employment environment resulting

been selected in order to supply the properties and areasfrom the economic downturn. However, the overwhelming majority ofthe mobile population (people moving in) is located in the three major
metropolitan areas. The total number of people who moved into these areasfor enhancing the sales performance.
Since the financial crisis, however, the company
has experienced a declining number of new tenancies,

comprises 63% of the total number for the whole of Japan. Furthermore,these figures are derived primarily from the principal cities of each of theseareas.
Additionally, by viewing the status of the demographic shifts from theperspective of “number of employees” it becomes evident that the total

resulting from the impact of a deteriorating employment
environment, which arose from such reasons as a surge
in contract terminations among temporarily contracted
employees.
In view of the current status, the company aims tonumber of employees has increased by 1.29 million in the ten years leading
up to 2009, with a breakdown of this figure showing 1.09 million in theimplement even more detailed medium to long-term
strategies that incorporate new indices, such as theTokyo Metropolis, 250,000 in Chukyo block (including Shizuoka Prefecture)and 50,000 in the Kansai block (including Shiga and Wakayama Prefectures),pointing to the fact that the capacity to absorb employment is extremely“number of employees”, in order to promote the “NewArea Strategies”, under which the selection of critical areas
is to be made by the Leasing Business with the aim oflarge in the three major metropolitan areas.

securing new tenants.

Total percentage for
top prefectures
63％
Others37％① Tokyo Metropolis : 17％② Kanagawa Prefecture : 9％
③ Saitama Prefecture : 7％
④ Chiba Prefecture : 7％
⑤ Osaka Prefecture : 6％
⑥ Aichi Prefecture : 5％
⑦ Fukuoka Prefecture : 4％
⑧ Hyogo Prefecture : 4％
⑨ Shizuoka Prefecture : 2％
⑩ Kyoto Prefecture : 2％

【Composition in percentage for the number of people
moving in by municipality for FY2009】
Total percentage for
top municipalities
41％

Others59％① Tokyo Special Wards : 14％② Yokohama City : 5％
③ Osaka City : 4％④ Nagoya City : 3％
⑤ Kawasaki City : 3％
⑥ Fukuoka City : 3％
⑦ Sapporo City : 3％
⑧ Saitama City : 2％
⑨ Sendai City : 2％
⑩ Kobe City : 2％

92.8

92.4

3,406

4,215

Average occupancy rate during FY（％）
88.6
82.3

83.7

1,677

1,560

1,300

Related businesses (all non-core businesses)

1,000

Apartment construction subcontracting businessLeasing business

6,729
6,316
327
760

7,332
327

360

Consolidated operating income(100 million yen)

6,203
440

714
3,591
3,275

501

3,161

2,370

5,647
235

5,606
195

1,801

1,561

53

【Rate of change in the number of completely unemployed persons】

117(set to 100 the fourth quarter of YE1999)

（％）
140

86.2

84.5

2,691
Consolidated net sales (100 million yen)

The status of “Demographic Shifts” for FY2009 indicates that the total
number of people who relocated was 2.47 million. This figure has declined
in comparison to the previous year, due to stagnation in the movement of【Composition in percentage for the number of people
moving in by prefecture for FY2009】

Order received(100 million yen)

2,864

3,136

3,461

3,637

3,877

2011/3plan

2012/3
plan

3,427

5,467
199
1,101

183

4,194

120
100

-296

80

2007/3
record60

2008/3
record2009/3
record2010/3
recordMedium-term Management Plan

40
Tokyo Metropolis

Tokai Block

Kinki Block* Note 1: Applied to the new market segments as of March 2010. Figures from prior dates shown have been adjusted to new market segments.

200* Note 2: Three business divisions in the bar graph above represent ﬁgures prior to eliminations between segments and therefore the total amount for each ofthese ﬁgures do not match the consolidated sales amount (total amount for ﬁgures shown on the top of the bars).
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

YE1999YE2000

YE2001

YE2002

YE2003

YE2004

YE2005

YE2006

YE2007

YE2008YE2009* Source of two pie graphs on the left: Announcement materials for January 2010, Ministry of Public Management, Home Affairs, Posts and Telecommunications.
* Source of graph on the right: Labor Survey, Ministry of Public Management, Home Affairs, Posts and Telecommunications.

03
Leopalace21 Investors Guide 20102013/3plan

04
Leopalace21 Investors Guide 2010

Medium-term Management Strategy-1

Overall Strategy
Management resources concentrated into core businesses to build revenue base primarily for Leasing
Business
The company has been thoroughly implementing “Selection” and“Concentration” in our business operational domains in order to complete【Core Businesses】

our new business models. In the Medium-term Management Plan that

Apartment
Construction
Subcontracting
Business

Synergy

started from the fiscal term ending March 2011, we decided to conduct a

Leasing
Businessfundamental review of our quantitative targets (calculated planning) and
implement efforts to execute strategies, as we are now aware that the rapid
deterioration of the economy, which has taken place since the financial
crisis, will be ongoing for a long period of time.
Specific activities to be undertaken consist of three new strategies(New Area Strategy, New Channel Strategy and New Product Strategy) withthe further enhanced accuracy of details relating to marketing in the corebusiness areas, in order to build a stock-type business model that consists

Operation of Apartment Construction
Subcontracting Business to enhance
profitability for Leasing Businessprimarily of the Leasing Business.

【Transition in number of units used and occupancy rates by attributes】
Unit under lease（Thousands of units）

250｝

OthersCorporations
Students

Left index

Occupancy rate
Managed units

The number of units used by the three attributes(corporations, students and others) is an increasing trend,Managed units（Thousands of units）

Right index
｝

200

100

in the volume of the overall stock (number of managed

95

units). Due to gaps arising between the overall stock andtenant attributes, however, the occupancy rates have90

been indicating a declining trend since the fiscal term,

85

ending March 2009.
In order to restructure the revenue base for the

500

150
400
100
300

50
0

although the pace is somewhat slow, due to an increase

Occupancy rate
（％）

600

80

leasing business, it is necessary to restore the occupancy
rates by filling such gaps in demand. We have therefore
launched the “New Area Strategy”, which is an essential

75

Jun.

Sept. Dec.
2008/3Mar.

Jun.

Sept. Dec.
2009/3Mar.

Jun.

Sept. Dec.
2010/3

Mar.

200

70

strategy to accomplish such needs.

Switching of strategies and strategic framework for core businesses

Outline of “New Area Strategy”

Strategy switching in core businesses

Features of New Area Strategy【Former strategies】【New strategies】

Area
Strategy

A “Supply Plan” is formulated by determining the number ofunits that will be made available, based on the lease property
demand forecast for each individual area.

A “Supply Plan” is formulated, by determining the number of units
that will be made available, based on the certainty for securing
new tenants in each individual area.

ChannelStrategy

Multifaceted channels are extended, including office under
direct management, affiliated companies, corporate sales
channels and web site.

A franchise chain of “Leopalace Partners” including sales offices,established by employees resigning from the company to start theirown independent sales offices, will be added as available channels.

A full product line is provided, with newly targeted tenants in
mind, based on demographic dynamics.

A full line of products will be offered, with the understanding of amore realistic picture of the newly targeted tenants, based on the
demographic dynamics, as well as the “New Area Strategy”.

Product
Strategy“New Area Strategy” started as essential strategy for filling gaps in demand

Strategic framework for core businesses comprised primarily of leasing businessA new stock business, which is uniqueto our company, will be built byimplementing the triune strategies of“New Product Strategy”, “New Area
Strategy” and “New Channel Strategy”,
as well as the “Leasing ALM System”,
which supports these strategies.

Products, pivoting on the creationof a profit structure primarily in the
Leasing Business, are developed andsupplied.

Switch to stock-type business model

Formerstrategies

Tenants

Lease marketing

New Area
Strategy

structure in the Leasing Business.
Improvement of profitability in the
Leasing Business is promoted, basedon the supply of properties to areas
where a high degree of certainty
exists for securing new tenants.

New ProductStrategy

New Channel
Strategy

Leasing ALM System

05
Leopalace21 Investors Guide 2010

A framework is set up to enable theefficient and effective promotion ofBasis

New supply

Subcontract sales

New supply

Subcontract sales

Basis

New
strategies

Tenants

Lease marketing

New channel strategy

Product planning

New product strategy

Supply plans for apartment units were formulated, starting from subcontract sales (sales activities in the apartment building construction subcontracting
business, targeting land owners) with existing business models. In order to switch the business to a stock-type business, however, it is important that properties
offered in the future are thoroughly evaluated from the perspective of “securing tenants”. It is for this reason that we decided to make a significant switch fromformulating supply plans of the existing “product-based” type that starts from the construction subcontracting sales, to supply plans of the “market-based” typethat starts from tenants (sales activities targeting prospective tenants in the Leasing Business). To that end, a “Customer Drawing Capacity” evaluation system,
intended for an analysis on the type of attributes in which prospective tenants belong in each area and to what extent new tenants can be secured, was newly
developed and implemented. By completely reversing the flow for formulating supply plans (in the past, the flow consisted of first securing properties available
to supply and then recruiting corresponding prospective tenants for such properties), a flow for developing and supplying properties that correspond to theneeds of new tenants in each area is established with the “New Channel Strategy” and “New Product Strategy”, which are expected to provide a significant
contribution towards the improvement of occupancy rates in the future.

This strategy is most criticallyemphasized among all new
strategies for the creation of a profit

A foundation for a stable profit
structure in the Leasing Businessis built by utilizing an optimized
operational system for managed
properties, to offer a powerful backup
for the New Channel Strategy.

Switch from “Product-based” to “Market-based”.

Critical Areas for New Area Strategy
Critical Areas (1) Major City Areas(Tokyo Metropolis)● Major city areas considered critical as areas in which theprofit margin can be secured due to high land prices.

Critical Areas (2) Second Industrial Areas(Chubu, Tokai and Kita-Kanto Areas)● These are the areas where the employment of● These are areas for thoroughly implementing the
profit first policy, with the enhancement of sales
activities through the segmentation of the market andby appointing persons in charge of revenue for eacharea, with the added responsibility of increasing the rent.

activities intended for the acquisitionof strategic targets in the future,through the establishment of a new
franchise chain (FC), etc.

06
Leopalace21 Investors Guide 2010

temporarily contracted employees have been
lost rapidly, primarily in the manufacturing andconstruction industries.
● These are the areas where our definition of corporate
business is broadened and extended to third
industrial areas, such as retailing and service sectors,
in order to promote the development of potential
demand and in which the recovery of the occupancy
rate is considered a prioritized agenda.

Medium-term Management Strategy-2

Strategies for Core Businesses: (1) New Strategies for Leasing Business
Strategic framework implemented with emphasis on building profit structure primarily for Leasing
Business to build stock business with high degree of stability.
The company will promote the “New Channel Strategy” in the future, in order to build a profit structure that is primarily for the Leasing Business. The mostsignificant aspect of the strategy is to increase the occupancy rates of managed units, the number of which is expected to increase to about 620,000 by the endof 2013 (which implies an enormous apartment stock), without increasing fixed expenses. The company launched a new, unique franchising program, “Leopalace
Partners”, for the purpose of dealing with this issue. In addition, “Corporate Sales”, “Overseas Offices” and “Outbound Telemarketing and Internet Sales” will also
be enhanced with regards to existing channels, in order to improve and stabilize occupancy rates.

【New channel strategy】【Development of sales offices and sales administrative expenses
for Leasing Busiess (plan)】

Direct Management Offices

Direct Management Offices

SG&A expenses (100 million yen)406

Corporate Sales（11.7％）

Affiliated Companies

286

Leopalace Partners Offices* Note: Figures inside brackets represent
SG&A expense ratios.

372（10.9％）

250
267

Web Site（7.3％）

Overseas Offices

186

280

271

（7.0％）（6.7％）

150

150

150
150

Outbound Telemarketing and Internet Sales

250＋

Leasing Business revitalization strategy (2)Corporate Sales

Approaching Foreign Tenants

Leopalace Partners

09/3

10/3
recordChannels to be reinforced

11/3

12/3

13/3

plan

The number of our units used bydevelopment of corporate sales, in order to enhance our engagementwith businesses of the industries in which the prospects for future demand

foreigners is increasing rapidly
by about 4.6 times in four years,

exist (such as service, retail, restaurant and manufacturing businesses).
Furthermore, we will collaborate with our affiliated subsidiary engaged

from 1,747 units at the end of
March 2006 to 7,974 units by thein company housing agency services, “Leopalace Leasing”, to improveend of March 2010. In terms of

convenience for corporate customers, in order to promote the acquisition ofcustomers.

nationalities, there has been asignificant increase in Chinese
citizens and in order to enhance ourbusiness intended for our Chinese
customers, the company intends to【Principal actions】
Carried out studies ofdemand trends specificallyfor corporate clients

Strengthen linkage with
our subsidiary “Leopalace Leasing,”

Reinforce marketing
approaches
to future growth industries

Acquisition of corporate customers
through the enhancement ofcompany housing agency services

through an expansion of the Leopalace Partners sales offices.

Outbound telemarketing sales
Internet sales

which provide agency services
for incoming tenants through the

4,877
（811）

3,182

increase the number of sales offices
in China from the present two

1,747

2,273

（331）

（352）

（377）

locations (Shanghai and Beijing) by
establishing two additional sales
offices (Northeast Provinces andHuanan Economic Zone).

06/3

07/3

08/3

09/3

10/3

Leasing Business revitalization strategy (5)Leasing ALM System
The “Leasing ALM System”, intended to optimize the operation of managed
properties, was launched in May 2010 as a means to back up the “New
Channel Strategy”. This system enables a rapid and detailed understandingof the market trends, gained through the occupancy rates of individual
properties, which are then used to set appropriate leasing standards in orderto improve the balance of revenue and expenditure in the Leasing Business.

30,258Customers● Increase the number of sales
offices in cities● Substantiate properties available
for searching on the internet● Provide diverse contract plans● Provide properties of our own
development● Increase the number of sales offices
in cities● Substantiate properties available forsearching on the internet● Provide properties suitable forcustomers ranging from● Increase the number of match-ups
singles to families
between customers and available units● Expand the selections available forsearching the available units● Provide contractual terms ranging fromshort to long terms

LeopalacePartners
franchisees

07
Leopalace21 Investors Guide 2010

● Secure customers for Leopalace properties● Share regional information and offer regional
cooperation● Provide Leopalace21 brand● Provide Leopalace properties as jurisdictional
properties● Provide profit structure and support frameworkthat offer peace of mind
● Advertise the power of Leopalace21● Network the power of sales offices

Property owners

25,480phone, efforts will be made toenhance our “Internet Sales” byhandling the responses we receive

The company started the operation of the “Leopalace
Partners”, a unique franchising program from April 2010.
This is a groundbreaking leasing strategy, which includes an

Although inhibiting an increase in the number of directly
operated sales offices, the improvement of occupancy
rates, the shift of fixed expenses to variable expenses and areduction in sales administrative, expenses will be sought byincreasing the number of contacts for drawing in customers,【The number of lease agreements
procured through outboundtelemarketing and internet sales】* Note: Figures inside brackets
7,974
represent Chinese customers. （2,864）

Saitama and Fukuoka Prefectures),

Leopalace Partners

employee independence program. This program is different
from conventional franchising programs in that it is intended
to create a “Win-Win-Win” relationship, involving the threeparties of the franchisee, the customers and the company.

Outbound Telemarketing and Internet Sales
Sales activities through unmannedsales offices will be enhancedin the future as channels withhigh sales efficiency. In addition
to our outbound telemarketing
centers (two call centers located in

Leasing Business revitalization strategy (1)【Number of units undermanagement leased by foreigners】

A unique survey on the trends of demand will be conducted for the

Leasing Business revitalization strategy (4)（Franchisees and employees independence offices）

Leasing Business revitalization strategy (3)on the internet through email andphone calls, to eventuate lease

18,558agreements from such responses,
aiming for sales activities with aneven higher efficiency.

3,251
08/3

19,70409/3

25,005

Leopalace21●Total maximization of proﬁts
between unit contracts and leasing●Best balance between rental
revenue and leasing rental costs

10/3

Broadband Business
The broadband business is defined as a business that creates revenue
with the apartment stock as a base”. The business is promoted under
the category of leasing business.
We have been promoting the installation of STB units (LEO-NET

Leopalace21

Liabilities

terminals) for our unique broadband service (Leopalace BB), which wehave been providing to tenants who reside primarily in apartment units
under our management. The number of units with STB units available
and the number of subscribers have both been increasing steadily as
the number of units under our management increase, thereby creatinga gigantic market. Furthermore, we intend to further expand the scaleand scope of targeted customers by introducing the service to our silverbusiness facilities and by offering the system to external facilities, suchas hotels and hospitals.
08
Leopalace21 Investors Guide 2010

AssetsTenants●Lease price setting for
maximizing lease prices x
number of tenants●Reduce life cycle costs forproperties【Transition in number of units with which
terminal services is available and number ofmanaged units (planned) 】（thousands of units）
Number of units with which
700
terminal services is available
Managed units
600
500
400

412

442

480

507 526552 552 578 577

603 594 621

300
200
100
0

2008/3 2009/3 2010/3 2011/3 2012/3 2013/3（record）（record）（record） （plan） （plan） （plan）

Medium-term Management Strategy-2

Strategies for Core Businesses: (2) New Strategies for Apartment Construction Subcontracting

Business

Principal objective of strategies for Apartment Construction Subcontracting Business is to provide firm
backup for implementation of strategies in Leasing Business.
Starting from the fiscal year ending March 2011, the Apartment Construction Subcontracting Business will develop and supply products to match the needs ofindividual areas, based on the “New Area Strategy” with the principal objective of a building profit structure primarily for the Leasing Business. The “New ProductStrategy”, which was drawn up based on this concept, is the driving force behind the promotion of ongoing preparations for providing a product lineup to
match the strategy, through such means as the sale of “VERDURE”, urban designer’s rental condominiums as products that cater to needs in urban areas (Tokyo
Metropolis), which are considered critical areas for the future, as well as “Leffect”, a product suitable for narrow plots of land in urban areas.

【New Product Strategy】
The construction of astable revenue base,primarily for the Leasing
Business, is considered
the most importantmanagement goal

Development of a full product line based on the “New Area Strategy”
Urban style "Designer Condominium(for lease)"

Designed for very small plotsof land「VERDURE」
Urban

StudioLarge Studio

Terrace house-type「Leffect」
Urban（20.44㎡～ 53.44㎡）

StudioUpgraded studio units「Lavo Speranza」

Large Studio（13.66㎡～ 52.17㎡）

primarily for the Leasing Business (One-stop Strategy).

Urban

SuburbStudioUpgraded 1LDK (Living room, dining
room and kitchen)「LEPIDO」

Large Studio

Suburb

（20.40㎡～ 41.40㎡）

Large Studio（26.08㎡～ 51.51㎡）「Villa Scelte」
SuburbFamilyExisting customers（40.17㎡～ 56.05㎡）

The developmentof products and theaccurate provision ofproperties are based on
the “New Area Strategy”
in the Leasing Business.

Apartment Construction Subcont
Business revitalization strategy (2)Enhancement of Land Information Managementbusiness information (details of past sales
activities, etc.), accumulated through theconstruction subcontracting business. A
system comprised of such information,
loaded onto a database, was partiallylaunched in May 2010. The company will
be able to promote the utilization of suchinformation, which can support construction
subcontracting business activities in the
future as well as lead to efficient andaccurate sales activities.

Young single persons

Double income
families in their 30s to
40s with children

Families in their
30s and 40s

Potential corporate
customers

New customer groups

Apartment Construction Subcontracting
Business revitalization strategy (1)The company is in possession of about
1.2 million pieces of land information andCapturing new customer
groups in Leasing Business【Principal action】
Land information management system(in partial operation since May 2010)● About 1.2 million pieces of land information,
as well as business information, is loaded
onto a database and centrally managed.
● Company-wide information shared resultsin the utilization of information as support
for construction subcontracting businessactivities.

Review of Sales Organization
A “Construction Subcontracting Sales Course”
has been established as a means to enhance thenew order-taking framework. This is intended toraise the level of motivation among employees
involved with the construction subcontracting
sales, through the implementation of incentives
that are clearly proportionate to sales
performances.
Furthermore, the sales organization itself
has also been changed from an organization
with two sections to an organization with three
sections. This is intended to enable the company
to manage projects with more detail than in the
past.

09
Leopalace21 Investors Guide 2010racting

etc.

Apartment Construction Subcontracting
Business revitalization strategy (3)Additional Establishment of Loan Promotion Offices【Principal actions】

Establishment of “Construction
Subcontracting Sales Course”
Implementation of incentives that areclearly proportionate tosales performances.

Change of construction
subcontracting sales organization
Sales organization changed from two to
three sections for more detailed project
management.

Our “Loan Promotion Offices” are comprised of a
dedicated team for providing support to landowners
who are planning to construct apartments and rental
condominiums, including financial support for suchneeds as construction expenses. These offices offer awide range of support, from arranging for procedures andpreparing the documents required for taking out loans, tointroducing financial institutions from which the loans canbe obtained.
These offices were established in four major
metropolitan areas in the past, but they have now been
established at six additional locations (as of September2009) in order to enable a speedy and detailed response
within regional cities. These offices are promoting theenhancement of collaborative relationships with regionalbanks.
10
Leopalace21 Investors Guide 2010

【Principal action】

Additional establishmentof loan promotion offices

Past offices: Four locations
at Tokyo, Nagoya,
Osaka andFukuoka
New offices: Six locationsat Sendai,
Takasaki,
Funabashi,
Shizuoka, Kyoto
and Hiroshima

Medium-term Management Strategy-3

Medium-term Management Strategy-4

Practical Action Plans

Strategies for Related Businesses

Efforts will be concentrated into the three-year Medium-term Management Plan with the fiscal term
ending March 2011 set as the first year of implementation, in order to put into place various action forimproving the business structure to that of a new business model, with a shift of the pivoting axis to thestock business (leasing business), during the first year of implementation.

【Basic Strategies】【Practical actions】

Enable the Leasing Business toshow a profit as soon as possible● A further sophistication of price setting strategies according to the“Leasing ALM System”.
→ Stricter profit and loss management by area and by property● An improvement in the occupancy rates according to the “New
Channel Strategy”.

Shift to a more stable earnings
structure based on leasing revenues

Improve Linkage between
Apartment Construction
Subcontracting and Leasing
Shift from a “Product Out” model
to a “Market Out” management model

Fundamentally reform cost
structure
Develop a low-cost structure that is
responsive to fluctuations in earnings

Promote revision of ourbusiness portfolio

Priority fields【Change of organization】
A new organization is establishedto enhance the governance for
maximizing the effects of actionplans.

Increased
monitoring

Key changes toorganizational structure● Promote new product strategy to suit our New Area Strategy.
→ Pursue an area-based order volume plan in line with new supply
plans.
→ Strengthen new product lineup and promote regional strategies.
→ Introduce strategic products for urban areas.

Business Structure Reform
Headquarters
Rent Administration
Department● Reduce unit prices for apartment construction, and rectify rents due
on master lease agreements with apartment owners.
● Reduce consolidated SG&A expenses.

Considerdownsizing orwithdrawal

Status analysis

Future strategies

Leopalace Leasing
Corporation

Primary properties comprise studio units and there isno differentiation from other companies with regard toproperties presented to family groups.

Efforts will be made to start offering properties
intended for families and a foundation for
acquiring corporate customers will be established.

Leopalace InsuranceCo., Ltd.

It will be possible to expand the business base linked with theleasing business and to secure a stable cash flow.

The current condition is sustained with regard
to sales organization, with the aim of increasing
profitability at the earliest possible time.

Silver Business

The operating rate of facilities is low, with the profitability ofthe operating business unit in decline.

Orders for the construction of new facilities havebeen terminated to increase the operating rates ofexisting facilities.

Domestic HotelBusiness

The business environment for the overall hotel industry has
deteriorated, due to the economic downturn and decreased
corporate demand.

Efforts are being made to improve operating rates
and to reduce costs.

Resort Business

The number of people visiting Guam has dropped since
October 2008 due to the economic downturn.

Our sales capabilities are enhanced through theutilization of comprehensive resort facilities andimplementation of cost reductions.

Real Estate BusinessLand prices are in a correction phase but demand is expected
to remain sluggish for the foreseeable future, althoughgovernment economic stimulus strategies can be expected.

Sales inventories are to be disposed of and theacquisition of new land will be discontinued.

Leopalace FinanceCo., Ltd.

Bad debts are on the rise due to deterioration in the market
environment for secured loans provided to real estate agents.

Credit management has been thoroughly
implemented with a rigorous evaluation ofcollateral and the implementation of “Bridging
Loans” for the construction of apartment buildings.

Area Strategies
Department(Area Strategies Committee)● The concentration of management resources to core businesses
through the operation of related businesses that maximize thesynergy with core businesses.

Purchasing Department(Cost Reduction Committee)● Streamline the balance sheet(Sell fixed assets, control capital
expenditures, reduce interest-bearing debt).

Financial stability

Business nameSilver Business

Efforts will be made for the time being to improve the revenue and expenditurebalance for the operation of 56 facilities that have already been launched.

The company launched the “Silver Business Division” in 2005 to provide
construction subcontracting and operating services for nursing carefacilities, as birth rates continue to decline and the population continues toage. As of March 2010, 56 facilities had already been launched. For the time
being we plan to inhibit the further launching of new facilities, in efforts toimprove the revenue and expenditure balance for operations.

【Status of silver facility implementations(As of end March 2010)】（Facilities）
25

Nursing care facilities
Residential-type facilities
DS：Day service facilities
SS：Short stay facilities
GH：Group home facilities

20
15

New organization for implementing strategies

105General Stockholdersʼ Meeting

Strengthen business management systems
Cost Reduction Committee：New

Board of Auditors

Board of Directors
President and CEO

Area Strategies Committee

Corporate Management Council

Business Structure
Reform Headquarters

IT Committee

CSR Committee

Risk Management Committee“Azumi En Grande Ome”
(Ome City, Tokyo Metropolis)
Launched April 2010

Domestic Hotel Business

Auditing Council

Compliance Committee“Azumi En Grande Tsuchiura”(Tsuchiura City, Ibaragi Prefecture)
Launched November 2009

0

Tokyo

SaitamaManagement
Headquarters

Asahikawa

Sapporo(Opened November 2002)

Niigata(Opened September 2002)

OkayamaHakataAuditing Department

Loan Screening
Department

11
Leopalace21 Investors Guide 2010

Financial Accounting
Department

Legal Affairs Department

Purchasing Department

Personnel Department

General Affairs Department

Advertising Department

Information System
Department

Public Relations Ofﬁce

Secretariat

Business Planning
Department

Rent Administration
Department

Area Strategies Department

Related Business Division

Leasing Business Division

Core Business
Management Division

Construction Subcontracting
Business Division

Strengthen earnings management system

Tochigi(Opened August 2003)(Opened September 2003)

Business operation

Gunma

Continual efforts will be made in the future to capture the business trip
needs of corporate customers.

cities, ranging from Asahikawa City in Hokkaido to the north to Hakata City in Kyushu to the south.
We are planning to open Hotel Sendai Higashiguchi in July 2010. The capturing of the businesstrip needs of corporate customers will continue in the future with the domestic hotel business.
Business Planning
Headquarters

Kanagawa Ibaraki“Hotel Leopalace” has been launched at eight locations nationwide in Japan, primarily around major

Personnel Committee

Marketing and Sales
Headquarters

Chiba(OpenedApril 2007)

Sendai
Higashiguchi(Opened July 2010)

Nagoya(Opened May 2002)

Yokkaichi
Hotel Leopalace Hakata

Hotel Leopalace Nagoya

Hotel Leopalace Sendai Higashiguchi

12
Leopalace21 Investors Guide 2010

(Opened February 2003)

Medium-term Management Strategy-4

Medium-term Management Strategy-5

Strategies for Related Businesses

CSR Strategies

Resort Business

Aggressively implement sales activities that take full advantage of our strength inproviding comprehensive resort services.

Promote CSR management to contribute as corporate citizen, creating sustainable society.

Comprehensive resort facilities equippedwith sports and other facilities are being
offered under two brands, “Leopalace● Offer a variety of plans to suit different lifestyles● 24-hour apartment management support

Resort” and “Westin Resort”, through
LEOPALACE GUAM CORPORATION, our● Charitable donations and collection ofcontributions for relief efforts● Creation of dynamic workplace environments● Clean campaigns ● Support for sports programs● “Children’s 110” ● Group blood donor programs

Our policy is to promote CSR through our actual business operations.
To do this we will focus on developing a diverse product lineup thatwholly owned subsidiary.
We will strive to increase profitability

meets the various needs of tenants, while at the same time focusing

through the improvement of operating rates
achieved through sales activities that utilize

on development of new products to serve the extensive needs oflandowners.
We also provide 24-hour call center support for tenants, withservice in four different languages. In December 2008 we acquired

such strengths of these brands, as well as
through cost reductions, etc.
Leopalace Resort

As a company whose business activities have a strong impact on
people’s everyday lives, we are actively engaged in a number ofprograms to support local communities, such as making donations
and collecting contributions for domestic and international relief

ISO9001 certification for quality management systems (the updated
2008 version) for the Head Office and all branch offices.

efforts, working with apartment owners to organize community
cleanup activities, and supporting child safety through participationin the “Children’s 110” program so that children can recognize ouroffices as places of refuge should they ever find themselves in needor in danger. We have also set up a special subsidiary company
to support the disabled, and we place a strong focus on
creating dynamic workplace environments.

Track and soccer field

Westin Resort

Real Estate Business

Services ofsuperior quality andbountiful living

Competition-sized pool

Lawn tennis court

Club houseSound andhighly transparent
business activities

Four Basic
Policies
Realization of society
considerate ofglobal environment

We are dedicated to improve the operating rates of properties in ourpossession, by freezing new investments.

In the area of the residential housingbusiness, we have been implementing
subdivided residential housing projects andreal estate development projects.
We will suspend the purchase of newland and planning to withdraw from our
subdivided residential housing projects, assoon as our sales stock is depleted.
Furthermore, with regards to ourreal estate development projects, weare currently in possession of high riseapartment buildings, “Leopalace Flats”,
acquired through strategic real estate
investments in the past at 17 locations
nationwide in Japan, as at the end March
2010. For the time being our policy is tofreeze any new investments and to dedicate
ourselves in improving the operating ratesof our existing properties.

Contributions tolocal society
Favorable work
environments【Sales records for residential housing and land】
Osaka／103

Others／23

Aichi／56

Tokyo／305● Proactive IR programs● Development of compliance system

Kanagawa／152
Saitama／98（As of March 31, 2010）

Chiba／230* The prefectures indicated with green shaded areas on the map are
the locations where the records of residential housing sales are kept.
* Areas with thesymbol are the locations where our “Leopalace
Flat” buildings are located.

13
Leopalace21 Investors Guide 2010

Leopalace Flat Yamagata

We have established a “Charter of Corporate Ethics” to guide ourbusiness development and to ensure that our activities are firmly
grounded in compliance with legal and social standards. We have
set up a compliance “hotline,” distributed a compliance manual to
all directors and employees, and are conducting ongoing training
programs for compliance education. We are also actively promoting
a variety of IR programs. To achieve corporate transparency ourpolicy is to disseminate information in a timely manner. We aremaking full use of an entire range of IR tools and events, and we are
steadily improving our IR website.

● Participation in the “Challenge 25” campaign● Participation in the “Eco-cap Movement”● Testing the use of solar electric panels at model
rooms, and at company-owned condominiums
We are participating in the “Challenge 25” program, which is anextension of the former “Team Minus 6% ” program designed tohelp prevent global warming. We have implemented a car sharing
program that involves the use of 500 vehicles kept in the parking
lots of company apartment buildings. The Company has instituted asystem whereby all air conditioners turn off automatically after threecontinuous hours of operation. In these ways Leopalace21 is working
to take advantage of its scale (550,000 units nationwide) to help
protect the environment.

14
Leopalace21 Investors Guide 2010

Outline-1: Company History●Formulation of the “Medium-term Management Plan”.
● Formulation of the “New Medium-term Management Plan: Change for NEXT”.

（● All events illustrated in the timeline occurred in respective calendar years, while all operational data in charts
represent respective ﬁscal year ﬁgures.）● Opening of Leopalace Center Taipei and Leopalace Center Pusan● Formulation of the “Medium-term Management Plan: United Spirit”.
● Number of managed properties increased to 300,000● Start of Residential and Silver Businesses● Launch of Monthly Leopalace Flat service● Opening of Leopalace Center Seoul● Beginning broadband business● Launch of Leopalace REIT II and III, a series of real estate securitization products● Capital increases to ¥37.24 billion following public offering of new shares (¥37.56 billion in 2003)● Listed on 1st Section of Tokyo Stock Exchange● Capital increase by public offering, capital increase to ¥55.64 billion● Opening of Leopalace Center Shanghai● Launch of Leopalace REIT, a real estate securitization product● Capital increases to ¥30.52 billion following third-party allotment of new shares● Change company name to “Leopalace 21 Corporation”

Other Divisions

6.0％● Launch of Monthly Leopalace service

Leasing Division● Leopalace 21 Villa Colonna Series wins the 1998 Good Design Award

11.3％● Launch of Leopalace Fraternity● Sales breakdown by division for FY
ended March 1991 (consolidated)

Construction
Division

2.1％

Apartment
development/sales

80.6％● Listed on over-the-counter market(JASDAQ)

88

87

86

91

90

89

92

eriod

le P
Bubb

odel
m
s
s
ne
Busiransitiont

93
Post le
b
b
Bu od
Peri

Grow

Developer

Construction
Subcontracting

Establishment of
New Business Model

Apartment development/
sales business

Net worth turns positive on a consolidated basis

Return to profitability at net level

7,000

6,316

6,729

6,000
5,000

4,222

4,000

Apartment construction
subcontracting business

Related businesses

38.2％

6.5％

Leasing business

55.2％(in the ﬁscal year ended March 1996)

Synergies from Construction and Leasing start to be felt in earnest
full-operation
Transition in Number of Owners(or Number of People Who are Members of Leopalace Fraternity)
30,000600,000

7,332● Sales breakdown by division for FY
ended March 2010 (consolidated)(in ﬁscal year ended March 2001)

Number of Apartment Units under Management

8,000

551,773

6,203

26,588506,742

4,763 4,654

25,11425,000500,000

3,604
2,976

3,000
2,000

0

earn

Return to profitability at operating level(¥100million)

Real Estate
Construction
Leasing
Other

Re

wth

gro
ings

(in the ﬁscal year ended March 1997)

Net Sales by Division (consolidated)

1,000

to
turn

572

1,168

1,445

1,918

2,205
1,073

744

736

635

1,055

1,371

1,670

1,049 1,265 1,632 1,777
54
34
45
46
47
109
180
250
17
37
61
132

537
78
349
110

183
85
390
85

26
137
364
108

18
224
377
116

5
531
431
88

1
760
519
91

22,568442,025

1,915 2,062 1,873

12
915
618
125

44
37
27
17
0
0
0
0
637 1,544 1,902 2,250 2,480 1,952
1,040 1,073
841 1,082 1,268 1,628 1,889 2,166 2,497
728
104
118
120
147
74
83
116
205

* Note 1: The sales figures of the Real Estate Division from March 2003 onwards are included in the “Other” category.

22,627

20,258400,00000003,161 3,275 3,591 2,370
2,771 3,027 3,347 3,427
384
428
394
406

20,000388,500

17,107344,045

87/3 88/3 89/3 90/3 91/3 92/3 93/3 94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3
497
54
19
3

10

96

95

94

d

rio
th Pe

97

99

98

02

01

00

04

03

09

e
dwid
l
r
o
W
ssion
rece

07

06

05

08

304,111300,000

15,00014,218259,221
11,594* Note 2: Applied to the new market segments as of March 2010.
216,463

Recurring Profit (consolidated)

200,000(¥100million)

800

760

600
445

400
200
0
-300

346

340
78

158

171

211
65
37

-10

87/3 88/3 89/3 90/3 91/3 92/3 93/3

-22

102

144

154

169

517

547
408

10,000181,484

9,128

152,351
136,755714
502
100,000

7,115

117,273
100,035

5,517

5,000

83,176

4,397
2,991

167
1,897

-297

-6

94/3 95/3 96/3 97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3

0

97/3 98/3 99/3 00/3 01/3 02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3

0

98/4 98/1299/1200/1201/1202/12 03/12 04/12 05/12 06/12 07/12 08/3 09/3 10/3

*Figures from March 2008 onwards represent the number of owners (figures obtained from the end of fiscal
year calculations), whereas those up to and including December 2007 represent the number of people whoare members of the Leopalace Fraternity (figures obtained from the end of year calculations). (The Leopalace
Fraternity has been transferred into Class-L as of the end of December 2007.)

15
Leopalace21 Investors Guide 201016
Leopalace21 Investors Guide 2010

Outline-2: Core Business【Core Business Model】【Construction/Leasing Synergies】

Further evolution of our basic strength, "Model of Synergies between Construction and Leasing".
The “Model of Synergies between Construction and Leasing” development, which was intended for the organic consolidation of real property
utilities, has after a twenty-year history been converted into “High Revenue Generating Asset Management” and transformed our businessmodel into one that can maximize the benefits from the scale of our stock business.

Studios (less than 30m2): Construction
Division's main productIn the apartment business, accurately assessing
the changing needs of specific customer groups
over the next 20-30 years is essential. In thiscontext, we have developed products primarily

Proposing and contracting
construction of leased
apartments

Property ownersegment(Landowners)

Bulk leasing contract(promising stable
management)

Our Company
Apartment
Construction
Subcontracting
Business

Simple and convenient
leasing format(Available for use startingfrom 30 days )Leasing
Business

Rental agreement

Total Support System(TSS)(maintenance andmanagement of buildings)

Provision of various services
that support daily life

Monthly agreement[Construction subcontracting revenue][Management services revenue]

targeting single individuals, who account forthe majority of apartment tenants. Thus, weTenant segment(those moving in)● Individuals(general)● Corporations(dormitories
and company
housing)

Rental agreement for long-term
occupancy and Monthly agreement for
short-term stays: the Leasing Division's
two main products

Leopalace's "Monthly Agreement" hasmultiple functions
In recent years, Monthly agreements have been
employed by a diverse group of tenants. Simply

The Leasing Division offers products designed
for long-term occupancy and short-term stays.
The former responds to a long-term occupancy

short-term tenants make up the remaining 40% .
Long-term occupancy functions include ordinary
residential use, company and school dormitories,

through a “Rental Agreement” with monthly

offer studio units (single room with kitchen, lesspayments and without agent fees, whereas

than 30 square meters) as our main product.
In addition, we are offering a new lineup thatthe latter is suitable for a temporary tenancy as
it offers a “Monthly Agreement” that includes

includes larger studio units and family-typefurniture, consumer electronics, and utility
expenses, and requires an advanced payment in aunits, as well as residences with attachedrental units to target new tenants to improve
occupancy rates and to create new demand.

single lump sum.

put, long-term occupancy tenants account forsome 60% of Monthly agreement tenants andand housing for job transferees away fromfamilies. Meanwhile, reasons for short-term stays
include business trips (mainstay), job training,
entrance examinations and lectures, temporary
housing during moves and home renovation, andsightseeing. As mentioned earlier, the successof the Monthly agreement service owes to our

Indeed, proposals we submit to owners are for

accurate response to diverse customer needs.

the construction of apartment buildings locatedin areas where we expect large lease demand
based on detailed analysis of the market.

[Usage fee revenue]

Synergy
The development of the Leasing business that is able to sustaina stable level of tenancy will ensure that apartments are managed
properly after they are built and facilitate the expansion of theApartment Construction Subcontracting business.

The increasing number of property owners who selectour services leads to an increased number of leased
properties (managed properties), thereby promoting
the expansion of the Leasing business.

Building a unique business model withthe fusion of construction business andleasing business based on the conceptthat "apartment management exists
only because of leasing"

Exhibiting an extremely strong
competitiveness in the industry byfacilitating compatibility between
benefits for property owners andbenefits for tenants

We are building our business based on the basic
policy that states "Apartment Management
Exists Only Because of Leasing" and with ourOur customers are from both the property ownerbase, owners of the real property, as well as
tenants, who wish to move into leased properties.

belief that apartment building construction andleased property management are inseparable
businesses. From the perspective of property
owners, the biggest concern regarding theirdecision to build an apartment building is

The strength of the "Model of Synergies between
Construction and Leasing" is born out of various
mechanisms that maximize the benefits for bothparties.
We established a "Total System for Apartment"whether it would be possible to continue
securing an adequate number of tenants
throughout the years". Consequently, we
provide a "Bulk Leasing System" to the property

Operations" that not only offers the membersof the property owner base recruitment andmanagement of tenants, through a bulk property
leasing system and cooperative system, but also

owners by conducting the Leasing business on
our own We resolve the concerns regarding
apartment building management for property
owners and provide them with a mechanismthat makes it possible to commission us withincludes maintenance and management of thebuildings through the provision of comprehensive
support.
Furthermore, to the members of the tenantbase, we provide not only the development

the construction of an apartment building
by realizing a "Model of Synergies between
Construction and Leasing".
By owning such a unique synergy between
Construction and Leasing, we are able toand provision of leased properties that feature
superior designs and functionality, but also units
furnished with consumer electronics by providing
leasing formats (such as Rental agreement andMonthly agreement) to respond to the diverse life

realize extremely high stability in our business
operations.

styles of modern times.
Our business model that offers significant
benefits to both parties exhibits an extremely
strong competitiveness.
17
Leopalace21 Investors Guide 2010

Expansion of student’s rental market
through business collaboration;
improved occupancy rates throughimproved corporate sales
By actively developing expansion for new
demand, we have been successful in further

Unit bath comes equipped withconvenient bathroom dryer features"Leopalace21 Series" exterior view

"Leopalace21 Series" Interior view

Facility with Pet Accommodating
Specifications (some available)

Microwave oven

Kitchen with an electricalcooking facility

improving our occupancy rates in this particularsector.
With the original intention of retaining
existing student tenants from 2005 we concluded
an agreement with companies that have a large
number of students in their correspondence study

Leash hookbusinesses. We also established a new payment
option that allows for monthly payments forthe use of Monthly agreement, providing thepossibility of making payments necessary to move

Western door with pet access

Refrigerator

Security Installations
Bed

into the leased properties as if they were being
paid as rent on a monthly basis through a businessalliance with credit card companies. This has
expanded demand and developed a structure thateases the burden on students starting a new life.
We also intend to expand corporate tradingeven further, by utilizing as leverage our extended
product lineup that incorporates larger studio

Automatically locking gate

Intercom equipped with monitor
Television also offers broadband
servicesunits and family-type units. What used to beregional corporate sales business units locatedat individual sales offices were integrated intoa single corporate sales organization based at
our head office in April 2009. This office will bedirecting sales to the head office functions ofother corporate groups.

Card key

Security windows (first floor only)*Includes currently unfurnished/uninstalled properties

18
Leopalace21 Investors Guide 2010

Table and chair (table is collapsible)

Air-conditioner

Outline-3: Characteristics and Competitiveness of Core BusinessCharacteristics and Competitiveness-1 Master sublease system and Total Support System ensuresmooth maintenance and administration

With our unique supply plan, we promise 30 years of stable management

Three unique points that support the master-lease system

Based on our belief that successful leasing operations are the key tothe apartment business, we introduced a master sublease system

Multiple tenant recruitment channels

Innovative leasing systems

which guarantees 30 years of stable apartment operations, aheadof industry rivals. Under the system, we first draft apartment supply
plans based on our research on market potential and tenant needs

Without successful tenant recruitment, theapartment business would not run smoothly. Our

Our products cover short-termstays as well as conventional long-

thorough research in local markets' potential backed

term housing needs, aided by ouroperations from building maintenance toby our nationwide marketing activities enables

unique systems. Moreover, we havetenant administration. Furthermore, the asset

tenant recruitment independently as well as throughintroduced innovative businessvalue of buildings are maintained at a hightie-up real estate agents nationwide. We employ
various recruitment media, including our nationwide

practices that do not require anyutility expenses; however, furniturelevel and the current Total Support System(TSS) has been implemented since April

office network, web sites, and apartment rental

and consumer electronics are

2007 to protect the life savings of owners

publications to ensure efficient tenant recruitment.

included. Thus, we have successfully

against unforeseen incidents, replacing

Meanwhile, prospective tenants are able to searchfor housing units, anytime, anywhere from all overJapan.

recruited a broad range of tenantgroups unrivaled by competitors,
meeting multiple needs of boththe apartment maintenance, which was
systematically conducted by the “Leopalace
Owners' Mutual Insurance System” in the past.

Payment ofmaster sublease
rent to owners

Ownersin each of the about 1,025 segmented areas across the country.
Based on these plans, we make proposals to prospective apartment
owners, offering comprehensive support for the apartment

Leopalace21
Corporation

business from construction to maintenance and administration.
The master sublease system, which ensures stable rent income
over the maximum 30-year period, and Total Support System(TSS), which guarantees apartment building maintenance andadministration, represents our key support systems for apartment
owners.

Building

Unique tenant
recruitment
systemTenants
Payment ofsublease rent

Comprehensive
maintenance andadministration

Reliable proxy maintenance andadministration
On behalf of apartment owners, we carry out

individuals and corporations.

Characteristics and Competitiveness-2 Nationwide studio apartment network, supported by online＊ Total Support System (TSS) : a planned maintenanceprogram for apartment buildings.

search capabilities

Apartment buildings under master sublease contracts with Leopalace21 are available nationwide

New network established for own sales offices and franchisee locations

Studios for which we have subcontracted construction and havecarried out maintenance and administration are located all over

Visitors to Leopalace Centers, spread throughout Japan, can searchreal-time for studios using our online network. For example, a person● Number of Leopalace Centers by area
(at end-March 2010)

who lives in Tokyo can look for the most up-to-date information
about studios for lease available in other areas such as Hokkaido andKyushu, apply for the apartment, and sign the contract on the spot. The

Total number of outlets in Japan

Japan, totaling some 551 thousand units. These studios werebuilt in areas where we estimated reasonable potential demand
based on thorough market research, in order to meet needs ofprospective tenants. We are the only industry player with thismany studios nationwide.

● Number of apartments managed by area
(at end-March 2010)

Hokkaido area:
14,327 units

Total number of units in Japan

551,773

Koshinetsu area:
24,002 units
Tohoku area:
33,796 units

Hokuriku area:
16,150 units
Kinki area:
77,922 units
Chugoku area:
37,289 units

Lavo cerna

Tokai area:
91,416 units

Kyushu/Okinawa area:
47,361 units

Villa Superio

Kanto area:
195,126 units

Shikoku area:
14,384 units

nationwide sales center network combined with our online network
guarantees our ability to meet a variety of needs among prospective
corporate and individual tenants.
An operation of the Leopalace Partners (franchisees) was launched186*In addition to a further five overseas outlets.

Koshinetsu area:
10 Outlets
Hokuriku area:
6 Outlets

in April 2010, as a new strategy. This shifted our operation of sales
offices from primarily our own sales offices to those that show a properbalance of our own sales offices with our franchisees, thereby reducing
customers, with the aim of improving the occupancy rates.
Under this strategy directly managed sales offices (in Japan), as of
Kyushu/Okinawa area:
21 Outlets

the installation of new franchisee locations, with 150 franchisee sales
offices targeted by the end of March 2011.

Kanto area:
54 Outlets

Shikoku area:
6 Outlets

Characteristics and Competitiveness-3 Real-time web search possible anywhere, anytime
Powerful web research based on nationwide network
Visitors to our web sites can search real-time for the most up-todate information on studios available across the country, and apply
for the apartment and sign a contract on the spot. With some 551
thousand studios managed nationwide, we are the only industry
player that can provide prospective tenants with real-time searchcapabilities of studios available nationwide even using our mobile
Internet site.

SearchSelection

Application

Leasing Agreement

Real-time search on our mobile
Internet site
Real-time search of our rental studios canalso be performed on our mobile Internet.
Similar to accessing our main home page,
visitors to the wireless site can gather
information regarding rental studios, view
floor plans,
and make payments
by credit card.

19
Leopalace21 Investors Guide 2010

Tohoku area:
18 Outlets

Kinki area:
25 Outlets
Chugoku area:
16 Outlets

fixed costs while increasing the number of contacts for drawing in

the end of March 2010, decreased by 100, reducing the number to 186
sales offices. This figure is scheduled to be further reduced to 150 sales
offices by the end of March 2011. On the other hand, we are promoting

Hokkaido area:
7 Outlets

20
Leopalace21 Investors Guide 2010

Tokai area:
23 Outlets

Market Trend-1

Demands (Residential Construction Market)

Supply (Residential Leasehold■ Number of new residential housing starts (sorted by user relationships)
Leased units
Residential houses for allotment sales
Condominium units for allotment sales
Homeowner's houses
Company housing and others■ Number of studio units, number and shares of our units■ Number of new residential leaseholds (units under 30m2)
Number of new residential leaseholds

Number of new residential leaseholds under 30m2

Number of new residential leaseholds under 30m2

Number of units we supply

（％）

600

60.0

1,630

3,500

(Thousands of units)

150

616

1,249
1,173

1,145

444

147

430.8

442

455

459 467

518

136

118
113

211

166

119
192

116

129

139

223

198

202

207

121 107

636
200

438

438
377

366 373367

353 356

312 31123.7

60

14,000

23.7

200

20.0

65.6

30
10.0

113.5

287

122.8

127.6

112.2

44.9

49.7

55.9

46.7

56.3

31

12

28

19

15

13

12

97/3 98/3

99/3

00/3

01/3

02/3 03/3

10

12

04/3 05/3

10

11

12

12

110.3
98/10

4.0

485.4

243.0
03/10

08/10

14

06/3 07/3 08/3 09/3 10/3

Note : Excerpted from Residential Housing Construction Work Commencement Statistics for fiscal
2009 of the Ministry of Land, Infrastructure and Transport.

Residential housing supply status (commencement of construction for
new residential housing) has reached the lowest level in over a decade
According to the Residential Housing Construction Work Commencement Statistics ofthe Ministry of Land, Infrastructure and Transport, the overall status of the supply forresidential housing and the number of newly built residential housing units for the past
decade and some years peaked in fiscal 1996 (ending March 1997) with 1,630 thousand

0

05/3

06/3

07/3

08/3

116.9

09/3

residential housing has declined to a level of about one million units.

0Note 1 : Excerpted from Residential Housing Construction Work
Commencement Statistics for fiscal 2009 of the Ministry of Land,
Infrastructure and Transport.
Note 2: All figures are based on fiscal year periods.

During fiscal 2009 (ending March 2010), however, the lingering
effects of the economic depression made a significant impact
even on leased housing, resulting in a dramatic decline of
30.0% in the number of units, in comparison with the previous
year, even though the leased housing still comprises 40.1% , a

A look at the trends for commencing new residential housing in recent years in terms
of user relationships indicate that leased housing and owned houses depressed at a
relatively slow rate until fiscal 2008 (ending March 2009), even as the market deteriorated,
thereby contributing to an increasing proportion in the makeup of overall housing. Leased
residential housing is our core market among these, which increased the proportionin the makeup of housing overall, in spite of the impact from the economic downturn.

21
Leopalace21 Investors Guide 2010

0

05/3

06/3

07/3

08/3

09/3

10/3

Note : The total number of units supplied by our company is taken as theactual number of units supplied.

Decline in number of construction for leased
units smaller than 30m2 was due to temporary
factors, such as dramatic reduction in corporate
demandlarge proportion in the makeup of the overall housing.

The reason behind this relatively stable transition of compact
leased units smaller than 30m2, with the number of new

Construction of leased units less than 30m2,
which had been increasing at a steady pace,slows down in fiscal 2009

residential housing showing a decreasing trend, is the increasein the number of young and single households in urban
areas seeking a new lifestyle, along with the birth of a new
demand, such as the outsourcing of corporate dormitories andcompany housing.

Leased units smaller than 30m2, which constitute our core field,
have been rapidly increasing in recent years. Since a recovery
was shown as the number reached 100 thousand units by

Leased residential housing maintains greater proportion of housing,whereas number of units decrease significantly

2,666

2,245

fiscal 2002 (ending March 2003), the number remained atover 100 thousand units, with the proportion of residential
units smaller than 30m2 in the overall number of leased units
constructed continuing at a high level around 25% .
With the dramatic economic depression during fiscal
2009 (ending March 2010), however, a decrease in the numberof construction of leased units smaller than 30m2 became
significant, with the proportion in the overall number of leased
units constructed sinking to under 20% .

The number of new constructions for leased units smaller
than 30m2 fell to about half in fiscal 2009 (ending March 2010).
This was due primarily to a rapid drop in corporate demand,arising from the deterioration of business revenue and thesuspension of hiring. The number of units supplied by us forfiscal 2009 (ending March 2010) also decreased to the levelit was back in fiscal 2004 (ending March 2005). This decreasein demand, however, is temporary in nature and we expect a
gradual shift to a recovering trend as the economy recovers in

0

1,123

2.0
0
2006〜2008
2001〜2005
1996〜2000
1991〜1995
1981〜1990
1980 and before

Now（7.0％）
5 years ago（13.9％）

2,374

10 years ago（14.7％）

2,131

15 years ago（13.2％）

3,746

25 years ago（23.2％）

5,289

4,534

30 years ago（28.1％）

03/10

08/10

2,580
5,100
4,516

6,938

2,000

units and thereafter the number continued to hover around 1,200 thousand units during
the ten subsequent years, which indicated some slow recovery.
The condition of the real estate market significantly deteriorated in fiscal 2007 (ending
March 2008) due to the impact of the Revised Building Standard Law, which came into
effect in June 2007, and then again in fiscal 2008 (ending March 2009), from the impactof the global financial crisis. The number of construction commencements of new

2,790

8,000

4,000

10/3

16,0991,047

16,154

1,303

16,131

6,000

60.4
0

6.0

3.3

12,00010,00095
100

16,000

12.0

8.0(Thousands of units)

19.4

67
476

6.9

18,000

60.4

16.0

10.0

■ Trend in residential leaseholds by period

775

311

160 165

451

0

30.0

26.3

24.3

138 138

400

1,000

311.4
300

231 242

116.9

18.0

14.0

90

538

218

112.2

40.0

26.0

126

3,498
11.7

500
400

431 445

600

113.5

444.7

1,035 1,039
426 418

3,309

1,500

120

1,285

1,173 1,193

516

122.8

50.0

467.3
1,341

1,000

4,163

2,000

127.6

500

1,226 1,213

（％）

2,500

537.9

1,179

Our share

3,000

517.9

1,200

Our stock

4,500(Thousands of units)

1,600

200

Studio housing stock(Thousands of units)

4,000

1,800

1,400

Stock and Rebuilding (Residential Leasehold Construction Market)

Market share of new residential leaseholds under 30m2

(Thousands of units)

800

Construction Market)

98/10

Note (for both graphs above): Excerpted from Residential Housing and Land statistics survey forfiscal 2008 of the Ministry of Public Management, Home Affairs, Posts and Communications.

Increasing studio stocks
The stocks of studios are in a steadily increasing trend. According to the Residential
Housing Construction and Land Statistics Survey, conducted every five years by the
Ministry of Public Management, Home Affairs, Posts and Telecommunications, thenumber of studio units as of October 2008 was 4,163 thousand units. This is an increaseof 854 thousand units above figures taken ten years ago, with a growth rate of 25.8% ,showing an outstanding performance in comparison with the growth rate for the
residential housing stock for the same period (14.7% ). Furthermore,
our market share of stocks has also increased by 11.7% .

Market for rebuilding residential leaseholds has gigantic potential forresidential leasehold construction
The graph shown above represents the data of trends for the overall residential leaseholds
sorted by construction period. Figures have remained stable for the past five years; whileduring those five years 3,310 thousand units of residential leaseholds constructed in 2000
and earlier (ten years ago) were lost, with approximately 3,360 thousand new units built
to replace them. This indicates that this is a market with a gigantic demand for rebuildingin the future.

the future.

22
Leopalace21 Investors Guide 2010Market Trend-2

Demands (Leasing Market)

Demand (Residential Construction■ Estimation for future number of general households by family category■ Estimates for single person households in the future
65 years and overSinglesSingle parents with kid(s)Married couples
Married couples with kid(s)Others■ The number of households residing in
rental housing and our share of the market(Thousands of households)

20,000Temporary stay
between moves 1.02％

49,06350,28750,60050,411

17,334
49,837

12,91140,000(27.6%)

16,56348,802

46,782
15,707(31.2%)

16,563

17,922

18,237(37.4%)

3,578

4,112

4,514

30,000

8,835

9,637

10,085

4,824

10,186

5,013

10,045

5,072

9,762

20,000

4,655

12,911
12,000569

3,032(23.5%)

5,621

6,311

6,729

7,173
(39.3%)

16,000779
2,153

12,000

9,391

5,444

6,351

7,134

7,531

7,662

2,591

53.15％

39.96％

8.0

15.21％

7.0

Student dormitories 2.72％
Job assignment away from home 0.66％
Daily use because of long commute 0.32％

3,925

5.0

8,000

■ Number of tenants by contract type
(Thousands of units)

500

4.0

Monthly agreement
Rental agreement

413.5

400

371.7

3.7%
14,91914,646

14,03013,256

10,00011,524

10,7034,000 (41.1%) 5,148

Our share
6,539

6,212

5,951

5,771

5,655

5,557

5,443

2000/10

2005/10

2010

2015

2020

2025

2030

(Projected)(Projected)(Projected)(Projected)(Projected)

Note : Excerpted from the National Census from the Ministry of Public Management, Home Affairs,
Posts and Telecommunications for fiscal 2005 and the Number of Households and Future
Estimates of fiscal 2008 from the Institute of Population Problems.

Large market needs exist for studios that will be sustained over a long
periodWith declining birth rates and an aging society, the population problem in Japan is an
issue that needs to be considered. In terms of family categories, singles consisted of
14,457 thousand in 2005, which comprised 29.5% share of the market. It is anticipatedthat this will increase to 15,707 thousand by 2010 and comprise over 31.2% of the market
share. Furthermore, an estimate for 2030 shows the number of households will reachapproximately 18,237 thousand, with 37.4% of the market share, a rapid increase in thisperiod. This indicates that the household makeup in Japan will be moving toward theformation of a gigantic single person household base very rapidly.
The market needs for studios provided by us is large and will be sustained over a long
period in the future, as indicated by this data on future estimates.
We have also been enhancing our new line of family-type units ranging from 40m2 to
50m2. The number of “married couple only” households, on the other hand, is predicted
to undergo a minutely declining trend, but will sustain about 10 million households,
which will enable us to find marketability.

6.5%

4,701

4,185

3,890

3,402
3,662 (18.7%)

2.7%
02000/10 2005/10

2010

2015

2020

2025

2030

(Projected) (Projected) (Projected) (Projected) (Projected)

300

9,155

4,000

(35.6%)

7,511

200
1.0

1.0%
1998/10100
2003/10

2008/10Furthermore, the graph, shown above, represents dataprepared by categorizing the extracted information regarding
single person households obtained from the estimation for
the future number of general households by family category,shown upper left, by age group. Targets comprised of theunder 35 population base of corporate users and the silverbusiness market, comprised of persons 65 and over, for whomthere are increasing needs in terms of hobby and nursing care,are emerging.
Our share in the market of the single person households
for under 35s was 2.7% in 2000, although it reached a level of
6.5% in 2005.

0

146.4
129.4 32.5 57.8
113.8 3.5

194.4

442.3 461.5
106.8

104.2

108.0

117.3

109.7

103.5

89.7

74.7
150.1 174.4

217.2

254.4

305.5

335.6 357.3

1999/3 2000/3 2001/3 2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3

Note : Based on company data

The classification into household categories
of tenants in rental housing reveals that there
is an increasing trend of single-person andtwo-person households, which are the target
categories of our company

Pioneering new markets through monthly leasing

The graph shown above indicates households that willreside in rental housing in the future and are classified into

residential use, the purposes for using the service are expanding, such as "dormitory (foremployees and students)," "job assignment away from home," "daily use because of longcommute," besides the "general use of rooms." Furthermore, as for "temporary use," thepurposes vary, including "business trips," which is the most often cited purpose, as well ashousehold types derived from the estimated number ofgeneral households by family makeup category. It is evident
that the proportion of single and two person households,
which are our targets, are by far larger than other category
throughout the entire population. Furthermore, although
households comprised of three or more persons are declining,those comprised of single and two persons, particularly single
persons, are showing a rapid rate of growth, indicating thatthe growth will continue to rise in the future.
Of these, our share of the market for managed units thatis comprised of single and two-person households, in termsof number of managed units, has been increasing by 1.0% in
1998, to 2.0% in 2003 and 3.7% in 2008.

23
Leopalace21 Investors Guide 2010

167.6

113.8 125.9 113.9 109.8 119.70Note : Excerpted from the National Census from Ministry of Public
Management, Home Affairs, Posts and Telecommunications forfiscal 2005 and the Number of Households and Future Estimatesof fiscal 2008 from the Institute of Population Problems.

In terms of single person households categorizedby age group, the silver population baseemerges together with the under 35s as thetarget populations for our core business

277.9
239.8

2.0

2.0%

2,000

0

326.9

3.0

8,077

5,302

12,394(for friends and others). Social area
. Conference room
. Other

Residential use

6.0

6,000

0

45.51％

Business trips

3,695
6,757

Temporary use

Company dormitories

2,591

10,000

4,577

1,912

creative activities. Common space

34.24％

9.0

3,927

5,027
8,000

1,672

2,447

14,0003,865(26.7%)

661. Place for hobby,

General10.0

18,00014,457
17,334（％）

20,00015,707

16,00014,457(29.5%)

17,922

18,237

Temporary use (for space) 1.34％
and other. Ofﬁce space

Training 3.17％(number of managed units / single-person + two-person households)(Thousands of households)

50,000■ Breakdown of uses of month-to-month leases (March 2010)
Temporary stay to visit hospitalized relation 0.22％
Study 0.22％
Temporary stay to visit relation on assignment 0.21％
Temporary stay during
Domestic tourism (individual) 0.13％
homerenovation/
Tourism (foreigners) 0.02％
rebuilding 0.55％
Domestic tourism (group) 0.01％

Household of ﬁve or more persons
Households of four persons
Households of three persons
Households of two persons
Households of one person
Our market share

Under 35 years

60,000Utilization (Residential leaseholds)(single-person and two-person households)

35 years to 64 years(Thousands of households)

and Leasing Markets)

We are pioneering into new markets outside the existing leasing markets by implementing
Monthly agreement, which is available for short or long-term leasing, along with Rental
agreement intended for long-term tenants. The purposes for using the monthly leasing
service can be categorized into "residential use" and "temporary use." In terms of theaccommodation during moving, taking seminars, taking exams and tourism.

Steady increase of a user base for monthly leasing responding tovarious needs
The trend for number of tenants by contract type indicates that since Monthly Leopalace
provides furniture, consumer electronics and utility expenses, launched in March 2000,
the number of transactions for monthly leasing increased rapidly, which indicates theservice matched the needs of the market. Furthermore, Monthly Leopalace Flats waslaunched in March 2002, offering tenancy periods for shorter segments, responding
appropriately to the changing needs of the market. The number of units for this service
has been sustained at a high level exceeding 100 thousand units since March 2005.

24
Leopalace21 Investors Guide 2010

Financial Highlights

Consolidated Segment Information

Consolidated net sales

Consolidated operating income

Consolidated sales for apartment construction
subcontracting business

Consolidated recurring profit（¥ million）

400,000（¥ million）（¥ million）

800,000
600,000
400,000
200,0000（¥ million）

80,000

06/3

07/3

08/3

09/3

10/3

Consolidated net income

80,00060,00060,00040,00040,00020,00020,0000

0-20,000-20,000-40,000

06/3

07/3

08/3

09/3

10/3

316,117200,000-40,000

06/3

07/3

08/3

09/3

10/3

0

30,000

07/3

08/3

09/3

12,744

12,749

06/3

07/3

08/3

09/3

10/3

0

06/3

07/3

08/3

10/3

Consolidated sales for other businesses（¥ million）

12,682

34,29912,6099,706

30,00020,01720,00023,346

20,1605,000

50,000100,000-40,000

0

40,00010,000200,000

09/3

255,233

10/3

100,0000-80,000

06/3

300,000

10,000342,713100,000

Consolidated sales for hotel and resort business

150,000

346,130
313,624200,000

200,000

400,000

20,000195,202（¥ million）（¥ million）

500,000

286,427

300,000

100,000

Consolidated net assets（¥ million）

400,000

237,062

15,00040,000359,154300,000

Consolidated total assets（¥ million）

327,540

Consolidated sales for leasing business（¥ million）

10,000
4,737

06/3

07/3

08/3

09/3

10/3

0

06/3

07/3

08/3

09/3

10/3

0

06/3

07/3

08/3

09/3

0

10/3

06/3

07/3

08/3

09/3

10/3

* Applied to the new market segments as of March 2010. Figures from prior dates shown have been adjusted to new market segments.

■ Consolidated Sales Breakdown

Consolidated
2006/3

2007/3

2008/3

2009/3

2010/3

Net sales

465,386

631,608

672,973

733,235

620,376

Operating income

40,77576,007

71,40250,156-29,727

Recurring profit

44,15173,002

60,847

46,785-33,831

Net income-16,582

37,358342

9,951-79,075

Total assets

412,803454,819

493,956

467,300

396,511

Net assets

133,622

185,784

170,155

146,442

70,979Common stock

55,64055,64055,64055,64055,640Net assets per share ( ¥ )839.44

1,054.99

1,036.43

967.40466.76

Net income per share ( ¥ )-104.17234.68

2.15

63.54

-521.91

Non-Consolidated（¥ million）

2006/3

2007/3

2008/3

2009/3

2010/3

Apartment Construction Subcontracting Business

195,202316,117

327,540

359,154

237,062

Leasing Business

255,233

286,427

313,624

346,131

342,713

Hotel and Resort Business

12,744

12,74912,682

12,609

9,706

Other Businesses

4,737

20,017

23,346

20,16034,299(Eliminations/Unallocated)（2,532）（3,704）（4,222）（4,821）（3,406）

Total

465,386

631,608

672,973

733,235

620,376

2006/3

2007/3

2008/3

2009/3

2010/3（¥ million）■ Consolidated Operating Income Breakdown（¥ million）

Apartment Construction Subcontracting Business

39,452

74,61473,267

70,112

29,744

Leasing Business

7,531

6,918

3,396

-977

-47,875

Hotel and Resort Business-2,313-2,339-793-472-1,324

-199

915

-38

-13,724-6,776

2006/3

2007/3

2008/3

2009/3

2010/3

Other Businesses

Shares outstanding (thousand shares)

159,543

159,543

159,543

159,543

159,543(Eliminations/Unallocated)（3,695）（4,101）（4,430）（4,782）（3,496）

Net assets per share ( ¥ )835.15

1,052.81

1,005.07

991.25471.21

Total

40,77576,007

71,40250,156-29,727

Net income per share ( ¥ )-209.23

248.45

19.85

58.21

-519.68

Dividends per share ( ¥ )

15.00

50.00

80.00

30.00

0.00

-

20.12

403.02

51.54-

Payout ratio (% )25
Leopalace21 Investors Guide 201026
Leopalace21 Investors Guide 2010