■ Corporate Data

■ Members of Board of
Directors (As of June 27, 2008)(As of March 31, 2008)

Company Name: Leopalace21 Corporation
Head Office: 2-54-11 Honcho, Nakano-ku, Tokyo
TEL: +81-3-5350-0001 (Main Line)
President and CEO: Yoshiteru Kitagawa
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.
Number of Employees: 8,678 (Consolidated basis) 7,771 (Non-consolidated basis)
Building lots and buildings transaction business license:
Minister of Land, Infrastructure and Transport Permit (8) No. 2846
Construction business permit:
Minister of Land, Infrastructure and Transport Permit (Special-15) No. 11502
Registration of Class-1 architect office: Tokyo Governor Registration 36122
Loan business registration: Kanto Finance Bureau Chief Registration (8) No. 00581
Memberships: Japan Association of Home Suppliers
Japan Prefabricated Construction and Manufacturers Association■ Corporate Structure(As of March 31, 2008)

President and CEO
Senior Managing
Director
Executive Director ofManagement
Director
Director
Director
Director
Director
Director
DirectorStanding Auditor
Standing Auditor
Auditor
AuditorYoshiteru Kitagawa
Eisei Miyama■ Shareholder Composition(As of March 31, 2008)

Securities Companies

Leopalace21 Corporation
Toyo Miyama Kogyo Co., Ltd.
(Manufacturing and Sales of Housing Materials)

Hiroyuki Miyata
Kou Kimura
Yoshikazu Miike
Satoshi Abe
Yousuke Kitagawa
Hiroshi Takeda
Naomichi Mochida
Yoshitaka Kouda
Yoshinori Uehara
Masami Matsushita
Koichi Fujiwara

Investors Guide
For the year ended March 2008

Treasury Stocks

1,679 thousand shares / 1.05%

Apartment Construction Subcontracting Division

Tadahiro Miyama

165 thousand shares
0.10%

Business Corporations andother legal entities
8,239 thousand shares / 5.16%(50%)
Financial Institutions
34,327 thousand shares / 21.52%

Leasing Division(comprising trust and banking companies)
28,280 thousand shares / 17.73%

SPC Leopalace REIT (Real-Estate Leasing)Foreign Corporations

77,025 thousand shares
48.28%

Individuals and Other
38,106 thousand shares / 23.88%

SPC Leopalace REIT II (Real-Estate Leasing)

SPC Leopalace REIT III (Real-Estate Leasing)
Leopalace Leasing Corporation*(Company housing agency and real estate agency)(100%)

Leopalace Travel, Ltd.
(Travel Agency)

No. of shares% ofoutstanding
sharesYusuke Miyama

21,251,774

13.32%The Master Trust of Japan, Ltd.
(Trust Account)

10,389,500

6.51%

Japan Trustee Service Bank, Ltd. (for trust)

6,594,400

4.13%

State Street Bank and Trust Company
Standing Proxy, Mizuho Corporate Bank, Ltd.

4,837,881

3.03%

Name of shareholder

Hotel and Resort Related Division
LEOPALACE GUAM CORPORATION(Hotel/resort operations in Guam)■ Major Shareholders (Top10) (As of March 31, 2008)(100%)(100%)

Other Business
Leopalace Finance Co., Ltd. *(Financial Business)(100%)

Chase Manhattan Bank GTS Clients Account EscrowStanding Proxy, Mizuho Corporate Bank, Ltd.

3,828,105

2.39%

Leopalace Insurance Co., Ltd. *(100%)

State Street Bank and Trust Company 505103
Standing Proxy, Mizuho Corporate Bank, Ltd.

3,282,062

2.05%

Trust & Custody Services Bank, Ltd.
(Investment trust)

3,079,900

1.93%

Investors Bank West Pension Fund Clients,
Standing Proxy, Standard Chartered Bank

2,827,800

1.77%

Toyo Kanetsu K.K.

2,745,900

1.72%

MDI Corporation

2,350,000

1.47%

Domestic Consolidated Subsidiary
Foreign Consolidated Subsidiary
Equity-method affiliates
Note 1: Numbers within parentheses represent equity stakes held by Leopalace21.
Note 2: Apart from the companies listed above, there are two companies (100% owned
indirectly by Leopalace21) with operational permits
Note 3: Those marked with an asterisk (*) are new consolidated subsidiaries.

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

Our “Medium-term Management Plan: United Spirit”
is Considered to Be Our Second Launch of Business inPursuit of “New Value Creation” by Always Staying a Step
Ahead of the TimesAt Leopalace21 we arrived at a turning point in March 2008, as we enteredthe 35th financial term. In December 2006 we announced our “Medium-termManagement Plan: United Spirit”, which projected our business operations for five
years into the future. This “Medium-term Management Plan: United Spirit” fiveyear plan is intended to raise the amount of sales to ¥1 trillion and the recurring

Corporate Slogan

Corporate Vision

A single dream for a united purpose

1. We strive to become a Total Support

Enterprise, providing a diverse range of
products and services in accordance withsolutions relating to "Effective Use of Land"and "High Quality Housing," as well as market
needs.

A United Spirit to meet today's constant demand for
new value and constant change

2. We will make work operations and financial

A united purpose to fulfill our customers' dreams
A united purpose for building a comfortable future
A united purpose aiming at a new goal
A united purpose of both employees and customers at the
new LeoPalace21
to realize a rich and comfortable lifestylecontent 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.

profit to ¥100 billion by the fiscal term ending March 2011. It has already been
two years since the plan was launched and we expect more substantial activities
to take place henceforth in order to achieve our planned targets. The attainment

Course of action and target indices of the Medium-term Management Planof our numerical targets is of course an important issue, but certainly the overall
strategies to “Leap Significantly towards Becoming a Total Support Enterprise for
President

Housing” and the qualitative targets to “Convert to a Property Asset Management

Yoshiteru Kitagawa

Company for Housing” are also critical issues. Furthermore, with the changing
times, issues for which businesses are expected to provide solutions are stacking

First phase of the Medium-term Management Plan
(fiscal year ending March 2007 to March 2009)

up at a pace far faster than we could imagine. Critical issues for the future include

Second phase of the Medium-termManagement Plan
(fiscal year ending March 2010 to March 2011)

how to participate in society as a “Corporate Citizen”, as cited in our Corporate
Vision, as well as how to sustain the growth of our business through support
obtained from society, or in other words, how to be evaluated favorably as aJune 2006: The new slogan, “United Spirit” formulated;transition made to a “Three Divisional Setup.”business that fulfills social responsibilities.

eriodsion Pnapx
ic E
SynergSpecific issues required of us for this critical time, during the second launchof our business, include the “Creation of New Values” and the recognition that our
corporate slogan supporting this corporate philosophy, “United Spirit: One Dream.
One Mind.” is our social responsibility. Therefore, we consider it important for us
to proactively pursue improvements to our business foundation and the expansionof the spectrum of our business affairs.

dg Perio
n
i
h
s
i
l
stab
Base EtnemeApproximately 600,000 apartment units targetedManagfor management in the final fiscal year!

As a representative of Leopalace21, I would like to take the helm of the

December 2006: The “Medium-term Management Plan: United Spirit” (Five Year Plan) announced.

company as we proceed through this period of the Second Launch of our Business,

Consolidated target indices (for fiscal year ending March 2011)

pursuing our “Creation of New Values” by always staying a step ahead of the times,
and by promoting the Corporate Social Responsibility Management to build our“Corporate Quality” and “Corporate Brand” in order to take on “Corporate Social
Responsibility” as a “Corporate Citizen”, as cited in our Corporate Vision.
We would like to ask all our stakeholders for their continued support andNet sales:¥1 trillion

Recurringprofit:¥100 billion

Equity ratio:
50 %

ROE:
15 %

Dividend
payout ratio:
30 %patronage.

Corporate Philosophy
Basic Policies

We aim to create new value through housing
1. We view the apartment business as a social undertaking,which realizes the effective use of land and supply of high-quality housing.

2. 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 andMedium-term Management Strategy

1. [Overall Strategy] Leap significantly towards becoming a total support enterprise for housing
Sustain and improve growth potential and profitability of core business, while significantly expanding business in areas other than thecore business, primarily with the strategic three businesses (Residential Business, Silver Business and Broadband Business) in our efforts
to make a significant leap towards becoming a "Total Support Enterprise for Housing."

2. [Core Business Strategy] Convert to a property asset management company for housing
Simultaneously promote quantitative increases and qualitative improvements for the core business (Apartment Construction
Subcontracting Business and Leasing Business) with the aim to become the largest "Property Asset Management Company for Housing."

systematic proactiveoperations.

01
Leopalace21 Investors Guide 200802
Leopalace21 Investors Guide 2008

Perspective of Medium-“Medium-term Management Plan: United Spirit” clarifies issues from mediumto long-term perspectives by basing decisions on certain macro indices, such as“Demographic Dynamics” and “Demographic Shifts”
Strategies based on “Demographic Dynamics”● Estimates for single person households in the future
Under 35 years

35 years to 64 years

17,334
15,707

16,00012,911

12,000

8,000

4,000

3,865
(26.7%)

3,032(23.5%)

5,444

4,577

5,302
(41.1%)

6,757

6,311

7,134

7,531

7,662

4,185

6.5%

2005/10

1 Tokyo Block

3,890

3,402
(18.7%)

3,662

2010
2015
2020
2025
2030
(Projected) (Projected) (Projected) (Projected) (Projected)

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

City name1,889,182 Urban areas of Tokyo Block

Total number of
migrants%

1,255,226

66.4

2 Tokyo Metropolis

Special wards of
792,198 Tokyo Metropolis

661,59183.5

3 Osaka Block715,652 Osaka City & Sakai City

241,379

33.7

4 Kanagawa Prefecture

451,686 Yokohama City & Kawasaki City

413,532

91.6

5 Nagoya Block375,294 Nagoya City

163,42443.5

6 Osaka Prefecture

334,720 Osaka City7

330,586 Saitama City

77,77823.5

314,712 Chiba City

188,909

60.0

Saitama Prefecture

8 Chiba Prefecture
4,701

2.7%
2000/10

6,351

5,621

7,173
(39.3%)

6,729

5,148
(35.6%)

Our share
0

4,655

18,237

RegionTotal number of
migrants

102,325

9 Aichi Prefecture

244,178 Nagoya City

163,42466.9

217,563 Fukuoka City

145,875

67.0

883

800

730
608

ofit toring pr442
e to
fit basew proBuild n

1,000

s of
net sale

800

10%

600

f recurratio osecure4002000Consolidated net sales (¥100 million)
12,000

ion
ans
Exp

Strategic three businesses and related businessLeasing Business

rgic

e
Syn

Apartment Construction Subcontracting Business

d

in

tB
men

e

nag

Ma

ness

si
e Bu
Thre

c
tegi
[Stra

8,000

ion

erio
gP

lish

tab

Es
ase

10,000

ess]

sit
mpo

o

es c

t sal

f ne
tio o

usin

ed B
elat
nd R

iod
Per

%

5
to 2

10,000

ra
ease
Incr

8,700

a

7,667 7,650

2,553

25.5%

1,657

473

969

30.6

10 Fukuoka Prefecture

1,200

1,025

● Top ten regions with highest demographic shift in 2007

16,563

14,457

Consolidated recurring profit (¥100 million)

Consolidated recurring profit

What steps are suitable for expanding our business to efficiently
promote our efforts to “Leap Significantly towards Becoming a Total
Support Enterprise for Housing”, which is our “Overall Strategy” citedin the Medium-term Management Plan? We clarify this management
issue by using data on the “Demographic Shift” and bringing about theformulation and implementation of practical strategies.
For many years the “Demographic Shift” in Japan had been
concentrated in urban areas, and this trend has been strengthening
in recent years. The demographic shift in the year 2007 indicatesthat increases in the Kanto, Kinki, and Chubu Blocks have constituted
the top nine regions, as shown in the table, with the tenth region
comprising a location out of the Kita-Kyushu Block, which has the
fourth largest population concentration in Japan.

65 years and over

17,922

Transition of net sales and recurring profit for the “Medium-term Management Plan: United Spirit” by business divisions (plan)

Strategies based on “Demographic Shifts”

What must Leopalace21 do now in order to remain the best
supporter of people for “housing” in the future? We clarify suchmanagement issues from medium- to long-term perspectives basedon “Demographic Dynamics” in order to substantiate our strategies.
The “Demographic Dynamics” mentioned indicate enormous
trends with “Declining Birth Rates” and “Aging Population”. In the midstof such movements the index data relating to “housing”, in which wemust focus, is the “Number of Single-Person Households”. Our future
estimates indicate that the number of single-person households willcontinue to grow at the current rate and the figure is expected to
exceed 15 million households by the year 2010.

(Thousands of households)
20,000term Management Plan

6,729
nually,12% an
10% tontracts
m
o
fr
ss
g co
busineof buildin
wth inlan groaccumulation
P
]
s
s
e
teady
g Busin[Leasin through s
4,247
3,474

6,316
383

6,000

Source: "Report on Migratory Movements Based on Basic Resident Register" of the Ministry of Public
Management, Home Affairs, Posts and Telecommunications (issued January 25, 2008).

3,843

3,498

4,654
205

427

3,027

2,772

4,000

74.5%
The number of single-person households comprising persons under the ageof 35 is expected to decrease due to the “Declining Birth Rates”, though wewill see the emergence of a new demand comprising men and women 35
and over. Furthermore, the number of single-person households comprising
persons 65 and over is on the rise due to the “Aging Population”.
The taking on of such new demands is anticipated in the formulationof our medium-term management plan, with the following specific strategies
being promoted:● Seek out ways to comprehensively present substantialfunctions, spaces, and services for studio apartments in our“Core Business”, and enhance our response to the needsof company housing by increasing our sales efforts in our
Leasing Business.

● Enhance our drive towards families as new targets bylaunching our “Residential Business”.

● Proceed with our efforts in creating receptacles for aged
single persons by launching our “Silver Business”.
Our aim is to “Leap Significantly towards Becoming a Total Support
Enterprise for Housing” as our “Overall Strategy” through the promotion ofsuch specific strategies.

The demand for “Housing” is more concentrated in regions where theinflux of a large number of residents occurs, causing a concentration of
the population in the region. We are promoting our activities intended to
expand our areas of business:● Implement activities for the “Core Business” with theintention of substantiating the business infrastructure(inventory of apartment units) in order to respond to theconcentration of orders in the three major urban blocks(Kanto Block, Kinki Block and Chubu Block).

2,497[Apartment Construction Subcontracting Business] Plan business froma neutral perspective, rather than based on current conditions.
2,000

3,703
3,161

3,275

3,200

2006/3

2007/3

2008/3

2009/3(record)(record)(record)(plan)

3,200

3,200

2009/3

2010/3

2011/3(projected)(plan)(plan)

1,952● Promote the activities of the “Strategic Three Businesses”(Residential, Silver, and Broadband Businesses) in order toexpand our business by utilizing the infrastructure of ourcore business within the three major urban blocks.

0● Enhance backups for our core business by launching “Related
Three Businesses” (company housing agency, financing, andinsurance businesses) and implementing activities primarily inurban areas.
We intend to expand our business operations in an efficient mannerby implementing such activities.

03
Leopalace21 Investors Guide 2008

First phase of theMedium-term Management Plan

Second phase of theMedium-term Management Plan

Note 1: Planned figures for March 2009 onwards are the same as the figures announced at the time the Medium-term Management Plan was formulated (December 2006).
Note 2: Forecast figures for March 2009 are the forecast figures announced on May 15, 2008.

04
Leopalace21 Investors Guide 2008

[Overall Strategy] “Leap Significantly towards Becoming a Total Support Enterprise for Housing”

Aim of 10% for recurring profits on sales, by establishing new revenue baseIn addition to the growth in our core business, we intend to expand strategic three businesses and launch related three businesses during
the implementation period for our Medium-term Management Plan to “Leap Significantly towards Becoming a Total Support Enterprise for
Housing” as defined by our [Overall Strategy].

Leopalace21

Enhancing and ExpandingCore Operations

Enhancing and expanding core business operations

The fundamental base of our business management
is the strong synergy of our Apartment Construction
Subcontracting and Leasing Businesses. We will build a new
management base using the "Leasing ALM System," basedon the business relationship between stock increases andefficient operation, in order to further enhance and expand
our core business.

Strategic three businesses and strategic
real estate development business
The three divisions of Residential, Silver, and Broadband
Businesses are extensions of our two core businesses andare all businesses that are open to an efficient and rapid
expansion based on effective utilization of our existing
business infrastructure. In addition, we will promote
improvements to our infrastructure spread throughout
Japan, as well as qualitative improvements to our fixed assets
through the “Strategic Real Estate Development Business”.

Related three businesses and otherrelated businesses
We launched related three businesses to support thecomprehensive strategies of our core business, in order toexpand the spectrum of our core business. Our other related
businesses include our existing Domestic Hotel Business andOverseas Resort Business in Guam in the United States.

Apartment
Construction
Subcontracting
Business

Leasing
Business

SynergyCore Business: Strategy of “Apartment Construction Subcontracting Business” and “Leasing Business”

Promote quantitative increases and qualitative improvements simultaneously to“convert the company into a property asset management company for housing”
We have thus far increased the amount of orders for apartment units in our Apartment Construction Subcontracting Business, with thepresumption of a thirty-year block leasing system, based on the concept that “successful leasing operations are the key to the apartment
management business” and we have been engaged in the management and operation of apartment unit inventory in our Leasing Business
Department. This is expected to increase our inventory of apartment units to approximately 600,000 by the fiscal term ending March 2011,
which is the final fiscal year for the current Medium-term Management Plan. The depth of property assets comprising apartment unit
inventors in our portfolio will increase rapidly.
We decided that the building of a foundation for a new business, which can fully utilize the strengths of a stock business, was essential
and for this reason we determined the "conversion to a property asset management company for housing" is the direction we should betaking our core business. In the future we will be simultaneously promoting the "quantitative increase strategy" to increase the benefits thatcomes with this scale of business and the "qualitative improvement strategy" for raising efficiency and productivity.

Strategic three businesses andstrategic real estate development businessResidential
Business

SilverBusiness

Creating new profitable units
through our change to anationwide-level of operations.

Broadband
Business

Strategic
real estatedevelopment
business

Profits delivered Improvementby our addedand expansion
value service. of infrastructure

Related three businesses and other related businesses
Leopalace
Leasing
Corporation

Leopalace
FinanceCo., Ltd.

Strategic business Business for carrying
for entry into
our next generation
family apartment
strategic realbusiness
estate development
business

Leopalace
Insurance
Co., Ltd.

Domestic
HotelBusiness

Overseas
ResortBusiness

First insurancecompany inour corporate
group

Responding
to local needs.

Resort businessin Guam, USA

Progress status of individual business operations
Apartment Construction
Subcontracting Business

The amount of orders received during the fiscal term ending March 2008 was ¥420 billion, a 23% increase over that of theprevious term. As a result, the balance of orders exceeded ¥340 billion. The amount of sales, on the other hand, remained at¥327.5 billion, due in part to the effects of the “Revised Building Standard Law” which came into effect in June 2007. The amountof sales, however, exceeded by approximately 4% the figures of the previous year.

Leasing Business

The number of units under our management increased by 53,500 and resulted in a total of 442,000 units by the fiscal term endingin March 2008. The occupancy rate (annual average) remained at 92.4%, due in part to the fact that during this financial period
we terminated our weekly rentals, which were rental housing for extremely short terms that provided very little profitability. The
amount of sales, however, was ¥302.7 billion.

1 Quantitative increase strategy-1

2 Quantitative increase strategy-2

3 Qualitative improvement strategy

Expansion and implementation ofstrategies in core business (new apartment
units and services)

Expansion and enhancement offoundation for leasing business(outlets and sales personnel)

Complete leasing ALM system (first phaseplan) and operate at full-scale (second
phase plan)“Enhanced new apartment unit strategies” by ourapartment construction subcontracting business and“enhanced new leasing service strategies” by our Leasing
Business Department become vital keys for our success.

We will have 400 sales locations nationwide as apart of our outlet strategy and a sales organization
comprising 2,400 personnel as our personnel
strategy by the final fiscal year of the current
Medium-term Management Plan ending March
2011.

A revenue management system, rivaling that of financial
businesses, will be established by the fiscal term ending
March 2011, with the aim to optimize the operation ofproperty assets, which are increasingly becoming gigantic innumber (inventory of 600,000 apartment units).

Progress status

Progress status

Progress status

Nine newly offered apartment units, incorporating
our two-person dwellings, dwellings open to pet
owners, and dwellings with complete security
measures, were introduced during the first term
(fiscal term ending March 2007) with our newapartment unit strategy. Our Leasing Business
Department also developed our monthly packduring the second term (fiscal term ending March
2008), resulting in steady progress.

We have increased the number of outlets
nationwide to 311 (including overseas
locations) and expanded the organization
to 2,100 personnel as of the second term
(end of the fiscal term ending March 2008).
This organization is adequately equipped torespond to the management of 500,000 units
as we expect a large number of managed
units by the third term (fiscal term ending
March 2009).

Development vendors will already have been selectedby the fiscal term ending March 2008, which is thefirst term of the Medium-term Management Plan (thisterm is to be completed by the fiscal term ending
March 2009), in preparation for moving onto the next
design and development stage, “Phase One” (April
2008 to April 2010). Systematic conversion of the corebusiness and major management operations will betargeted in “Phase One”, with the development ofsystems for the core business, including the “Leasing
ALM System”, finally starting to take place.

Related Businesses

Strategic Businesses

Number of apartment units under management and rate of tenancy (plan)
Strategic Three Businesses(Residential Business,
Silver Business,
Broadband Business)

Strategic Real Estate
Development Business

Related Three Businesses(Leopalace Leasing Corporation,
Leopalace Finance Co., Ltd. ,Leopalace Insurance Co., Ltd.)

Domestic HotelBusiness
Overseas Resort
Business

The total amount of sales for the strategic three businesses indicated a growth of 18% over that of the previous term in thefiscal term ending March 2008, with the amount reaching ¥36.8 billion. Since the strategic three businesses will continue to playa major role in our efforts to attain the strategic target to “Leap Significantly towards Becoming a Total Support Enterprise for
Housing”, we are setting challenging targets for these businesses.
Our real estate development business was launched through strategic real estate investments, amounting to approximately ¥100
billion, in order to establish our nationwide network core business. This investment business operation is being promoted with thepremise of a transformation into a business without assets and aims to secure business earnings of 7%.

(Thousands of units)
800
Number of apartment units under management

600

400

We perform our hotel business operations at major cities around the country with the aim of managing hotels that are convenientfor our customers, providing services in line with the times and with prices set at reasonable rates.

005
Leopalace21 Investors Guide 2008

92.4

92.8

92.4
507

New related three businesses were launched as a means to raise the composition ratio of sales arising from businesses otherthan our core business. “Leopalace Leasing Corporation” conducts one such business, which is in charge of operating a company
housing agency business as a strategic business entering into the family-oriented apartment business industry. We also have
“Leopalace Finance Co., Ltd.”, which was launched with an investment of ¥100 billion during the term of our Medium-termManagement Plan in order to support our strategic real estate development business. Finally, we also have “Leopalace InsuranceCo., Ltd.”, which was established as a unique insurance business operating for our leasing business.

We perform our major resort business operations at two locations, one in the central region and the other in the northwesternregion of Guam through our wholly owned subsidiary, Leopalace Guam Corporation (LGC).

93.3

Rate of tenancy

344

388

94.0

94.5

(%)
95.0

592

92.5

543

Outline of Leasing ALM System

Owners Liabilities Leopalace21 Assets

Tenants

442
90.0

200

87.5

2006/3

2007/3

2008/3

2009/3

2010/3

2011/3(record)(record)(record)(plan)(plan)(plan)First phase of theMedium-term Management Plan

85.0

Second phase of theMedium-term Management Plan

06
Leopalace21 Investors Guide 2008

●Maximization of total
profits in Construction
and Leasing Business●Best balance between
leasing income andlease rent

●Leasing system
maximizing the numberof occupied units andrent●Reduction of lifecycle
costs of properties

Strategic Three Businesses 1: Strategy of “Residential Business” and “Silver Business”

Strategic Three Businesses 2: Strategy of “Broadband Business”

Establish business base early in three major metropolitan areas during first phase ofplan and nurture them as hubs for next source of revenue

Convert enormous scale of core business into revenue,as part of our stock businessWe are aiming to leap towards becoming a “Total Support Enterprise for Housing” as our overall strategy of the Medium-term Management
Plan. Since our residential business and silver business are structured to build and sell or operate residential housing or nursing care facilities,
they are indeed a progression of our core business model. Both of these businesses, therefore, can be expanded in an efficient and securemanner, based on our existing business infrastructure (leased or subcontracted retail spaces, locations with a concentration of managed
apartment units, locations with a concentration of individually owned apartment units, etc.).

1

2

Residential BusinessOur main targets for the Residential Business are the "Baby-boomer
Junior Generation" (born between 1971 and 1975), who are moving out
of our studio apartments, offered by our core business. Approximately
6.3 million of these people, comprising about 64% of their population,
are concentrated into three metropolitan areas (2005 estimate). We
will, therefore, enter into these three metropolitan areas and construct
our business base in these areas.

Silver BusinessApproximately 14 million or 56% of the "Silver Generation" (people
65 years and older), targets of our Silver Business, are concentrated
in the three metropolitan areas (2005 estimate). We are focusing ourefforts on operations in and around the three metropolitan areas forthe time being and strive to expand business in an assured manner.
The operation of the facilities following their construction for the Silver
Business, holds the key to business success. For this reason, we intend
to concentrate on building our operational know-how during the firstphase of the plan and schedule a gradual development, unlike the
Residential Business in terms of area expansion speed.

If we were to consider the Leasing Business as a stock business that utilizes
managed apartment units as an intermediary, then the Broadband Business isa stock business that utilizes software (or IT) as an intermediary. We have been
providing our unique broadband service (Leopalace BB) intended for occupants ofmanaged apartment units and we have been proceeding with the installation of
STB units (LEO-NET terminals). This gigantic market is unique to us and deals withthe occupants of managed apartment units as subscribers. Through an increased
number of managed units and the improvement of the STB installation rates, thescale of the business will become even more gigantic.

Transitions in the number of units withinstalled terminals and installation rates
Number of units with installed terminals
Installation rates(Thousands of units)
500

83.3

(%)
100.0

89.2
394

400

80.0

324
300

66.0

60.0

227
200

40.0

100

20.0

Progress status
Installations have been completed at 89.2% of our managed units (394,000 units) asof the end of March 2008, and we are planning to reach an installation ratio of 94%(484,000 units) within the current fiscal year.

0

2006/3

2007/3

2008/30Content of Broadband Business's principal services

Services aimed
at tenantsNote: The population figure for the Baby-boomer Junior Generation and Silver Generation, in the three metropolitan areas described above, is our estimate based on the data in the"2005 Population Census of Japan," prepared by the Ministry of Internal Affairs and Communications.

Current state of development of Residential BusinessCurrent state of development of Silver Business(Results in fiscal year ended March 2008)(as of March 31, 2008)

Number of properties under contract
Number of properties sold

31 31

Tochigi
Prefecture

Gunma
Prefecture

30

35

6

4

44 43

Tochigi
Prefecture

Gunma
Prefecture

146

SaitamaPrefecture
Chiba
Prefecture3

Paidservices● Video on demand (VOD): Approximately 3,000 titles● CS Plus (satellite television) service (Four additional channels including WOWOW)

Under
development● Sale of systems to condominiums, hotels, and hospitals● Classified advertisements using the LEO-NET and related program guide "LEO-NET BOOK"● Programs with commercial tie-ups (Tools for switching to surveys and request forbrochures following commercials)● Interlocking TV and cell-phone program (character entry tool using cell-phone)

In planningstage● Various subscription services (such as regional information and corporate information)

4
IbarakiPrefecture

41

Tokyo
Metropolitan
Area

6

1

1

SaitamaPrefecture

38

23

Number of facilities withcompleted contracts
Number of facilities thathave been opened

IbarakiPrefecture

Corporateorientatedservice utilizing
media content

Free
services● Continual internet connection● Basic CS (satellite television) service (Four channels including MTV)● Informational services (news, weather, fortune telling, maps etc.)● Services such as gaming, shopping, and home delivery● Creation of participatory programming for tenants and their transmission

3

Tokyo
Metropolitan
Area

2

14

10

Kanagawa
Prefecture

Kanagawa
Prefecture

Chiba
Prefecture

Note: Other than the above, our performance records indicate that 35 buildings areunder contract and 34 buildings have been sold in the Kinki Block (Osaka andHyogo Prefectures), whereas 28 buildings are under contract and 28 buildings
have been sold in the Chubu Block (Aichi Prefecture).

Note: Other than the above, a facility is under contract in Yamanashi Prefecture.

07
Leopalace21 Investors Guide 200808
Leopalace21 Investors Guide 2008

Set Top Box(STB)Other strategic businesses: Strategy of “Strategic Real Estate Development Business”

Other strategic businesses: Strategy of the “Domestic Hotel Business” and “Overseas Resort Business”.

Our real estate development business was launched with strategic real estate investmentof approximately ¥100 billion to build a nationwide network of core business

Expanding synergy between core business and strategic three businesses

As of March 2008, we have high-rise apartment buildings, “Leopalace Flat” situatedat 14 locations nationwide, forming synergistic effects by the completion of anationwide network of our core business. We intend to make strategic real estate
investments with approximately ¥100 billion by March 2011, improving andexpanding the infrastructure of our business operations, as well as improving thequality of our fixed assets. This investment business operation is promoted with thepremise of a transformation into a business without assets with the aim to securebusiness earnings of 7%. Furthermore, we intend to avoid the appreciation of our
fixed assets, to slim down figures on our balance sheet and improve our ROA.

Summary of strategic real estate investments● Investment scale: Approximately ¥100 billion(by fiscal year ending March 2011)(about 50% of operating cash flow)● Investment standard: ROI of about 7%

Aside from ordinary hotel guests, the Domestic Hotel Business offers rooms with a “Monthly
Leopalace Flat” contract to guests who stay longer periods, similar to the leasing of apartment
units. Furthermore, a business location for our core business is also established in our hotels
and used as a sales location for the area. The Overseas Resort Business, on the other hand,is implemented through our wholly owned subsidiary Leopalace Guam Corporation. It has
been operating our Leopalace Resort at an average occupancy rate of 57.7%, as of the fiscal
term ending March 2008. The total number of rooms is 13,185 and 23.0% of the occupancy
is composed of apartment owners, whereas our shareholders occupied 2.5%. We intend toincrease the synergistic effects of both these business operations to contribute towards theenhancement of our core business.

Asahikawa(Opened August 2003)

Sapporo(Opened November 2002)

Niigata(Opened September 2002)

Okayama(Opened September 2003)

SendaiHakata(Opened April 2003)(OpenedApril 2007)

Second softball field■ Overview of Leopalace Resort

Third soccer field

Nagoya(Opened May 2002)

Cycling and Jogging cource
Track and soccer field

Competition-sized pool
Diving pool

Yokkaichi

La Cuesta E(Opened February 2003)

First softball field

Fitness jim
Walking pool
Swimming pool
ReceptioncenterBaseball field

La Cuesta D

La Cuesta pool
Footsal court
Multipurpose ground

Beach Volleyball court

La Cuesta B

Water slider
Luxury pool

Second soccer field

La Cuesta C
Lawn tennis court
Leopalace Resort
Hotel Belvedere
Manenggon lake

ChapelLeopalace Flat Hiratsuka

Leopalace Flat Yamagata

Leopalace Flat Funabashi

Leopalace Resort
Country Club

Kids garden
Leopalace Resort
Country Club

Multipurpose ground

Related three businesses: Strategy of three businesses that support comprehensive strategies for core business
1

Club house

Sub baseball field

Hotel Leopalace Hakata

Company housing agency plays strategic role for corporate customers of our Leasing Business Department: “Leopalace Leasing Corporation”
We will enter into the family-oriented apartment business industry with a brand new perspective. In the past, our business centered on
the core apartment business that dealt primarily with studio apartments. In the future, however, we will incorporate a family-oriented
apartment business in order to meet the needs of our corporate customers for their company housing and dormitories intended forfamilies, which will include the management of properties owned by other parties. At the present time our business operations in thisarea center around the management agency work for the residential housing we lease from other parties, as well as the management andoperation agency work for company housing with 46 contracted clients for the company housing agency work. We intend to broaden theapartment unit business base through our newly established subsidiary, “Leopalace Leasing Corporation”.

2

Strategic company for our Real Estate Development Department: “Leopalace Finance Co., Ltd.”
Leopalace Flat Business is a critical sales strategy in our efforts to build our nationwide network for the business operations of our Leasing
Business Department. We believe that in order to expand and substantiate the business use of our leasing units and formulate businessstrategies, which transcend the framework from medium to long term, it is essential for us to take a step further by implementing a realestate business with a strategic development orientation. The company charged with the responsibility of conducting these strategic realestate developments in the future is our newly established subsidiary, “Leopalace Finance Co., Ltd.”.

3

Leopalace Resort

Westin Resort

First insurance company of our corporate group: “Leopalace Insurance Co., Ltd.”The first insurance company of our corporate group was launched in March 2008. The company will initially be conducting business at
the Center Branches of our Leasing Business Department nationwide, selling household contents insurance primarily to individual tenants
who become the residents of our apartment units, but incremental expansion in the scope of business is expected in the future. Insurance
indemnifies policyholders from losses by covering their household contents and liabilities and these are intended for the younger generation
single persons, so that they may reside with peace of mind in their leased apartment units. Furthermore, we intend to take on development
projects to provide a broad range of assistance in the vast insurance business industry in order for us to broaden our business base.

09
Leopalace21 Investors Guide 2008

Track and soccer field

Competition-sized pool

Lawn tennis court

10
Leopalace21 Investors Guide 2008

Club house

●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（● All events illustrated in the timeline occurred in respective calendar years, while all operational data in charts
represent respective fiscal year figures.）●Launch of Monthly Leopalace Flat service●Opening of Leopalace World Nagoya and 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

Construction
Division

97●Sales breakdown by division for FY

ended March 1991 (consolidated)

2.1％

Apartment
development/sales80.6％●Listed on over-the-counter market(JASDAQ)

88

87

86

th
Grow

89

le
Bubb

d
Perio

92

Post le
Bubb
d
Perio

91

90

94

93

d
Perio

99

98

02

01

00

rnin

ea
rn to

Retu

ineslsBusoem ditiontrans

Net worth turns positive on a consolidated basis(in fiscal year ended March 2001)
Other Divisions

Return to profitability at net level

6.3％(in the fiscal year ended March 1997)

Return to profitability at operating level(in the fiscal year ended March 1996)

Apartment development/
sales business

th

row
gs g

96

95

Establishment of
New Business Model

Net Sales by Division (consolidated)
6,730

Construction
Division

45.0％

48.7％

ended March 2008 (consolidated)「Synergies from Construction and Leasing start to be felt in earnest
Number of Apartment Units under Management

7,000 (¥100million)

Leasing Division●Sales breakdown by division for FY

Construction
Subcon tracting

Developer

04

03

25,000500,000* Leopalace Owners' Mutual Insurance System was transferred
to Class-L,as of December 31, 2007.

6,000

22,568442,025

4,763 4,654
4,222

4,000

3,604

1,918

2,000
1,168

2,205

1,445

1,073

572

744

635

736

1,055

1,371

1,670

20,25820,000400,000

2,976

3,000

1,000

full-operation

Number of Members of the Leopalace Owners' Mutual Insurance System

6,316
5,000

06

05

08

07

388,500

1,915 2,062 1,873
17,107344,045

0Real Estate
Construction
Leasing
Other

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

497
54
19
3

1,049
54
47
17

1,265
34
109
37

1,632
45
180
61

1,777
46
250
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

12
915
618
125

27
1,040
728
120

44
1,073
841
104

37
637
1,082
118

17
1,544
1,268
147

0
1,902
1,628
74

0
2,250
1,889
83

0
2,480
2,166
116

0
1,952
2,497
205

0
3,161
2,772
383

0
3,275
3,028
427

304,111300,000

15,00014,218259,221
11,594* The sales figures of the Real Estate Division from March 2003 onwards are included in the “Other” category.

216,463

200,000

Recurring profit (consolidated)

10,0009,128

181,484

800 (¥100million)

760

152,351

714

7,115

136,755

600

547
445

400

340

200

158

171

0

408

100,000

346

211

78

117,273

517

37

-10

-22

-6

92/3

93/3

94/3

95/3

65

102

144

169

154

5,517

100,035

5,000
4,397

83,176

167

2,991
1,897

-100

0
87/3

88/3

89/3

90/3

91/3

96/3

97/3

98/3

99/3

00/3

11
Leopalace21 Investors Guide 2008

01/3

02/3

03/3

04/3

05/3

06/3

07/3

08/3

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

98/4 98/12 99/12 00/12 01/12 02/12 03/12 04/12 05/12 06/12 07/12

12
Leopalace21 Investors Guide 2008

New Total

Implement multifaceted business operations for customers of both the Property Owner"Land Utilization-Related Market".

Business Modelbase and User base by setting a comprehensive target that widely considers the entire● Examples of exhibited offerings from our“Leopalace21 Series” lineup
Property Owner segment

Customers using
the facilities(Landowners)

Investor segment

Proposal ofdevelopmental realestate business

Customers considering
investments
in securitized real estate(For Real Estate Securitization Business)

Sale of securitized real estate

Leopalace21

Leopalace
Finance

Customers
considering
sale of land

Residential Business

Proposal to securitize real estate

Proposal to manage
leased apartments

Provision of services,
including courtesy
services

Customers
considering
effective
use of land

New Leo Various(For Real Estate Securitization Business)

Apartment
Construction
Subcontracting
Business

Leasing Business

Domestic
HotelBusiness

Provision of functions
as local area sales locations

Leopalace
Leasing

Provision of broadband
ISP services

Provision ofleasing services

Tenant segment(individual andcorporation tenants)
Leo Various

Leopalace
Insurance

Response to accommodationand long-term stay needs

Hotel guests

Provision of nursing
care services
Proposal to develop nursing careinsurance applicable facilities

Proposal offamily-oriented
apartment units

Leasing operations of
securitized properties

Broadband
Business

Overseas
Resort BusinessResidential
buyers(For Real Estate Securitization)(For Allotment Sales Business)

Assessment and purchase of land

(For Allotment Sales Business)

Sales of residences by allotment

Silver Business
Provision ofoverseas resort services

Silver segment(including family
members)

Provision of
insurance cover,primarily forhousehold contents

Leo Comfort

Strategic real estatedevelopment
business

Build business models that aim to maximize the use ofcustomer resources with the two core operations
We are conducting business operations from various perspectives as ago-between for the customers who own properties and the customers
who are using the facilities that are built and managed by us.
Apartment Construction Subcontracting and Leasing businesses
are the two operations at the core of such activities. The synergic
effects on peripheral businesses are extremely powerful resulting froma high degree of credibility and recognition secured through dealing
with our customers who are property owners and our customers
who are users. This has become our business model with the aim to
maximize the use of customer resources.
Customers on both ends of the business are not only in a
relationship with the entrance and exit of operations, but rather, theyshould be positioned as critical business management resources thatbring operating revenue.
Our business model has extra depth with the addition of the new
related three businesses (Leopalace Finance, Leopalace Leasing, andLeopalace Insurance) that support the strategies of our core business.

Improvement andexpansion of internal
infrastructure

Realizing Maximized Business Opportunities by
Implementing Various Approaches for the Property
OwnersAside from the Apartment Construction Subcontracting business,
which is one of our core operations, we also have strategic business
operations, such as the Residential business and Silver business thatcan be included in our proposals to property owners.
The needs of our customers vary from "effective use of land" to"sale of land" and "investment in securitized real estate". We, therefore,
offer our proposals on these three business operations, suggestingManagement of Rental Apartments, Securitization of Real Estateand Development of Nursing Care Insurance Applicable Facilities
depending on their needs, while conducting the Assessment andPurchase of Land for customers who are considering selling theirproperty and providing services related to the Sale of Securitized Real
Estate, such as Leopalace REIT to those customers who are interested
in investing in securitized real estate.
We are realizing a maximization of business opportunities throughsuch various approaches.

Expanding Customer Base through Diversification ofApproaches Implemented to Users
Approaches employed to aid users are conducted by five business
operations, including the “Leasing Business”, which is a core operation,
along with the “Broadband Business”, “Residential Business”, “Silver
Business” and “Domestic Hotel Business”.
Along with properties managed by the Leasing business, we
perform leasing operations for properties, which have been securitizedby the Residential business and provide leasing services to theindividual and corporate tenant base. Furthermore, we are increasing
the attraction of leasing properties and connect it to the acquisitionof business revenue by offering both free and for-fee Broadband ISP
services (Leopalace B.B.) to the tenant base. Furthermore, we will sellresidences (houses and condominium units) that has been developedby the Residential business to prospective home buyers, while various
nursing care services are provided to those in need of nursing care(including families of patients) by the Silver business.
We will be expanding the customer base of users through theoperation of these businesses and promote diversification of ourrevenue sources.

Inside Villa Alta

Inside Villa Superior

Dwelling open to pet owners

13
Leopalace21 Investors Guide 200814
Leopalace21 Investors Guide 2008

Core Business Model

Construction/Leasing Synergies

Our fundamental strength is the "Model of Synergies between Construction
and Leasing"
Our Company
Proposing and contracting
construction of leased
apartments

Property ownersegment(Landowners)

Bulk leasing contract(promising stable
management)

Apartment
Construction
Subcontracting
Business

Simple and convenient
leasing format
Tenant segment(available for use starting(those moving in)from two weeks )Leasingbusiness●Individuals

Leopalace21 Leasing System

Cooperative systems(maintenance andmanagement of buildings)

Provision of various services
that support daily life

(general)●Corporations(dormitories
and company
housing)Monthly Leopalace Flats[Construction subcontracting revenue][Management services revenue]

Studios (less than 30m2):
Construction Division's Main
Product
In 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
targeting single individuals, who account for the
majority of apartment tenants. Thus, we offer
studios of less than 30 square meters as our main
product in the Construction Division. Indeed,
proposals we submit to owners are for theconstruction of apartment buildings located inareas where we expect large lease demand basedon our detailed marketing analysis.

Membership-based leases forlong-term occupancy and Monthly
Leopalace Flat for short-term stays:
the Leasing Division's two main
products
The Leasing Division offers products designed
for long-term occupancy and short-term stays.
The former responds to the long-term occupancy
through the Leopalace21 Leasing System that
does not require lease deposits and key money,
while the latter is Monthly Leopalace Flat, which isprovided with furniture and consumer electronics
and includes utility expenses.
To cope with the diversifying needs of tenants
in recent years, we have approached productdevelopment with an eye to convenience andamenity for short-term stays.

Monthly Leopalace Flat has multiple
functions
In recent years, Monthly Leopalace Flat has been
employed by a diverse group of tenants. Simply
put, long-term occupancy tenants account forsome 60% of Monthly Leopalace Flat tenants
and short-term tenants make up the remaining
40%. Long-term occupancy functions include
ordinary residential use, company and school
dormitories, and housing for job transferees awayfrom families. Meanwhile, reasons for short-termstays include business trips (mainstay), job training,
entrance examinations and lectures, temporary
housing during moves and home renovation, andsightseeing. As mentioned earlier, the success of
the Monthly Leopalace Flat service owes to our
accurate response to diverse customer needs.

[Usage fee revenue]

Synergy
The development of the Leasing business that is able to sustain
a high 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.
Unit bath comes equipped with convenient bathroom
dryer features

Building a Unique Business Modelwith the Fusion of Construction
Business and Leasing Business
Based on the Concept that
"Apartment Management Exists
Only Because of Leasing"
We are building our business based on the basic
policy that states "Apartment Management
Exists Only Because of Leasing" and with ourbelief 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"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 owners
by conducting the Leasing business on our own
and by building an organization that can sustain
a high rate of tenancy. We resolve the concerns
regarding apartment building management
for property owners and provide them with amechanism that makes it possible to commission
us with 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 torealize extremely high stability in our business
operations.

Exhibiting an Extremely Strong
Competitiveness in the Industry by
Facilitating Compatibility Between
Benefits for Property Owners andBenefits for Tenants
Our customers are from both the property ownerbase, owners of the real property, as well as
tenants, who wish to move into leased properties.
The strength of the "Model of Synergies between
Construction and Leasing" is borne out of various
mechanisms that maximize the benefits for bothparties.
We established a "Total System for Apartment
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
includes maintenance and management of thebuildings through the provision of comprehensive
support.
Furthermore, to the members of the tenantbase, we provide not only the development andprovision of leased properties that feature superior
designs and functionality, but also units furnishedwith consumer electronics by providing leasing
formats (such as Leopalace21 Leasing System andMonthly Leopalace Flat) to respond to the diverse
life styles of modern times.
Our business model that offers significant
benefits to both parties exhibits an extremely
strong competitiveness.

Expansion of student rental market
through business collaboration;
improved occupancy rates throughimproved corporate sales
By actively developing expansion for new demand,
we have been successful in further improving ouroccupancy rates in this particular sector.
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
businesses. We also established a new payment
option that allows for monthly payments for theuse of Monthly Leopalace Flats, providing thepossibility of making payments necessary to moveinto 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.
Furthermore, as part of the strategy for
expanding corporate trading, we launched the
new “Corporations Only Plan” in April 2006, whichallows residential dwellers to move nationwide.
The number of corporate accounts during the
fiscal year ending March 2008 was approximately
24,670 (a 28.9% increase over the same periodof the previous year), showing favorable growth.
Furthermore, starting in April 2008 corporate sales
locations increased to 59 locations, giving a boost
to increased trading and occupancy rates.

"Leopalace21 Series" exterior view

"Leopalace21 Series" Interior view

Facility with pet accommodating
specifications (some available)

Microwave oven

Kitchen with an electricalcooking facility

Leash hook

Refrigerator

Western door with pet access

Security Installations
Bed

Automatically locking gate

Intercom equipped with monitor
Television also offers broadband services

Card key

Security windows (first floor only)*Includes currently unfinishedproperties

15
Leopalace21 Investors Guide 200816
Leopalace21 Investors Guide 2008

Table and chair (table is collapsible)

Air-conditioner

Characteristics and Competitiveness 1

Master sublease system and Total Support System ensure smoothWith our unique supply plan, we promise 30 years of stable management
Based on our belief that successful leasing operations
are the key to the apartment business, we introduced amaster sublease system which guarantees 30 years of stableapartment operations, ahead of industry rivals. Under thesystem, we first draft apartment supply plans based on our
research on market potential and tenant needs in each of the
1,179 segmented areas across the country. Based on theseplans, we make proposals to prospective apartment owners,
offering comprehensive support for the apartment businessfrom 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 maintenanceand administration, represents our key support systems forapartment owners.

Payment ofmaster sublease
rent to owners

OwnersThree unique points that support the master-lease system

Unique tenant
recruitment
systemTenants

Leopalace21
Corporation
Payment ofsublease rent
Comprehensive
maintenance andadministration

Building

maintenance and administration

Multiple tenant recruitment channels

Innovative leasing systems

Without successful tenant recruitment, theapartment business would not run smoothly.
Our thorough research in local market's
potential backed by our nationwide marketing
activities enables independent, nationwide
tenant recruitment. We employ various
recruitment media, including our nationwide
office network, web sites, apartment rental
publications, and TV commercials to ensure
efficient tenant recruitment. Meanwhile,prospective tenants are able to search forhousing units, anytime, anywhere from allover Japan.

Our products cover short-term
stay as well as conventional longterm housing needs, aided by our
unique systems. Moreover, we haveintroduced innovative businesspractices not requiring leasedeposits and key money. Thus, wehave successfully recruited a broad
range of tenant groups unrivaled bycompetitors, meeting multiple needsof both individuals and corporations.

Reliable proxy maintenance andadministration
On behalf of apartment owners, we carry out
operations from building maintenance to tenant
administration. Furthermore, the asset value ofbuildings are maintained at a high level and the current
Total Support System (TSS) has been implemented
since April 2007 to protect the life savings of owners
against unforeseen incidents, replacing the apartment
maintenance, which was systematically conducted by
the “Leopalace Owners' Mutual Insurance System” inthe past.

* Total Support System (TSS) : a planned maintenance program forapartment buildings.

Characteristics and Competitiveness 2

Nationwide studio apartment network, supported by online search

Apartment buildings under master sublease contracts
with Leopalace21 are available nationwide
Studios for which we have subcontracted construction andhave carried out maintenance and administration are located
all over Japan, totaling some 442 thousand units. Thesestudios were built in areas where we estimated reasonable
potential demand based on thorough market research, inorder to meet needs of prospective tenants. We are the only
industry player with this many studios nationwide.

capabilities

Domestic network of 306 Leopalace Centers
Hokkaido area:● Number of apartments managed
by area (at end-March 2008)

10,862units

Total number of units in Japan

Koshinetsu area:

442,025

19,003units

Hokuriku area:
14,581units

Tohoku area:
28,696units

Kinki area:
61,055units

Visitors to Leopalace Centers at 306 locations nationwide
can search real-time for studios using our online network.
For example, a person who lives in Tokyo can look forthe most up-to-date information about studios for leaseavailable in other areas such as Hokkaido and Kyushu,
apply for the apartment, and sign the contract on the
spot. The nationwide sales center network combinedwith our online network guarantees our ability to meeta variety of needs among prospective corporate andindividual tenants.

Total number of outlets in Japan306

13 Outlets

Koshinetsu area:
14 Outlets

Hokuriku area:*In addition to a further
five overseas outlets.

10 Outlets

Tohoku area:
29 Outlets

Kinki area:
43 Outlets

Chugoku area:

Chugoku area:

Kanto area:

30,229units

159,363units

Kyushu/Okinawa area:

Tokai area:

36,247units

71,039units

Kanto area:

23 Outlets

95 Outlets

Kyushu/Okinawa area:

Tokai area:

35 Outlets

35 Outlets

Shikoku area:

Shikoku area:

9 Outlets

10,950units
Villa Cherte

Hokkaido area:● Number of Leopalace Centers by area
(at end-March 2008)

Villa Alta

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 upto-date information on studios available across the country,
and apply for the apartment and sign a contract on the spot.
With some 442 thousand studios managed nationwide, weare the only industry player that can provide prospective
tenants with real-time search capabilities of studios available
nationwide even using our mobile Internet site.

Search17
Leopalace21 Investors Guide 2008

Selection

Application

Leasing Agreement

Real-time search on our
mobile Internet site
Real-time search of our rental studios
can also be performed on our mobile
Internet. Similar to accessing ourmain home page, visitors to thewireless site can gather information
regarding rental studios,view floor plans, andmake payments bycredit card.

18
Leopalace21 Investors Guide 2008

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

Construction Market)

Stock and Rebuilding (Residential Leasehold Construction Market)■ Number of studio units, number and shares of our units■ Number of new residential leaseholds (units under 30m2)

Studio housing stock

Number of new residential leaseholds under 30m2
Number of units we supply
Our share

Number of new residential leaseholds
Number of new residential leaseholds under 30m2
Market share of new residential leaseholds under 30m2

Our stock

(%)
16.0

3,447

3,500

(Thousands of units)
1,800(Thousands of units)
600

(%)
60.0

(%)
75.0

(Thousands of units)
150

1,630

537.9

3,000

12.0

454.5

1,341

458.7

467.3

1,200

1,179

1,173

1,145

400

426

418

444

147

518
442

455

459

40.0
90

300

39.6

431
136

118

119

600

192

211
166

116

129

139

138

138
200

218

22.9

23.6

24.3

23.7

223

198

202

207

231

200

23.7

366

373

367

353

16,132
15,47010,00030

1,303

16,076
1,043

Now (6.5%)

2,790

2,664

5 years ago (16.6%)

2,577

10 years ago (16.0%)

4,510

20 years ago (28.1%)

5,282

25 years ago (32.9%)

2,054

312

28

19

15

13

12

12

10

12

10

11

12

97/3

98/3

99/3

00/3

01/3

02/3

03/3

04/3

05/3

06/3

07/3

08/3

104.2

108.1

113.5

122.8

127.6

49.7

55.9

5,100
8,000

56.3

6,000
4,000

0

0
03/3

44.9

35.0

112.2

04/3

05/3

06/3

07/3

08/3

5,371

15.0

10.0

356

31

2001~2003
1996~2000
1991~1995
1981~1990
1980 and before

12,00042.8
377

16,00014,000

20.0

100

438

30.0

242

636
438

110.4

59.3
32.0
242.9
0
88/10
93/10
98/10
03/10
Note: Excerpted from Residential Housing and Land Statistics Survey for fiscal 2003 of the Ministry of
Public Management, Home Affairs, Posts and Communications.

(Thousands of units)
18,000

60

160

476

2.0

■ Trend in residential Leaseholds by period

40.4

121

400

451

39.6

33.6
26.0

126

113

45.0

30.0

4.0

1.9

0

538

800

200

500

50.2

43.8

467

3.4
2.4

112.2

108.1

1,035

516
1,000

6.0

1,000

113.5
104.2

1,173 1,193

8.0

60.0

430.8

1,249

1,226 1,213

1,500

122.8
120

1,285

616

0

50.0

7.0

1,717

127.6

500
1,400

10.0

2,451

2,000

517.9

14.0

3,215

2,500
1,600

Our share(Thousands of units)
4,000

0

0
03/3

04/3

05/3

06/3

07/3

8,045

6,939

2,000

08/3
0

Note: Excerpted from Residential Housing Construction Work Commencement Statistics for fiscal 2006 of
the Ministry of Land, Infrastructure and Transport.

Residential housing supply status has been changing over pastten years in terms of market share makeup
According to the Residential Housing Construction Work Commencement Statisticsof the Ministry of Land, Infrastructure and Transport, the overall status of the supply
for residential housing and the number of newly built residential housing units forthe past ten years peaked in fiscal 1996 (ending March 1997) with 1,630 thousand
units and thereafter the number continued to hover around 1,200 thousand units
during the nine subsequent years, which indicated some slow recovery.
Furthermore, although a deteriorating impact had been felt by some part of theresidential housing market in fiscal 2007 (ending March 2008), macro indices showedabnormal figures, which do not reflect the actual conditions, due primarily to theeffects of the Revised Building Standard Law, which came into effect in June 2007.

Central roles played by the shifting of the market share makeup
for residential housing supplies (commencement of construction
for new residential housing), include an increase in the numberof leased units and residential houses for allotment sales
A look at the trends for commencing new residential housing in recent years, interms of user relationships indicate that leased units and residential housing forallotment sales are supporting slow overall recovery trends. Of all residential housing
for allotment sales, Residential houses maintained a high level approaching 140
thousand units in the most recent three years, whereas the number of condominium
units has increased four years in a row, with an increase of 22.2% in fiscal 2006 (ending
March 2007) over fiscal 2002 (ending March 2003). Furthermore, leased units haverecorded a consecutive increase for six years since fiscal 2001 (ending March 2003),
19
Leopalace21 Investors Guide 2008

Note 1: Excerpted from Residential Housing Construction Work Commencement
Statistics for fiscal 2006 of the Ministry of Land, Infrastructure andTransport.
Note 2: All figures are based on fiscal year periods.

gaining the highest share of the market by dominating
41.9% in fiscal 2006 (ending March 2007) for all new unitsof residential housing construction. (Furthermore, figures
for fiscal 2007, covering the fiscal term ending March 2008,
were abnormal; nevertheless, the market share has beensustained at the high level of 41.6%).

Construction of leased units less than 30m2
are increasing at steady pace
Leased units under 30m2 constitute our core field andhave shown a rapid increase in recent years. The amountof construction work commencing in fiscal 1999 (ending
March 2000), for leased units under 30m2, bottomed out
at 73 thousand units but showed a recovery by reaching
100 thousand units by fiscal 2002 (ending March 2003).
In fiscal 2006 (ending March 2007) this figure increased
further to 127.6 thousand units. Furthermore, theproportion of residential units less than 30m2 among theoverall total number of leased units being constructed has
been sustained at a high level since fiscal 2004 (ending
March 2005), hovering around 24%, which is about aquarter of the market (in addition, the figures for fiscal
2007 covering the fiscal term ending March 2008 wereabnormal figures; however, the market share has beensustained at a high level of 26.0%).

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

Our share of supply for studio apartments is
50.2%
The reason behind this increase in leased units under
30m2, is the increase in the number of young and single
households in urban areas seeking a new lifestyle, alongwith the birth of a new demand, such as the outsourcing
of corporate dormitories and company housing.
Furthermore, the graph shown above represents thenumber of new units supplied by our studio apartment
operations (Apartment Construction Subcontracting
Business) for the construction of leased units under
30m2. In fiscal 2006 (ending March 2007) we were able tomaintain or improve on our high market share of 43.8%
of all supplied units in the market. It is clear that we arein possession of a formidable market share in this field.
Furthermore, the number of new constructions for leased
units less than 30m2 decreased in fiscal 2007 (ending
March 2008), due to the impact of the Revised BuildingStandard Law; however, we were able to limit this impact
on our business operations to a relatively low level, whichenabled us to increase our supply of units, even though
the increase was very little. As a result, our market share is
at a level exceeding 50%.

93/10

98/10

03/10

Increasing studio stocks
On the other hand, 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, the number of studio units as of October 2003 was
3,447 thousand units. This is an increase of 996 thousand units above figures taken
ten years ago, with a growth rate of 40.6%, showing an outstanding performancein comparison with the growth rate for the residential housing stock for the same
period (17.6%). Furthermore, our market share of stocks has also increased by 7.0%.

Market for rebuilding residential leaseholds has gigantic
potential for residential 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; while during those five years 2,460 thousand units of residential
leaseholds constructed in 1995 and earlier (ten years ago) were lost, withapproximately 2,400 thousand new units built to replace them. This indicates that
this is a market with a gigantic demand for rebuilding in the future.

20
Leopalace21 Investors Guide 2008

Demands (Leasing Market)

Demand (Residential Construction

and Leasing Markets)

Utilization (Residential leaseholds)■ Estimation for future number of general households by family category
SinglesSingle parents with kid(s)Married couples
Married couples with kid(s)Others■ Breakdown of uses of month-to-month leases (March 2008)■ Estimates for total number of households in the future

by household age groups(Thousands of households)
60,00065 years and over

65 years and over

35 years to 64 years

35 years to 64 years

Under 35 years

Under 35 years(Thousands of households)
60,00050,00049,06350,28750,60050,411

49,837(Thousands of households)
20,00048,80250,00049,06350,28750,600 50,441 49,837

14,457(29.5%)

15,707(31.2%)

16,563

17,334

18,237(37.4%)

40,000 11,136

13,546 15,680 18,028

3,578

4,112

4,514

4,824

18,992 19,012 19,031

9,637

10,085

10,186

10,045

5,621

6,311

7,173
(39.3%)

General34.71％

Residential use

Company dormitories

15.83％
Student dormitories 3.06％
Job assignment away from home 0.80％
Daily use because of long commute 0.36％

3,865(26.7%)
3,032(23.5%)

5,027. Place for hobby,
creative activities. Common space(for friends and others). Social area
. Conference room
. Other

54.8％

38.44％
6,729

4,655

12,911

5,013
5,072

8,835

Business trips

15,707

12,00030,00043.9％

17,334

14,457
17,922

Temporary use (for space) 1.3％
and other. Office space

Temporary use

18,237

16,56316,000Temporary stay to visit hospitalized relation 0.21％
Temporary stay to visit relation on assignment 0.18％
Domestic tourism (individual) 0.15％
Tourism (foreigners) 0.02％
Domestic tourism (group) 0.01％

1.13％

48,802

46,782

12,911(27.6%)

Temporary stay duringhomerenovation/
rebuilding 0.55％
Study 0.26％
Training 2.98％
Temporary stay
between moves

17,922

46,78240,000■ Estimates for single person households in the future■ Number of tenants by contract type

30,000500 (Thousands of units)
Monthly Leopalace Flat
Leopalace21 Leasing System

9,762

20,0008,000

26,138 26,371 26,535

9,391

5,444

6,351
6,757

4,577

7,134

7,531

413.5

400

7,662

371.7

20,00025,39914,91914,646

14,03013,256

10,000

6,539

6,212

12,394

11,524

10,703

9,509

5,951

5,771

5,655

5,557

5,443

2010
(Projected)

2015(Projected)

2020(Projected)

2025(Projected)

2030(Projected)

0

9,146

Our share
8,072

7,173

6,623

6,265

5,929

0
2000/10

2005/10

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 overa long period
With 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 consistedof 14,457 thousand in 2005, which comprised 29.5% share of the market. It is
anticipated that 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 numberof households will reach approximately 18,237 thousand, with 37.4% of the market
share, a rapid increase in this period. This indicates that the household makeup in
Japan will be moving toward the formation of a gigantic single person householdbase 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.

21
Leopalace21 Investors Guide 2008

0
2000/10 2005/10

2030
2010
2015
2020
2025
(Projected) (Projected) (Projected) (Projected) (Projected)

167.6
4,185

3,890

3,402
3,662 (18.7%)

The graph shown above is made up of data at the upper
right and an estimation of the future number of generalhouseholds by family category, as viewed in terms of age
group. The so-called silver population, comprising people
aged 65 and over, will exceed a 30% share of the makeup
in 2010 and their share of the makeup will reach 39.0% by2030. This means that a gigantic silver business market,
comprising nearly two out of every five households, will
emerge.

100

2.7%2000/10 2005/10

194.4

200

4,701
6.5%

277.8
239.8

2010
2015
2020
2025
2030
(Projected) (Projected) (Projected) (Projected) (Projected)

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

Anticipated emergence of gigantic silverbusiness market based on estimated figures
for future number of households by age
group

117.3

300

5,302
4,000 (41.1%) 5,148(35.6%)

10,000

108.0

326.9

24,825 24,561 23,842

113.8

129.4
3.5

143.9
32.5

57.8

113.8

125.9

111.4

109.8

119.7

1999/3

2000/3

2001/3

2002/3

2003/3

109.7

103.4
89.7

74.7
217.2
150.1

254.4

305.5

174.4

0
2004/3 2005/3

2006/3

2007/3 2008/3

Note: Based on company data

In terms of single person households
categorized by age group, the silver
population base emerges together with theunder 35s as the target populations for ourcore business
Furthermore, the graph, shown above, represents dataprepared by categorizing the extracted information
regarding single person households obtained from theestimation for the future number of general households
by family category, shown on page 21, by age group.
Targets comprised of the under 35 population base of
corporate users and the silver business market, comprisedof persons 65 and over, for whom there are increasingneeds in terms of hobby and nursing care, are emerging.
Our share in the market of the single personhouseholds for under 35s was 2.7% in 2000, although itreached a level of 6.5% in 2005.

Pioneering new markets through monthly leasing
We are pioneering into new markets outside the existing leasing markets byimplementing Monthly Leopalace, which is available for short or long-term leasing,along with Leopalace21 Leasing System intended for long-term tenants. The
purposes for using the monthly leasing service can be categorized into "residentialuse" and "temporary use." In terms of the residential use, the purposes for using
the service are expanding, such as "dormitory (for employees and students)," "jobassignment away from home," "daily use because of long commute," besides
the "general use of rooms." Furthermore, as for "temporary use," the purposes
vary, including "business trips," which is the most often cited purpose, as well as
accommodation during moving, taking seminars, taking exams and tourism.

Steady increase of a user base for monthly leasing responding
to various needs
The trend for number of tenants by contract type indicates that since Monthly
Leopalace provides furniture, consumer electronics and utility expenses, launchedin March 2000, the number of transactions for monthly leasing increased rapidly,
which indicates the service matched the needs of the market. Furthermore, Monthly
Leopalace Flats was launched 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.

22
Leopalace21 Investors Guide 2008

Consolidated net sales

Consolidated operating profit

Consolidated recurring profit(¥ million)
800,000(¥ million)
80,000(¥ million)
80,000600,000

60,00060,000Consolidated sales breakdown
Other Division

Hotel Resort
Related Division

4.9%

1.7%

Consolidated sales for apartment
construction subcontracting business

Consolidated sales for leasing business*1(¥ million)
400,000(¥ million)
400,000
316,117 327,540

300,000
400,000

40,00040,00020,000

0

0

0

'04/3

'05/3

'06/3

'07/3

'08/3

'04/3

'05/3

'06/3

'07/3

'08/3

'04/3

'05/3

'06/3

'07/3

'08/3

Leasing
Division

Apartment
Construction
Subcontracting
Division

43.6%

49.8%

Consolidated total assets

100,000

00(¥ million)
40,000(¥ million)
500,000

30,000

'05/3

'06/3

'07/3

(¥ million)
200,000

Other Division

Hotel Resort
Related Division

'04/3

5.4%

1.5%

'06/3

'07/3

'08/3

(¥ million)
20,00035,73630,66415,000150,000

20,00013,303

13,271

'06/3

'07/3

13,574

12,074300,000
10,0002008/3100,000

20,00010,0009,210

200,000

0

'04/3

'05/3

'06/3

'07/3

'08/3

0

Leasing
Division

Apartment
Construction
Subcontracting
Division

44.7%

48.4%

50,000100,000-10,000-20,000'05/3

Consolidated sales for other businesses*3(¥ million)
40,00030,000400,000'08/3

Consolidated sales for strategic threebusinesses*2

Consolidated net assets

187,566

200,000

100,000'04/3

Consolidated net income

214,929

195,202200,000
20,000275,258
247,823

225,011
2007/3200,000

300,342300,000
248,032

'04/3

'05/3

'06/3

'07/3

0

'08/3

'04/3

'05/3

'06/3

'07/3

'08/3

11,58810,000

5,000
1,734

3,511

'04/3

'05/3

0

0
'06/3

'07/3

'08/3

'04/3

'05/3

'08/3

*1: The consolidated sales amounts for the “Leasing Business” shown in the graphs above represent figures that do not include the sales figures of the “Domestic Hotel Business”.
*2: The consolidated sales amounts for the “Strategic Three Businesses” shown in the graphs above represent the total amounts for the “Residential Business”, “Silver Business”, and “Broadband Business”.
*3: Other consolidated sales amounts shown in the graphs above represent the total amounts for the “Domestic Hotel Business”, the “Hotel Resort Related Business”, and “Other” of our other businesses.

Consolidated(¥ million)

2004/3

2005/3

2006/3

2007/3

2008/3

Net sales

422,224476,266

465,386

631,608

672,973

Operating profit

51,67054,682

40,77576,007

71,402

Recurring profit

41,29953,265

44,15173,002

60,847

Net income

20,96033,262△ 16,582

37,358342

Total assets

421,163

453,434

412,803454,819

493,956

Net assets

81,419149,798

133,622

185,784

170,155

Common stock

37,50055,64055,64055,64055,640Net assets per share (¥)

585.82941.06

839.44

1,054.99

1,036.43

Net income per share (¥)

150.91220.79△ 104.17

234.682.15(¥ million)

Non-Consolidated

2004/3

2005/3

2006/3

2007/3■ Consolidated Sales Breakdown
2005/3

2006/3

2007/3

2008/3

Apartment Construction Subcontracting Division

225,011

248,032

195,202316,117

327,540

Leasing Division Leasing Business (Excluding domestic hotel business)

187,566

214,929

247,823

275,258

300,342

1,299

1,664

1,875

1,907

2,411

7,056

9,561

10,86910,842

10,271

0

0

1,745

14,15011,281

0

0

2,433

5,345

11,173

1,734

3,511

7,410

11,16913,282

Domestic Hotel Business
Hotel Resort Related Division
Other Division

Residential Business
Silver BusinessBroadband Business
Other Business(Eliminations/Unallocated)
Total

855

849

559

522

892

(1,300)(2,282)(2,532)(3,704)(4,222)422,224476,266

465,386

631,608

672,973

2008/3

Shares outstanding (thousand shares)

139,543

159,543

159,543

159,543

159,543

Net assets per share (¥)

757.391,056.95

835.15

1,052.81

1,005.07

Net income per share (¥)

199.74

190.47△ 209.23

248.45

19.85

Dividends per share (¥)

15.00

15.00

15.00

50.00

80.00

Payout ratio (%)

7.51

7.88

-

20.12

403.02■ Consolidated Operating Profit Breakdown(¥ million)

2004/3
Apartment Construction Subcontracting Division
Leasing Division Leasing Business (Excluding domestic hotel business)
Domestic Hotel Business
Hotel Resort Related Division
Other Division

Residential Business
Silver BusinessBroadband Business
Other Business23
Leopalace21 Investors Guide 2008(¥ million)

2004/3

2005/3

2006/3

2007/3

2008/354,15357,05139,452

74,61473,267

8,015

7,004

7,725

6,742

2,713

△ 587

239

354

289

323

△ 3,849△ 3,928△ 2,667△ 2,628△ 1,116

0

0

△ 614

228

△ 1,209

0

0

257

308

1,261

△ 3,571△ 2,639

△ 194

176

683

55

△1

158

379

△ 90

(Eliminations/Unallocated)(2,545)(3,043)(3,695)(4,101)(4,430)Total

51,67054,682

40,77576,007

71,40224
Leopalace21 Investors Guide 2008

Profitability

Productivity

Gross profit / Net sales

Operating profit / Net sales

Net income / Net sales

(%)
30

(%)
30

(%)
20

20

20

10

10

0

10

'04/3

'05/3

'06/3

'07/3

'08/3

Net sales per employee

Operating profit per employee(¥ million)120(¥ million)
12

90

9

60

6

30

3

No. of employees at end-FY(persons)
9,000

6,000

0

0

'04/3

'05/3

'06/3

'07/3

2004/3

3,000

-10

'08/3

2005/3

'04/3

'05/3

2006/3

'06/3

'07/3

2007/3

'08/3

0

'04/3

'05/3

'06/3

'07/3

'08/3

0

'04/3

'05/3

2008/3

'06/3

'07/3

0

'08/3

'04/3

'05/3

'06/3

'07/3

'08/3

2004/3

2005/3

2006/3

2007/3

2008/3

83.71

78.33

69.85

88.47

83.66

Gross profit / Net sales (%)

25.84

24.92

23.94

24.84

24.06

Net sales per employee (¥ million)

Operating profit / Net sales (%)

12.23

11.48

8.76

12.03

10.60

Operating profit per employee (¥ million)

10.24

8.99

6.12

10.64

8.87

0.05

No. of employees at end-FY (persons)

5,702

6,457

6,868

7,409

8,678

Net income / Net sales (%)

4.96

6.98

5.91

△ 3.56

Note: Net sales per employee and operating income per employee are calculated using the average number of employees during the year.

Stability

Investment Indices
Equity ratio

Current ratio

Fixed assets/Equity ratio

(%)
60

(%)
150

(%)
600

40

100

400

20

0

50

'04/3

'05/3

'06/3

'07/3

'08/3

ROE

ROA

EV/EBITDA

(%)
90

(%)
20

(Times)
20

60

15

15

30

10

10

0

5

5

200

0

'04/3

'05/3

'06/3

'07/3

2004/3Equity ratio (%)

0

'08/3

2005/3

19.33

33.03

'04/3

'05/3

2006/3

'06/3

'07/3

2007/3

32.36

'08/3

-30

'04/3

'05/3

'06/3

'07/3

'08/3

0

'04/3

'05/3

'07/3

2004/3

2008/3

36.96

'06/3

33.44

ROE (%)

27.99
9.93

0

'08/3

2005/3

'04/3

'05/3

2006/3

'06/3

'07/3

2007/3'08/3

2008/328.77△ 11.70

24.75

0.20

12.18

10.19

16.82

12.82

Current ratio (%)

80.09

80.25

79.50

86.00

81.40

ROA (%)

Fixed assets/Equity ratio (%)

348.97

197.84186.44159.50166.64EV (¥ 100million)

3,528

3,440

7,250

6,002

2,457

EV/EBITDA (times)

6.19

5.68

15.99

7.45

3.21

Note1: Total assets, fixed assets, and tangible fixed assets are expressed as an average of the relevant numbers at the beginning and end of each fiscal year, respectively.
Note2: EV = market capitalization + interest-bearing debt - cash and cash equivalents
Note3: EBITDA = operating income + depreciation expense

Efficiency

Cash Flows

Total assets turnover

Fixed assets turnover(Times)1.5(Times)
3.0

1.0

2.0

0.5

1.0

Tangible fixed assets turnover(Times)4.0

Free cash flows

Depreciation expense

Capital investment(¥ million)
60,000(¥ million)
6,000(¥ million)
30,00040,0004,000

20,00020,0002,000

10,000

3.0

2.0

1.0

0

'04/3

'05/3

'06/3

'07/3

Total assets turnover (times)

'08/3

0

'04/3

'05/3

'06/3

'07/3

0

'08/3

'04/3

'05/3

'06/3

'07/3

'08/3

2004/3

2005/3

2006/3

2007/3

2008/3

1.01

1.08

1.07

1.45

1.41

Fixed assets turnover (times)

1.50

1.64

1.70

2.44

2.47

Tangible fixed assets turnover (times)

1.75

1.97

2.11

3.12

3.31

Note: Total assets, fixed assets, and tangible fixed assets are expressed as an average of the relevant numbers at the beginning and end of each fiscal year, respectively.

25
Leopalace21 Investors Guide 2008

0

'04/3

'05/3

'06/3

'07/3

'08/3

0

'04/3

'05/3

'06/3

'07/3

2004/3
Cash flows (¥ million)

0

'08/3

2005/3'04/3

2006/3

'05/3

'06/3

'07/3

'08/3

2007/3

2008/3

Cash flows from operating activities

31,49240,34856,971

63,308

11,745

Cash flows from investing activities△ 12,532△ 8,978△ 11,266△ 15,930

148

Cash flows from financing activities△ 30,129△ 20,959△ 47,946△ 17,018△ 26,779

Depreciation expense (¥ million)

5,251

5,855

4,565

4,559

5,163

Capital investment (¥ million)

12,715

8,919

13,193

21,8306,887

Note: Free cash flows = cash flows from operating activities + cash flows from investing activities

26
Leopalace21 Investors Guide 2008(¥ million)

2006/3

2007/3

2008/3

163,518

186,555

218,684(¥ million)

2006/3

2007/3

2008/3

205,674
81,231
20,348-

216,914
77,392
16,518-

268,621

1,435
9,503
23
4,423
37,62642,061

1,126
13,28730
27,021
46,744
23,529

5,094
9,635
25
14,30898,496
21,752

Liabilities

AssetsCurrent assets
Cash and cash equivalents

44,61275,16660,965Current liabilities
Accounts payable including payables for completed projects
Short-term borrowings

Trade receivables and accounts receivable for completed projects

8,114

9,594

15,159Operating loans

10,4268,501

15,789Marketable securities

155

29

14

Real estate for sale

7,524

27,76537,819Unpaid expenses
Accrued expenses

Property inventories

Long-term borrowings due within one year
Long-term borrowings from affiliates due within one year
Bonds due within one year

-

-

-

35,2498,818

11,792

Supplies---

Advances received

Other inventories

638

722

750

Customer advances for projects in progress

Prepaid expenses-

21,81924,628

Payment for construction in progress

Deferred tax assets
Accrued income
Other accounts receivable
Deposits payable

10,827

5,076

12,085---22,56422,07528,058---

Accrued income taxes

Deposits payable
Allowance for employees' bonuses
Other
Long-term liabilities
Bonds
Long-term borrowings

Other

24,893

8,273

13,068

Directors' long-term borrowings

Allowance for doubtful accounts△ 1,487△ 1,289△ 1,448

Retirement benefit reserves

249,128

268,190

275,265

Directors' accrued severance indemnities

196,512207,112

199,124

Provision of reserve for rental income

83,66680,62676,556

Lease/guarantee deposits received

Fixed assets
Tangible fixed assets
Buildings and structuresLand

107,216

118,255

116,295--

Net unrealized gains on "other securities"

55,64033,75953,123714

Translation adjustments△ 9,418

Treasury stock△ 197
133,622412,803--

175,348
55,64034,10485,700165,858

4,370

579

569

622

52,03560,50975,51911,046

7,934

9,082

-

-

-

Share capital
Capital surplus

-

2,930

2,281

2,399

Long-term loans to employees

-

-

-

Long-term loans to executives

-

-

-

Long-term loans to subsidiaries and affiliates

-

-

-

Long-term loans receivable

Minority interests
Minority interests
Shareholders' equity

Retained earnings

Total shareholders' equity

Long-term trade receivables

2,835

2,125

4,015

Long-term prepaid expenses

33,03542,72753,356

Deferred tax assets

1,901

3,074

3,388

Net assets

Other

3,349

4,942

5,442

Shareholders' equity

Allowance for doubtful accounts△ 3,064△ 2,575△ 2,164

156

73

6

Organization costs

9

-

6

Bond issuance costs

146

73

-

412,803454,819

493,956

Deferred assets

Total assets

Total liability, minority interest and shareholders' equity-

Share capital
Capital surplus
Retained earnings
Treasury stock
Effect of evaluation and exchange rate difference
Net unrealized gains on other securities
Translation adjustments
Minority interests
Total net assets
Liabilities and net assets

27
Leopalace21 Investors Guide 2008

5,064
1,592
399
19,727

17,651

1,901

-

4,111
2,986
533
8,974

-

3,832

-

3,246

323,800

4,397

Corporate bonds issued by subsidiaries and affiliates

28,395-

3,665

Shares of subsidiaries and affiliates

3,243
9,278
55,179269,035

Total liabilities

1,964

Investment securities

2,798
8,465
52,1208,194
27,3209,801
76261,530

Other

Investments and other assets

2,487
6,534
55,855
11,327
31,402-

Other

Construction in progress

Intangible fixed assets

89,523
16,221-28
Leopalace21 Investors Guide 2008

55,64034,104
76,211△ 96△ 98△ 7,205

△ 672

532

89

△ 7,737△ 762

17,641
185,784
454,819

4,970
170,155
493,956(¥ million)

2006/3
Ordinary income and loss
Net sales
Sales from Contracting Division
Sales from Leasing Division
Sales from Other Division
Cost of sales
Cost of Contracting Division
Cost of Leasing Division
Cost of Other Division
Gross profit
Selling, general and administrative expenses
Advertising expense
Selling fees
Provisions for allowance for doubtful accounts
Director compensation
Salaries and bonuses
Provisions for allowance for employees' bonuses
Provisions for retirement benefit reserves
Provision of reserve for directors' retirement benefits
Welfare expenses
Fees paid
Rents paid
Depreciation expense
Taxes and public charges
Other
Operating profit
Non-operating profit and loss
Non-operating profit
Interest income
Dividend income
Gain on sale of investment securities
Equity method income
Income from cancellation of resort memberships
Income from cancellation of construction contracts
Unrealized gains on interest rate swaps
Foreign currency translation gain
Other
Non-operating expenses
Interest expense
All other financing costs
Equity method investment loss
Bond interest expense
Amortization of bond issuance costs
Other
Recurring profit
Extraordinary income and losses
Extraordinary income
Gain on sales of fixed assets
Gain on sale of affiliates' stocks
Gain on sale of affiliates' bonds
Reversal of allowance for doubtful accounts
Gain from forgiveness of debt
Gain on redemption of affiliates' loans
Extraordinary losses
Loss on sales of fixed assets
Write-offs of fixed assets
Impairment losses
Markdown on investment securities
Loss on devaluation of affiliates' stocks
Provision for allowance for doubtful accounts
Amortization of transition obligation
Provision of reserve for directors' retirement benefits
Provision of reserve for rental income
Other
Net income before taxes and adjustments (loss)
Corporate, residential, and enterprise taxes
Income tax rehabilitation
Income tax adjustments
Minority interest
Net income (loss)
Retained earnings brought forward
Unappropriated retained earnings (loss)

29
Leopalace21 Investors Guide 20082007/3(¥ million)

2008/3465,386
195,202249,695
20,488353,928
129,397
203,664
20,866
111,458
70,683
8,265
2,909
1,653
425
25,714
1,752
861
4,101
1,293
2,391
21,314
40,775

631,608
316,117
277,163
38,328474,713
209,395
228,119
37,197
156,895
80,887
8,564
3,429
1,035
547
30,218
1,983
999
196
4,580
1,246
3,455
24,62876,007

672,973
327,540
302,73142,701
511,053
217,263
253,583
40,206
161,919
90,516
8,153
2,998
835
581
34,920
2,219
1,214
164
5,477
2,018
3,915
28,016
71,402

6,493
53
125
512
11
174
233
4,780
601
3,116
2,300
815
44,151

1,497
50
166
19
70
122
501
566
4,502
1,332
606
2,320
242
73,002

1,602
246
4
104
7
107
19
655
12,157
1,462
851
309
60,84768
13
31
24
66,96310453
65,480831
187△ 22,743
261
729△ 8,023871△ 16,582
-

3,725
7
2,514
1,119
83
7,397
16
215
3,009
210
710
2,789
446
69,32926,437
4,662
871
37,358
-

5,170
4,465
560
144
53,593
120
142
701
906
794
12,424
17,449△ 7,039

257
342-

2006/3
Cash flows from operating activities
Net income before taxes and adjustments (Decrease)
Depreciation expense
Increase (Decrease) in allowance for doubtful accounts
Increase in directors' accrued severance indementies
Interest and dividends income
Interest expense
Gain from forgiveness of debt
Foreign exchange loss (gain)
Equity method loss (income)Loss on sale of tangible fixed assets
Write-offs of tangible fixed assets
Impairment losses
Gain on sale of affiliates' stocks
Gain on sale of affiliates' bonds
Gain on sale of investment securities
Markdown on investment securities
Decrease (Increase) in accounts receivable
Decrease (Increase) in inventories
Increase in real estate for sale (Increase)
Increase in payment for construction in progress
Increase in long-term prepaid expenses (Increase)
Increase (Decrease) in accounts payable
Increase (Decrease) or decrease in amount received for uncompleted works
Increase in advances received
Decrease in guarantee deposits received (Decrease)
Increase (Decrease) in accrued consumption tax
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payment for purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Commissions paid on sale and disposal of tangible fixed assets
Payment for purchase of affiliates' stocks
Income from sale of affiliated companies' stock due to changes in consolidation
Proceeds from sale of affiliates' bonds
Payment for purchase of investment securities
Proceeds from sale of investment securities
Payment for loans madeProceeds from collection of loans
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Payment for accounts payable for long-term projects
Proceeds from shares issued
Proceeds from issuance of privately placed bonds
Payment for retirement of privately placed bonds
Payment for redemptions of privately placed bonds
Dividends paid to minority shareholders
Payment for purchase of treasury stock
Dividend paid for shareholders
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents (Decrease)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

2007/3

2008/3

4,565
1,737
△ 256
2,518
△ 4,780
△ 512
10
453
65,480△ 31△ 125
42,237△ 39,212△ 7,345△ 10,208
33,328
9,294△ 1,761△ 1,166
699
72,181228△ 2,356△ 13,081
56,971

69,329
4,559
159
2,986
△ 136
1,332
△ 501
2,320
16
215
3,009
△ 2,514△ 1,119
△ 166
210
914
△ 18,554
26,430△ 12,366△ 2,571△ 18,531
9,093
△ 780
2,923
2,769
69,028129△ 1,290△ 4,559
63,30812,424
5,163
590△ 1,394
△ 338
1,462
9,533
△ 104
120
142
701
△ 560
△4
906
△ 21,745△ 11,237△ 2,973△ 12,456
12,225△ 1,777
51,804
10,567△ 3,155△ 725
44,695367△ 1,476△ 31,840
11,745△ 13,193△ 21,830△ 6,887914△ 34△ 2,827
2,835△ 1,3812,843△ 422△ 11,2668△ 119△ 1,100
4,109
2,880
△ 792
1,000
△ 1,378
3,646△ 2,355△ 15,930

12,144△ 179△ 3,393
730
△ 369
202
△ 2,101148△ 22,743

17,75034,19078,610△ 28,564△ 32,454△ 82,388

10,68013,00022,000△ 42,703△ 22,655△ 17,454

13,259△ 13,667△ 1,435△ 873△1△ 2,390△ 47,946△ 2,006△ 1,435△ 873△2△ 4,781△ 17,018△ 3,100△ 1,126△ 475△1△ 10,359△ 26,779

0

195
30,55444,61275,166△ 2,240

46,852
44,61230
Leopalace21 Investors Guide 2008

△ 405
△ 15,290

75,16660,965