1. Problems Concerning Construction...
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This document and reference materials may contain forward-looking statements, but please understand that actual results may differ significantly from these forecasts due to various factors. *Reportable segments were changed in FY18/3. *Past figures are retrospectively adjusted, due to a change in accounting policy in a subsidiary in the Leasing Business.
Transcript of 1. Problems Concerning Construction...
This document and reference materials may contain forward-looking statements, but please understand that actual results may differsignificantly from these forecasts due to various factors.*Reportable segments were changed in FY18/3.*Past figures are retrospectively adjusted, due to a change in accounting policy in a subsidiary in the Leasing Business.
1. Problems Concerning Construction Defects
1-1 Construction Defects Overview 4
1-2 Construction Defects by Apartment Series 5
1-3 Status of Investigations and Repairs
on Parting Wall Defects 6
1-4 Number of Buildings with Defects by Time Period 7
1-5-1 Final report of External Investigation Committee 8
and Measures to Prevent Recurrence①
1-5-2 Final report of External Investigation Committee
and Measures to Prevent Recurrence② 9
2. About Leopalace21
2-1 Business Model of Core Businesses 11
2-2-1 Results Trend 12
2-2-2 Highlights of Results Trend 13
3. FY20/3 Q1 Results
3-1 Highlights of Results 15
3-2 Results of Business Segments 16
3-3-1 Main Indicators of Leasing 17
3-3-2 Occupancy Rate Trend 18
3-3-3 Occupancy Rates after Announcement ofConstruction Defects 19
3-4-1 Main Indicators of Development 20
3-4-2 Orders and Sales 21
3-5 Reduction in SGAE 22
4. Overview of Business (Leasing)
4-1 Demand of Leasing Clients 24
4-2-1 Indicator (Occupancy by Group) 25
4-2-2 Indicator (Shares of Occupied Units by Group) 26
4-2-3 Indicator (Occupied Units by Industry) 27
4-2-4 Indicator (Foreign Tenants) 28
4-3-1 Leasing Strategy (Office Expansion) 29
4-3-2 Leasing Strategy (my DIY and Security Systems) 30
4-3-3 Leasing Strategy (Tenant Services) 31
4-3-4 Leasing Strategy (IoT, AI) 32
4-3-5 Leasing Strategy (Subsidiary Businesses) 33
4-3-6 Leasing Strategy (Minpaku) 34
1
5. Overview of Business (Development)
5-1 Indicator (Offices and Apartment Construction) 36
5-2-1 Development Strategy (Ideal Land Usage) 37
5-2-2 Development Strategy (Apartment Construction) 38
5-2-3 Development Strategy (Social Welfare/Stores) 39
5-2-4 Development Strategy (Homes/Development) 40
5-2-5 Development Strategy (After-sale Services) 41
6. Overview of Business (Others and International)
6-1 Others (Elderly Care Business) 43
6-2 Others (Domestic Hotels Business) 44
6-3 Others (Resort Business) 45
6-4-1 International (Leasing Business Overseas) 46
6-4-2 International (Serviced Apartments and Offices) 47
6-4-3 International (Other Services) 48
6-5 Work Style Reforming 49
Appendix 1. Supplementary Data
App.1-1 Corporate Profile 51
App.1-2 Medium-term Management Plan Key Pointsand Strategy 52
App.1-3-1 Numerical Targets (Consolidated) 53
App.1-3-2 Quarter Comparison 54
App.1-3-3 Results of Leopalace21 Group 55
App.1-4-1 Indicator (Occupancy by Group) 56
Appendix 1. (cont’d)
App.1-4-2 Indicator (Foreign Tenants) 57
App.1-4-3 Indicator (Units and Occupancy Rates by Area) 58
App.1-4-4 Indicator (Occupancy Rates by Building Age) 59
App.1-4-5 Indicator (Contract Type) 60
App.1-4-6 Indicator (Solar Power Systems) 61
App.1-4-7 Indicator (Resources of finance for construction) 62
App.1-4-8 Indicator (“Azumi En” Area Disposition) 63
App.1-5-1 Finance (Balance Sheets) 64
App.1-5-2 Finance (Cash/Deposits and Interest-bearing Debt) 65
App.1-5-3 Finance (Cash Flows) 66
App.1-5-4 Finance (Shareholder Composition) 67
Appendix 2. Market Trends
App.2-1 Future Estimate of Population of Japan 69
App.2-2 Number of Households 70
App.2-3 New Housing Starts 71
App.2-4 New Housing Starts (Leased Units) 72
App.2-5 Vacant Rental Dwellings 73
App.2-6 Population Inflows and Outflows 74
App.2-7 Rental Housing Starts and Leopalace21Completions by Area 75
App.2-8 International Students in Japan 76
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1. Defects in Parting Walls2. Defects on Exterior Wall
Specifications
3. Defects on Parting Wall
Specifications4. Defects of Ceiling Specifications
DefectsOverview
The parting walls were not constructed insmall-scale attic or spaces above ceiling
The exterior walls do not meet thespecifications certified by the Minister ofLand, Infrastructure and Transport
The foamed urethane was used as insulationmaterial in parting walls although theconstruction certification documents.
The parting walls of fire-resistant propertiesdid not conform to the fireproofing structuralspecifications approved by the MLIT.
The construction of ceilings does not meetthe specifications certified by the MLITNotice as described in the constructioncertification documents
Description Discuss with property owners and specificadministrative agencies and determine repairwork
Presence of series that are repairableoutside and series that are required to repairone by one*
Discuss with property owners and specificadministrative agencies and determinerepair work
Inform tenants about moving or temporaryliving
Discuss with property owners and specificadministrative agencies and determine repairwork
Inform tenants about moving or temporaryliving
Promptly inform tenants about moving, dueto low fireproof function
Out of 4,456 of tenants living in propertiesmanaged by the company, about 93.1%have already moved out or determined thedate to move out (As of July 31)
Example ofIllustration
Construction defects that Leopalace21 announced on and after April 27, 2018 are classified into 4 types as below. Needs or ways for tenantsto vacate or repair period etc. depend on construction defects.
No parting walls in the entire attic
No parting walls inintermediate floor
No parting wallsin eaves
【Conceptual diagram】 【Conceptual diagram】
【Actual content of work】 【Actual content of work】
【Conceptual diagram】
*For example, Nail Series are repairable by entering attic from outside, but 6 Series need to be repaired one by one. Please refer to next page about our representative apartment series.
Rock wool acoustical board (9mm) overreinforced plasterboard (12.5mm)
Plasterboard
t=12.5mm double wall
Plasterboard
t=12.5mm double wall
Grass wool orrock wool filling
Decorative plasterboard(9mm) over reinforcedplasterboard (12.5mm)
Decorative plasterboard(9.5mm)one ceiling
Plasterboardt=12.5mm double wall
Plasterboardt=12.5mm double wall
Filled withurethane foam
The red areas indicate areas that do not confirm withthe notified specifications
The red areas indicate areas that do not confirm withthe minister’s certification
4
Exterior WallsParting Walls Ceiling
Upper floor
Lower floorCommon
Hallway
Common
Hallway
Terrace
Balcony
【Actual content of work】
Exterior wall (outside)
Base surfaceunder 606mm
Base surface about 455mm
Glass wool
Inside reinforcedplasterboard(Plasterboard is fireproof)
Siding
Exterior wall (inside)
Exterior wall (outside) Exterior wall (inside)
Excess space betweenbase surfaces
Urethane foam
SidingInside reinforcedplasterboard(Plasterboard is fireproof)
The red areas indicate areas that do not confirm withthe minister’s certification
Buildings Subject to Top-Priority Investigations (15,283 buildings) Others (23,802 buildings)
Nail Series (913 buildings) Subject 6 Series (14,370 buildings) Villa Alta (153 buildings) Other Series (23,649 buildings)
Serie
s
Series NameConstructionPeriod
Gold Nail (Wooden)1994 – 1997
New Gold Nail (Wooden)1994 – 1997
Gold Residence (Steel)1996 – 2001
New Silver Residence (Wooden)1997 – 2001
New Gold Residence (Steel)1998 – 2002
Special Steel Residence (Steel)1999 – 2001
Better Steel Residence (Steel)2000 – 2001
Con Grazia (Wooden, Steel)2000 – 2014
Villa Alta (AGR) (Steel)1999 – 2001
Other 41 Series1991 – 2018
Constru
ction
Defe
cts
Parting Walls ✓ ✓*Defects caused by inadequate
construction supervision*Defects caused by inadequate
construction supervision
Exterior WallSpecifications
✓ ✓
Parting WallSpecifications
✓
CeilingSpecifications
✓
Exte
rior
* Villa Alta(AGR) refers to those constructed from September 14,1999 to February 9, 2001
Villa Alta (AGR)Gold Nail
New Gold Nail
GoldResidence
Special SteelResidence
New SilverResidence
New GoldResidence
Con GraziaBetter SteelResidence
Construction defects were caused by (i) non-conformity with design documents, etc. and (ii) non-conformity with minister’s certification specifications, or the use of partsthat do not meet the standards of the Building Standard Law. Subject buildings are classified as buildings subject to top-priority investigations. In addition, it was discoveredthat defects in attic parting walls, etc. due to inadequate supervision of construction were found in 2,960 buildings other than buildings subject to top-priority investigations(as of July 31, 2019), and these will also be repaired.
Gold Residence andNew Gold Residence
(1,267 buildings)
(52 buildings)
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Around 80% of a total of 39,085 buildings have been investigated, and we scheduled to complete all-building investigation by the end of October 2019. Repair of theBuildings subject to top-priority investigations is scheduled to be completed by the end of June 2020.
* Apart from listed above, we confirmed minor construction deficiencies in 12,154 buildings out of 29,385 investigated buildings, which we will repair.
Buildings subject to top-priorityinvestigations
Others
Total
Product Type: Nail Series 6 Series SubtotalVilla Alta(AGR)
Others Subtotal
Number of constructedbuildings
913 14,370 15,283 153 23,649 23,802 39,085
Number of buildings managedby Leopalace21
189 13,341 13,530 149 21,715 21,864 35,394
Number of buildingscommenced investigation
912 14,196 15,108 128 16,506 16,634 31,742
Number of Investigatedbuildings
908 14,050 14,958 112 14,315 14,427 29,385
Investigation rate（vs number ofconstructed buildings）
99.5% 97.8% 97.9% 73.2% 60.5% 60.6% 75.2%
Number of defective buildings 874 6,151 7,025 35 2,925 2,960 9,985
Defect rate（vs number ofinvestigated buildings）
96.3% 43.8% 47.0% 31.3% 20.4% 20.5% 34.0%
（As of July 31, 2019）
(Reference)Number of rooms which resumed tenant recruitment: 28,303
6
8,524
5,004
3,092
1,679782
24,505
9,954
3,933
9,435
1,737
6,056
0 0
3,313
441
0
5,000
10,000
15,000
20,000
25,000
The start of construction of buildings subject to top-priority investigations is concentrated between 1990s to 2007.The percentage of buildingswith defects has decreased due to strengthening of the inspection system (obtaining ISO9001 in 2008) and the strengthening of corporategovernance.
(No. ofbuildings)
No. of buildings by construction starting period of each series and no. of defects in parting walls of attics, etc. (as of July 31, 2019)
~ 1999
TotalBuildings subject to
top-priorityinvestigations
Others
2000 ~ 2007 2008 ~
TotalBuildings subject to
top-priorityinvestigations
Others TotalBuildings subject to
top-priorityinvestigations
Others
7
61.8%
46.6%
39.5%
18.4%
13.3%
As announced on February 27, 2019, in order to objectively investigate construction defects, we established anexternal investigation committee made up of neutral and impartial experts who are completely independent from theCompany.
1. External investigation committee (Nishimura & Asahi)
1-5-1: Final report of External Investigation Committee and Measures to Prevent Recurrence①
As announced on May 29, 2019 and on July 31, 2019, The External Investigation Committee’s final report alsoidentified the points shown below as “systemic/intrinsic causes/background” and we see these as root causes of theconstruction defects in parting walls, etc. and take them seriously.
In the difficult operation environment at that time and under conditions where employees had to “think while running”,escape from management crisis and expansion of Construction Contracting Business were given top priority
The Company had become a one-man structure where the wishes of top executives were forcefully implemented
Employees lacked awareness of compliance with building-related laws and regulations and sensitivity to risk, and alsofailed to take ownership of quality problems
Insufficient work management and supervision due to a shortage of personnel.
2. Causes and Background
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We have been conducting an internal examination of recurrence prevention measures, and have now received theExternal Investigation Committee’s recommendations on such measures. Taking the content of these recommendationsseriously, we conducted an examination to ensure that our recurrence prevention measures will be effective andformulated measures accordingly.
The recurrence prevention measures are considered to be the management’s top priority and we plan to implement thempromptly.
We will post updates on our initiatives for each recurrence prevention measure on our website as and when necessary.
3. Recurrence Prevention Measures in Response to External Investigation Committee’s Recommendations
In addition to the above, as released on June 10, 2019, additional investigation was requested to clarify the causes ofthe defects of properties constructed by other companies and the defects of steel fire-resistant properties constructedby the Company, more objectively.
Measures to Prevent defects
1-5-2: Final report of External Investigation Committee and Measures to Prevent Recurrence②
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Radical Reform of
Corporate Culture
Reconstruction of Compliance/
Risk Management Structure
(1) Establishment of Compliance ManagementDepartment
(2) Establish Construction Legal Department within theCompliance Management Department to conductexamination of conformity of new products, etc.with laws and regulations and inspections fromoutside business departments
(3) Review method of operation of ComplianceCommittee
(4) Review risk management methods
(5) Verify conformity with laws and regulations whenlaunching new business, etc. of changing content ofbusiness, etc.
(6) Review system of person in charge of compliance
(7) Review the way in which doubts about violationsare dealt with
Review of Construction Subcontracting
Business Structure
(1) Improve new product, etc. developmentprocess
(2) Review checking structure in applicationdrawing creation stage
(3) Conduct proper construction supervisionthrough revision of construction supervisionstructure
(4) Ensure construction quality by performingproper construction management
(5) Introduce inspections by ComplianceManagement Department’s Construction LegalDepartment
(6) Introduce training by the ComplianceManagement Department’s Construction legalAffairs Department
(1) Foster customer-oriented corporateculture
(2) Firmly establish Compliance-First policy
(3) Realize reform of corporate culturethough dialogue with stakeholders
(4) Develop structure for reporting violationsof laws and regulations, etc.
(5) Provide training to reform the corporateculture
(6) Review personnel systems (increase jobrotation)
Overview of Recurrence Prevention Measures
Measures to enable early detection and response
Overview of additional preventive measures released on July 31,2019
(1) Securing personnel and building operational systems in line withthe volume of operations
(2) Provision of information, etc. to construction companies
(3) Efforts to realize appropriate construction management
(4) The department in charge of product development thoroughlyconfirms and examines the Minister's approval, and develops asystem that enables contractors, etc. to sufficiently grasp thecontent of use.
(1) Establishment of a framework for gathering and verifying riskinformation
(2) To clarify the drafters and approval procedures for importantdocuments such as blueprints
(3) Clarifying rules for the storage and management of importantdocuments
Business Model
Leopalace21 is a real estate company with two core businesses: the Development Business which constructs apartments mainlyfor single persons, and the Leasing Business which manages these apartments. The Leasing Business makes up over 80% ofsales, and we are moving forward to establish a stock-based business model capable of generating stable profits.
Responsive to tenant needsResponsive to owner needsApartment construction leads to inheritance tax reduction,and supports asset inheritance
Our Master Lease System pays rents for all units in buildingsregardless of vacancies for up to 30 years
Total support from construction to management andoperation
Nationwide network centered on three major metro areaswhere tenant demand is strong
Provide high value added services such as furnishedapartments with furniture, home appliances, andIoT devices
No brokerage fees (LP21 leases directly from landowners)
Leasing
Business
Development
Business
4.Rent
income
Owners Tenants
2.Masterlease
1.Construction
contractor
3.Sub-lease
Business model(Rooms)As of June 30, 2019
Tokyo metro 171,000
Tohoku 36,000
Chubu88,000
Kinki81,000
Chugoku39,000
Kyushu &Okinawa
51,000Shikoku15,000
Hokuriku &Koshinetsu
40,000
Hokkaido 14,000
Kita Kanto 40,000
Rooms under management
No. 1 in Japan in lease management of rental units for people living alone (570,000 rooms)
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334.5 342.3 355.7 379.0 383.6 388.5 399.3 410.6421.3 435.5 426.3
421.2
359.1237.0
107.8 62.9 53.3 63.1 61.3 74.1 80.3 76.5 58.9 59.7
733.2
620.3
483.5 458.2 454.2 470.8 483.2511.5 520.4 530.8 505.2 502.2
50.1
-29.7 -24.4
3.37.4
13.4 14.821.0 22.8 22.9
7.32.2
-20
0
20
40
60
80
-200
0
200
400
600
800
46%
49%
5%
Sales (Billion yen) Operating profit (Billion yen)
Results Trend
*Figures for FY17/3 adjusted to new segments
Occupancy rate (average)
Leasing
Development
Others
Operating Profits
FY19/3Sales
FY09/3Sales
Decrease in occupancy rates and rent, as well as stringent loan screening caused by the Lehman Collapse led to a decrease inapartment construction, and Leopalace21 reported operating losses for two consecutive years. However, structural reformmeasures such as leasing cost cuts were implemented in order to target a stable earnings structure for the mid to long term.Structural reforms were completed during the previous midterm management plan, and we are building the basis of our newgrowth business fields.
-300
84%
12%4%
88.51%
82.25%80.09%
81.16%82.94%
84.58%86.57%
87.95%88.53%90.59%
88.34%
85.20%
80%
95%
FY09/3 FY10/3 FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3(Plan)
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Highlights of Results Trend
(Billion yen) FY09/3 FY10/3 FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3FY20/3(Plan)
Net sales 733.2 620.3 483.5 458.2 454.2 470.8 483.2 511.5 520.4 530.8 505.2 502.2
Leasing 334.5 342.3 355.7 379.0 383.6 388.5 399.3 410.6 421.3 435.5 426.3 421.3
Development 359.1 237.0 107.8 62.9 53.3 63.1 61.3 74.1 80.3 76.5 58.9 59.7
Operating profit 50.1 -29.7 -24.4 3.3 7.4 13.4 14.8 21.0 22.8 22.9 7.3 2.2
Leasing -1.5 -47.8 -30.8 4.0 8.7 15.3 20.5 22.8 23.0 26.0 14.9 9.8
Development 70.1 29.7 11.8 4.2 2.7 2.9 0.2 3.3 5.7 3.6 -0.9 -1.7
Net income 9.9 -79.0 -41.7 0.3 13.3 15.7 15.1 19.6 20.4 14.8 -68.6 0.1
Managed units*(1,000 units)
506 551 571 556 546 549 554 561 568 570 57.4 57.7
Occupancy rate* 88.5% 82.3% 80.1% 81.2% 82.9% 84.6% 86.6% 88.0% 88.5% 90.6% 88.3% 85.2%
Orders received 337.8 250.2 80.3 50.0 73.0 81.1 87.3 86.4 92.8 87.6 73.3 62.0
Before the Lehman Collapse in 2008, Leopalace21’s main profit driver was the Construction Business (current DevelopmentBusiness). After the Lehman Collapse, we shifted our business model through structural reforms, generating profit from theLeasing Business.
*“Net income” refers to “net income attributable to shareholders of the parent”*Figures for managed units are as of the end of the final month for each fiscal year*Occupancy rate is the average value for each fiscal year*Figures for FY17/3 adjusted to new segments*Past figures are retrospectively adjusted, due to a change in accounting policy in a subsidiary in the Leasing Business
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Highlights of Results
Net loss was recorded due to a deterioration in business earnings caused by construction defects and the recording of anextraordinary loss of 4,500 million related to construction defects.There were also differences from the plan in sales and revenuerecognition for the development-type SPC (development segment).
*“Net income” refers to “net income attributable to shareholders of the parent”.*FY19/3 Full-year Plan reflects earnings forecasts revisions announced on February 7, 2019.
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(Million yen)FY19/3 Q1
Actual
FY20/3 Q1
Plan
FY20/3 Q1
ActualFY20/3
Full-year PlanYoYCompared to
Plan
Sales 129,268 119,600 113,324 -15,944 -6,275 502,200
Gross profit 23,860 12,400 11,282 -12,577 -1,117 66,100
% 18.5% 10.4% 10.0% -8.5p -0.4p 13.2%
SGAE 19,740 16,600 15,517 -4,222 -1,082 63,900
Operating profit 4,120 -4,300 -4,235 -8,355 +64 2,200
% 3.2% -3.6% -3.7% -6.9p -0.1p 0.4%
Recurring profit 4,138 -4,500 -3,529 -7,667 +970 1,300
% 3.2% -3.8% -3.1% -6.3p +0.6p 0.3%
Net income (loss)* -957 -4,700 -5,736 -4,778 -1,036 100
In the Leasing Business, both occupancy rates and profits decreased because the Company suspended recruitment of newtenants into buildings subject to top-priority investigations. In the Development Business, both sales and profits decreased YoYsince orders decreased due to the negative environment surrounding the apartment construction industry. In the Elderly CareBusiness, sales and profit exceeded forecasts as a result of improvement of existing facilities’ occupancy rates. In the Hotels,Resort & Other Businesses, sales exceeded YoY and forecasts as a result of improvement of occupancy rates.
*Gross profit/Sales*FY19/3 Full-year Plan reflects earnings forecasts revisions announced on February 7, 2019
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(Million yen)19/3 Q1Actual
20/3 Q1
Plan
20/3 Q1
Actual
20/3Full-year
PlanYoYCompared to
Plan
Sales 111,847 101,200 100,380 -11,467 -819 421,300
Gross profit 20,814 9,400 9,309 -11,505 -90 51,900
Operating profit 7,214 -1,600 -1,735 -8,949 -135 9,800
Sales 12,450 13,000 7,330 -5,119 -5,669 59,700
Gross profit 3,359 3,000 1,721 -1,638 -1,278 12,800
Operating profit -891 -800 -1,515 -624 -715 -1,700
Sales 3,360 3,600 3,606 +245 +6 14,800
Gross profit 31 200 166 +134 -33 1,200
Operating profit -366 -200 -170 +196 +29 -100
Sales 1,611 1,800 2,008 +397 +208 6,400
Gross profit 716 800 863 +146 +63 1,600
Operating profit -612 100 299 +912 +199 -1,000
Adjust-ments
Operating profit -1,222 -1,800 -1,112 +109 +687 -4,800
*18.6%
*27.0%
*12.3%
*21.4%
*9.3%
*23.1%
*9.3%
*23.5%
Main Indicators (Leasing)
*Gross profit/Sales *Figures for FY17/3 adjusted to new segments
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(Million yen)FY17/3Actual
FY18/3Actual
FY19/3Actual
FY20/3Plan
Sales 421,342 435,537 426,388 421,300
Gross profit 70,142 76,406 62,961 51,900
Operating profit 23,009 26,062 14,987 9,800
Units under management(as of the end of FY)
568,739 570,672 574,798 577,000
Occupancy rate (average) 88.53% 90.59% 88.34% 85.20%
Direct offices(as of the end of FY)
189 189 189 189
Number of corporate sales section(as of the end of FY)
60 59 54 52
Number of employees(non-consolidated, as of the end of FY)
3,284 3,247 3,241 3,218
of which, sales employees 1,701 1,546 1,494 1,428
*16.6% *17.5% *14.8% *12.3%
Actual figuresas of June 2019
75%
77%
79%
81%
83%
85%
87%
89%
91%
93%
95%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY 2017/3 FY 2018/3 FY 2019/3 FY 2020/3 FY 2020/3(Plan)
Occupancy Rate
Occupancy rate for July 2019 was 80.68%, decreasing more than 12p since April 2018. This decrease was mainly due tosuspension of new tenant recruitment in properties subject to top-priority investigations as well as decrease of individual tenants.
(Occupancy rate = Occupied units / Managed units, %)
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Apr May JunQ1
Avg.Jul Aug Sep Oct Nov Dec Jan Feb Mar Avg.
FY17/3 88.97 88.55 88.60 88.71 87.95 87.78 88.31 87.50 87.41 86.97 88.41 90.18 91.66 88.53
FY18/3 90.51 90.28 90.55 90.45 89.75 89.88 90.21 89.73 89.69 89.44 90.83 92.43 93.72 90.59
FY19/3 92.82 92.76 92.10 92.56 90.45 89.41 88.40 87.24 86.38 85.26 85.38 85.57 84.33 88.34
FY20/3 82.35 81.95 81.40 81.90 80.68 81.60
※Target average occupancy rate for FY20/3: 85.2%
92.82%
92.76%
92.10% 90.45%
89.41%
88.40%
87.24%
86.38%
85.26%
85.38% 85.57%84.33%
82.35% 81.95%81.40%
92.18%
87.86%
81.98%
77.87%
74.55%
71.11%
68.78%66.57%
65.65%
66.79%64.91%
61.59%60.34%
59.20%
93.09%
94.50% 95.25% 95.94% 96.24% 96.36% 96.32% 95.81% 96.51% 96.16% 95.25%94.03% 94.09%93.87%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
FY 2019/3 FY 2019/3Properties subject totop-priority investigations
FY 2019/3Properties not subject totop-priority investigations
Occupancy Rates by Apartment Types
Since the confirmation of construction defects, new tenant recruitments of properties subject to top-priority investigations was suspended,and occupancy rate decreased every month. Meanwhile, rental demand is high backed by external factors such as labor shortages, and theoccupancy rate of properties not subject to top-priority investigations (not suspended) is 93%. In the future, we will resume tenantrecruitment by investigating and repairing properties in an effort to raise the overall occupancy rate.
Occupancy rates fell 11.4p from April toJune 2019, mainly due to suspension oftenant recruitment in top-priority properties.
The total occupancy rate has beenreduced due to the delay in theresumed tenant recruitment ofBuildings subject to top-priorityinvestigations.
192018 2019
Others maintain a occupancyrate of more than 90 percent.
Main Indicators (Development)
(Million yen)FY17/3Actual
FY18/3Actual
FY19/3Actual
FY20/3Actual
Sales 80,321 76,587 58,992 59,700
Gross profit 23,124 21,355 14,343 12,800
Operating profit 5,786 3,663 -995 -1,700
Contract amount 92,852 87,628 73,325 62,000
of which, apartments and
other buildings87,592 75,905 64,495 42,000
of which, real estate
development5,260 11,722 8,829 20,000
Offices(as of the and of FY)
60 60 50 35
Number of employees(non-consolidated, as of the end of FY)
1,469 1,450 1,365 1,481
of which, sales personnel 566 530 475 447
*28.8% *27.9% *23.3%
*Gross profit/Sales *Figures for FY17/3 adjusted to new segments *For real estate development, contract amount = sales
20
*21.4%
Actual figuresas of June 2019
19.2 16.3
3.2
18.6 17.8 17.6 18.8 20.311.4
0.50.1
0.2
0.7 0.8 1.4 1.18.9
6.6
0
10
20
30
Q1 Q2 Q3 Q4
(Billion yen)Subcontracting Real estate development
Gross Orders
Orders and Sales
FY18/3 FY19/3
Competition intensified due to strategic limitation of business areas in metropolitan areas. Orders decreased compared to theprevious year and did not achieve plans, due to negative media reports about apartment construction, apartment loans, and theproblems concerning parting wall construction deficiencies.
21
FY20/3
(Billion yen)FY18/3 FY19/3 FY20/3
Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 FY(Plan)
Orders from subcontracting(buildings)
214 222 204 232 872 212 214 201 143 770 46 580
(Billion yen) 192 186 176 203 759 163 178 188 114 644 32 411
Orders outstanding(Billion yen)
697 680 687 639 639 656 658 711 623 623 492 -
Real estate development(Billion yen)
5 7 14 89 117 1 8 11 66 88 2 151
Sales (Billion yen) 144 175 145 299 765 124 142 115 207 589 73 472
6
8
10
12
14
16
18
20
60
62
64
66
68
70
72
74
Reduction in SGAE
FY18/3Actual
FY19/3Actual
FY20/3Plan
73.1
68.8
63.8
Personnel-1.9
Advertise-ment-0.8
Salesexpenses
-0.2
Others-2.0
4.3 bn yen reduction
4.9 bn yen reduction
Personnel-3.6
Advertise-ment-1.2
Salesexpenses
-0.3
Others+0.8
(Billion yen)
22
(Billion yen)
FY19/3 Q1Actual
FY20/3 Q1Actual
Personnel-0.6 Advertise-
ment-0.6
Salesexpenses
-0.1
Others*-2.9
19.7
15.54.2 bn yen reduction
We will reduce personnel, advertising, and other SGAE expenses. And the Structural Reform Office, which was newlyestablished in May 2019, will thoroughly manage the cost of the entire Group.
*Others: Repair and maintenance -0.8bn, Spplies expences -0.2bn, Special Factors in the Settlement Process -1.2bn,etc.
Companies that Own Housing/Dormitories for Employees
Corporations are shifting from owning housing/dormitories for employees to renting, due to increasing burden of maintainingproperties. Due to revisions to the Immigration Control Act , we expect up to 350,000 laborers being accepted over the next fiveyears.
Foreign Workers in Japan
63.565.5
61.2
46.042.3
35.8 35.3
29.4
20.7
20
30
40
50
60
70
1993 1995 1997 2001 2004 2007 2010 2013 2018
*Excerpt from “Rousei-jihou” No.3911 (16.6.24), No.3957 (18.9.14) *Excerpt from “Labor status of foreigners” (Ministry of Land, Infrastructureand Transport)
（%）
486563
650 686 682 718 788908
1,084
1,279
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
(Thousand people)
Estimated Number of Foreign Workers to Accept
Industry Number of People
Nursing care 50,000～60,000
Building cleaning 28,000～37,000
Industrial material 17,000～21,500
Industrial machinery manufacturing 4,250～5,250
Electric utility/information 3,750～4,700
Construction 30,000～40,000
Shipbuilding 10,000～13,000
Car maintenance 6,000～7,000
Aviation 1,700～2,200
Lodging 20,000～22,000
Agriculture 18,000～36,500
Fishing 7,000～9,000
Food and beverage manufacturing 26,000～34,000
Food service 41,000～53,000
Total 262,700～345,150
24
200
300
400
500
600
0
50
100
150
200
250
300
350
Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep MarJun
FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
Managed units (right axis)
Occupied units (right axis)
Occupied units by Group(Thousand units)
Managed and occupied units(Thousand units)
Individuals (left axis)
Corporate (left axis)
Students (left axis)
*Figures are as of the end of each month*Reference of p.56
Occupancy by Group
25
*Figures are as of the end of each quarter*Reference of p.56
Shares of Occupied Units by Group
26
(Thousand units)
51.5% 51.4% 51.1% 53.0% 53.3% 53.3% 53.0% 54.5% 54.8% 54.8% 54.8% 56.4% 56.6% 56.5% 56.5% 57.8% 57.7% 56.8% 56.4% 57.9% 57.8%
37.4% 37.4% 37.6% 36.8% 36.8% 36.8% 37.0% 36.0% 36.0% 35.9% 35.9% 34.6% 34.6% 34.6% 34.5% 33.4% 33.6% 34.2% 34.4% 33.7% 33.9%
11.1% 11.1% 11.3% 10.2% 9.9% 9.9% 10.1% 9.5% 9.3% 9.3% 9.3% 9.0% 8.8% 8.9% 9.0% 8.8% 8.7% 9.0% 9.2% 8.4% 8.3%
473 476 474 495 488 490 487 509 500 499 493 521 517 515 509 535 527 507 489 485 468
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
Student-occupied units Individual-occupied units Corporate-occupied units
48,035 48,883 42,075
40,380 46,32843,107
36,071 36,99533,324
43,782 43,38238,713
18,052 18,162
15,859
53,05057,070
52,210
53,21152,881
45,298
292,581303,701
270,586
2017/6 2018/6 2019/6
48,913 49,242 50,086 44,518
34,689 39,510 46,379 44,771
36,911 37,50738,438
35,462
42,837 45,03445,157
40,973
17,50918,150
18,77716,676
48,48952,920
58,293
52,920
47,91351,460
51,932
45,323
277,261293,823
309,062
280,643
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2016/3 2017/3 2018/3 2019/3
Other
Construction
Food service
Services
Staffing,outsourcing
Manufacturing
Retail
Shares of Occupied Units by Industry
Approximately 80% of listed companies* in Japan use Leopalace21. The suspension of recruiting new tenants into buildingssubject to top-priority investigations impacts tenant matching.
*Companies listed on the 1st and 2nd sections of the Tokyo Stock Exchange, regional stock exchanges, and emerging markets
(Units)
27
*No. of companies inparenthesesYoY +6.0% +5.2% -9.2%
(49,229社)
(43,751社)(48,089社)
(48,148社)
-8.5%
-12.7%
-10.8%
-9.9%
-7.0%
-13.9%
-14.3%
(43,019社)
-9.2%
-11.2%
-9.3%
-7.7%
-3.5%
-11.1%
-12.7%
(48,609社)(47,217社)
+3.8% -10.9%
0
5,000
10,000
15,000
20,000
25,000
Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Jun
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
China S. Korea Taiwan Vietnam Thailand Other Southeast Asia Other
Leased Units by Foreign Nationals (Excluding Corporate Contracts)
*Reference of p.57
In addition to obtaining customers at 16 overseas offices, we are strengthening our support system for foreign customers after coming toJapan such as preparing customer services in 7 languages by overseas employees (210 as of June 2019) at 7 domestic offices in theoverseas division. About 81%, or 15,000 units, of the nationality of foreign tenants with corporate contracts are distinguishable. A total ofabout 35,000 units are contracted by foreign tenants, meaning 7.5% of the total occupied units.
SingaporeOverseassubsidiary
Singapore
IndonesiaOverseassubsidiary
Jakarta
PhilippinesOverseassubsidiary
Manila
Myanmar 1 office Yangon
CambodiaOverseassubsidiary
Phnom Penh
ThailandOverseassubsidiary
Bangkok, Sriracha
VietnamOverseassubsidiary
Ho Chi Minh, Ha Noi
Taiwan 1 office Taipei
SouthKorea
2 offices Busan, Seoul
ChinaOverseassubsidiary
Beijing, Dalian, Shanghai,Guangzhou
19,512 as of June 31, 2019(YoY +4.4%)
28
(Units)
Direct Partners Total
Hokkaido 9 2 11
Tohoku 15 6 21
Kita-kanto 14 5 19
Tokyo metro 49 29 78
Hokuriku & Koshinetsu 13 8 21
Chubu 24 15 39
Kinki 25 10 35
Chugoku 11 10 21
Shikoku 5 5 10
Kyushu & Okinawa 17 18 35
Japan 182 108 290
Overseas 7 0 7
Total(Compared to March 2017)
189
(±0)
108
(-5)
297
(-5)
Leasing Offices
As of June. 30, 2019
* Overseas locations operating foreign real estate brokerage servicesnot included. (Thailand, Vietnam, Cambodia, Myanmar, Philippines,Indonesia, Singapore)
29
0
50
100
150
200
250
300
350
Sep Mar Sep Mar Sep Mar Sep Mar Jun
FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
(Offices)
Direct Partners
Contests
Wall-art ContestWinners paint their work on the wallsof our showroom “Kagoshima-like Rooms”
Students compete in creating roomswhich best represent “Kagoshima”
Renovation PartySelf-renovation event. The concept of therenovation is “living with friends withoutinvesting a large amount of money”
In May 2012, Leopalace21 has started “my DIY” as a strategy for acquiring individual tenants. 45,900 contracts have beenacquired as of June. 30, 2019, and we will continue to promote the image of “Customize = Leopalace.” Since 2012, throughalliances with major security companies, security systems and cameras have been installed. Apartments certified as “SuperiorDisaster Prevention Leasing” since June 2017.
“my DIY”
Custom wallpaper for free on 1 wall. Thumbtacks,shelves, and scribbling on the wall is OK
No cost for restoring room to original state
More than 100 types of wallpaper to choose from,including patterns
Male-to-female ratio of 50:50, higher percentage offemales compared to overall occupancy (70:30)
30
Security Systems Installments
FY20/3 Q1Actual
Cumulativetotal
% oftotal
Security systems(units)
1,677 310,621 54.0
Security cameras(buildings)
123 14,487 39.4
Certified as “Superior DisasterPrevention Leasing”
Designs for “Miranda” and“Cleino” have met the criteria forthe certification of a “SuperiorDisaster Prevention Leasing”apartment.
T Card Plus (Leopalace Member)
L-Select Leopalace ShoppingShopping web site with manyeveryday-necessities. Productsmade specially for Leopalace21 arealso available.
Tenant services which overturn common practices of the leasing apartment industry are available through “MY PAGE,” anexclusive website for our tenants. A Leopalace21 original brand credit card has been issued since October 1, 2017, and tenantscan pay monthly rent via credit.
Website for Tenants: “MY PAGE” (from Apr. 2013) STB device “Life Stick”
Expand functions of internet service “LEONET”(started in 2002) through STB device “LifeStick” with AndroidTV
Installed in 469,950 units (about 82%) as ofJune 30, 2019
Life Stick
L MOVIE
31
MY PAGE(Exclusive website for tenants)
Issued Leopalace21 original brandcredit card from October 1, 2017
Tenants can pay monthly rent viacredit
The only credit card in the realestate industry with “T Point”
More than 20,000 cards issued(as of June 30, 2019)
LEONET my-room
IoT with “Leo Remocon”
Controlling appliances with asmartphone made possibleie. control AC from outside
Standardly equipped in all newlyconstructed apartments(after Oct. 2016)
Installed in 13,205 units(97.8%)
In order to enhance tenant services, Leopalace21 has expanded functions of its internet service and implemented an IoT devicewhich makes controlling appliances and opening locking with a smartphone possible. Smart stations with AI speakers will bestandardly equipped in new apartments, starting from those contracted after January 2018.
32
Smart Lock “Leo Lock”
Selected as “Competitive IT Strategy Company”
Remotely lock and confirm viasmartphones
Key cylinder replacements andkey handovers becomeredundant
Standardly equipped on all newapartments (completed afterOctober 2017)
Installed in 6,264 units (100%)
Initiatives such as “first facialrecognition system for rentalproperties” and “industry-first rentassessment system utilizing AI”led to selection
Promoted by METI and the TokyoStock Exchange
Open-type delivery locker “PUDO Station”
Industry-first open-type deliverylocker installed in an apartment
Contribute to the localcommunity by improving thelives of occupants andneighbors
Installed in 139 apartments,accounting for half of theinstallments by real estatecompanies Leopalace Cleino
Cerezo Palthy II
33
Roof-lease Solar Power Systems (from Dec.2013)
FY20/3 Q1Actual
Buildingsinstalled* 4,483
Generatingcapacity* 66.9 MW
Generated power* 25,256 MWh *Refer to p.61
Corporate Housing Agency (from Sep. 2009)
Leopalace Leasing CorporationProvides agency services such as finding rooms fromover 1.6 million, including Leopalace21 apartments, aswell as contracting, paying rent, and concluding contracts.
Small-claims and Short-term Insurance Business(from Sep. 2006)
Asuka SSISupporting all tenants’ life by providing insurances whichcover niche fields such as an insurance for furniture andfee of tiding up ruins when fire occurred.
Rent Guarantee Business (from Apr. 2007)
Plaza Guarantee Co., LtdProviding comfortable environment to all tenants byguaranteeing debts such as rents, common fees,restoration costs, etc.
Tenants
Paying “Rents”+
“GuaranteeFee”
PlazaGuarantee
LesseesPayment of
“Guarantee Fee”
Guarantee ContractsLease Contracts
Lease GuaranteeContracts
Group companies implement leasing-related businesses, as well as services to increase the competitiveness and profitability.
70,000 contracts (+18.6% YoY)
300,000 contracts (-7.7% YoY)
170,000 contracts(-7.8% YoY)
34
Managed by other company
Provide first “minpaku” apartment in Ohta-ku, Tokyo,renovating a company-owned apartment
By obtaining know-how from this alliance, we will aim todevelop products with higher profitability
Leopalace21 provides a “minpaku” (private lodging) apartment in Ohta-ku, Tokyo, a special zone for “minpaku” businesses.We are aiming for full-scale entry into the “minpaku” business through operations by Leopalace21, as a “third option” of leasingin addition to general and monthly contracts. Initially we will operate minpaku at company-owned apartments, and will expandtargets as a measure to utilize vacant and old properties.
Leopalace Tokyo Kamata（ 29.06㎡ ）
As of July 2019: 5 buildings
Fukuoka (Fukuoka), Aichi (Toyota),Kanagawa (Yokohama)
Managed by Leopalace21
Leopalace21’s “Minpaku” Scheme
Since operation is limited to 180 days per year under the PrivateLodging Business Act, we will rent out the remaining days as “monthly”contracts, utilizing a “hybrid operation (‘minpaku’ + monthly)”
*1. Method of attracting customers1st phase - OTA and private lodging/vacation booking sites
(Airbnb、Vacation STAY, etc.)2nd phase - Via Leopalace21 offices in East Asia, where 74.2%
of visitors come from
*2. Target properties1st phase - Company-owned properties2nd phase - Vacant/old properties managed by other companies
Private lodging agent
Booking and payment
Lodgers
Lodge
Submitbooking info
Maintenance,cleaning
Private lodgingadministrator
Private lodgingbusiness operator
Management outsourcing
OTA*1
(Online Travel Agency)
*2.
Construction Offices Apartments Constructed (FY19/6)
Of the 64 buildings completed nationwide, Tokyometropolitan area makes up 50.0% (FY19/3 : 51.4%),and the three metropolitan areas (Tokyo, Kinki, andChubu) make up 73.4% (FY19/3 : 75.9%).
(Buildings)
Osaka 2 offices (3)Kyoto 1 office (1)Hyogo 2 offices (2)
Tokyo 11 offices (18)Kanagawa 4 offices (7)Saitama 5 offices (6)Chiba 1 office(1)
Tokyometropolitan:21 offices(32)
Shikoku:0 offices(0)
Hokkaido:0 offices(0)
North Kanto:0 offices(0)
Chubu:3 offices (4)
(Aichi)
Tohoku:2 offices(2)
(Sendai, Kohriyama)
Hokuriku,Koshinetsu:0 offices(0)
Kinki: 5 offices(6)Chugoku: 2 offices(2)
(Okayama, Hiroshima)
Kyushu, Okinawa:2 offices (4)
(Fukuoka, Okinawa)
We will continue to promote sales activities in the three metropolitan areas (Tokyo Kinki, Chubu). We will also concentrate onfollowing up on existing owners.
36
Total 35 offices (As of June 2019)( ): As of Mar. 2019
TokyoMetropolitan
32
Kinki12
Chubu3
Kyushu,Okinawa
8
Tohoku2
Chugoku5
Other2
Elderly care facilitiesApartments
Matching businessbetween land owners andcare facility operators,
addressing theincreasing number
of seniors.
Products addressingneeds of tenants.Apartments are bulk-leased and managedby Leopalace21.
Built-to-order houses Stores
Construction ofconvenience stores andrestaurants, as well ascomplex structures withhomes or apartments.
Construction of built-to-order houses and housewith rooms for rent, inwhich rent income can beearned.
Leopalace21 proposes the optimal plan fit for the unique conditions of each land.
Various land usage proposals, including management of vacant land and housing, as wellas support for sales
Others
Ideal Land Usage
37
“MIRANDA” “CLEINO”
New apartment brands “MIRANDA” and “CLEINO” announced in May 2015. The launch of two unique brands will strengthencompetitiveness and renew brand image. Leopalace21 apartments are standardly equipped with sound-insulating “non-sound system,”which drastically upgraded sound insulation.
38
WoodenV-model
Down
1/3
Steel
Down
1/3
Non-sound floor
Reducesnoise fromupper floors.Insulationimprovedtwo to threerankscompared toconventionalmodels.
Wooden
TLD-45
Steel
TLD-50
Sound-insulating walls
Improved sound-insulation qualityof walls, providingTLD-45 forwooden structuresand TLD-50 forsteel framestructures.
Down
15dBConstruction example
Cross section
Sound-insulating drainpipes
Installed as a measureagainst drainage noise.Decreases noise by 15dB compared toconventional models,providing environmentssimilar to “libraries ormidnight suburbs.”
Upgraded Sound Insulation with “Non-sound System”
Concept is “decorative.”
An apartment brand that proposes unique added valueand new ideas.
Concept is “plain.”
A “plain-type” apartment brand that fits and matches toeach occupant’s needs and lifestyle.
Since the fiscal year ended March 2012, Leopalace21 has started constructing buildings other than apartments. Elderly carefacilities make up the majority of the social welfare facilities constructed, but we are adding and diversifying products such aschildcare facilities.
Elderly care facility(Setagaya-ku, Tokyo)
Elderly care facility(Kokubunji City, Tokyo)
Elderly Care Facilities Childcare Facilities
39
Childcare Facilities
Nursery school(Kokubunji, Tokyo)
Disability group home(Yamato, Kanagawa)
Hotel and store(Shimogyo, Kyoto)
Apartment and supermarket(Setagaya, Tokyo)
Cram school（Ora-gun, Gunma)
Utsunomiya-nishi SR （Tochigi pref.）
Mito SR （Ibaraki pref.）
Kumagaya SR （Gunma pref.）
Makuhari SR （Chiba pref.）
Nagoya SR （Aichi pref.）
Yokohama SR （Kanagawa pref.）
Omiya-kita SR （Saitama pref.）
Nagano-chuo SR （Nagano pref.）
Toyama SR （Toyama pref.）
Saku SR （Nagano pref.）
Showa SR （Yamanashi pref.）
-40-
Branche Series
In addition to the luxurious homes made with kiso-hinoki wood built by subsidiary Morizou Co., Ltd., Leopalace21 has launched“○○” (maru-maru) Home, constructed using the SE (safety-engineering) method. Morizou Co., Ltd. has opened a new modelhouse in Omiya, Saitama in June 2018.Life Living Co., Ltd., a real estate developer operating in the urban areas of Tokyo,Nagoya, and Fukuoka, has been subsidized as of July 2016.
Free design is possible,such as spacious chambersand large windows, due tothe SE construction method
Adapts to changing familystructures by arranging floorplans
Apartments emphasizingdesign and functionality, fittingsmall or deformed land
Luxury custom-built by Morizou
“○○” (maru-maru) Home
H=under10m
Rent income
“TEN-FOUR CUBE” enables construction of four-storybuildings under 10 meters, which is generally the limit forthree-story buildings. By increasing floor space, rentincome increases 33% compared to normal constructionmethods. This is especially effective when floor-arearatio is not fully used.
*Scheduled to open Hamadayama Model House during this fiscal year
In order to differentiate from our peers, Leopalace21 has started a new service called “Life-stage Support.” In addition,Leopalace21 established Leopalace Trust Co., Ltd. to support the asset succession of customers and strengthen consultingservices.
“Life-stage Support”
In addition to apartment management, Leopalace21 willsupport the management of various assets, such as lifeinsurance, equity, and cash
Sales personnel will periodically visit landowners tointroduce new services and information regarding assetmanagement
Three pillars
1. Asset formationLeopalace21 will assist in creating portfolios withassets such as real estate, insurance, equity, cash,etc.
2. Tax planningLeopalace21 will introduce specialists and offer thelatest information
3. Life planningLeopalace21 will help in vacation planning, offerbenefit programs, and host gatherings
41
Apaerment owners
About assets,
Or legal trouble
Specialists,lowyers,accountants
Financial institution
insurance firms ,etc
introduce
*Private residential homes include Group homes
Elderly Care Business
Elderly Care Business is positioned as a growth strategy area, planning to increase facilities and stabilize management tocorrespond to Japan’s aging society. There are 87 facilities as of December 1, 2018. Occupancy rates are steady due tomeasures which improve customer satisfaction.
43
(Million yen)FY19/3 Q1
Actual
FY20/3 Q1
Plan
FY20/3 Q1
Actual
FY20/3Full-year
PlanYoYCompared
to Plan
Sales 3,360 3,600 3,606 +245 +6 14,800
Gross profit 31 200 166 +134 -34 1,200
Operating profit -366 -200 -170 +196 +30 -100
Facilities as of term-end 87 87 87 ±0 ±0 87
Occupancy rate (Day-service) 73.2% 74.4% 73.4% +0.2p -1.0p 77.4%
Occupancy rate (Short-stay) 91.8% 94.3% 95.7% +3.9p +1.5p 96.3%
Occupancy rate(Private residential homes, etc.)
91.5% 91.2% 91.8% +0.3p +0.7p 92.6%
Domestic Hotels Business
Hotel LeopalaceSendai
Hotel LeopalaceSapporo
Hotel LeopalaceHakata
Hotels in Asahikawa, Niigata, Yokkaichi, and Okayama were sold during the previous midterm management plan, and 4 hotels with a totalof 542 rooms in Sapporo, Sendai, Nagoya, Fukuoka (Hakata) are currently under management. An annex of Hotel Leopalace Sapporoopened in October 2017, and rooms have increased from 86 to 195. Also, renewal construction works in the former building of HotelLeopalace Sapporo was completed in June 2018.
44
Hotel LeopalaceNagoya
(Million yen)FY19/3 Q1
Actual
FY20/3 Q1
Plan
FY20/3 1Q
Actual
FY20/3Full-year
PlanYoYCompared
to Plan
Sales 455 480 509 +54 +29 2,000
Operating profit -781 -10 -0 +780 +10 -90
Depreciation and amortization 88 100 93 +5 -9 400
Occupancy rate 81.5% 75.7% 78.1% -3.5p +2.3p 87.0%
Resort Business (Leopalace Guam – non-consolidated)
The number of Japanese travelers to Guam has been on a recovery trend since the number of charter flights to Guam increasedsignificantly in 2019. An executive floor “Medallion Floor” in Leopalace Hotel (Guam) was certified as “L grade,” the highest rankgiven by JTB Hotel grade. Please note that the fiscal year of Leopalace Guam is from January to December.
Leopalace Resort Leopalace Resort Country Club
(Million yen)FY2018/12Q1 Actual
FY2019/12
Q1 Plan
FY2019/12
Q1 Actual
FY2019/12Full-year
PlanYoYCompared
to Plan
Sales 1,582 1,670 1,664 +81 -6 4,900
Operating profit 222 260 265 +43 +5 -480
Depreciation and amortization 239 280 285 +46 +5 1,100
Occupancy rate (Leopalace Resort) 53.9% 68.7% 66.9% +13.0p -1.8p 51.8%
Number of arrivals in Guam 399,858 - 431,083 +31,225 - -
of which, Japanese 149,985 - 189,769 +39,784 - -
45
Medallion Room
Busan
DalianBeijing
Shanghai
GuangzhouTaipei
Introduce Japaneseapartments
Foreign realestate brokerage
Both businesses
Bangkok
Ho Chi Minh
Phnom Penh
YangonHa Noi
Manila
Seoul
Jakarta
Sriracha
Leasing Business Overseas (16 locations)
Foreign offices, subsidiaries
South Korean JV “Woori & Leo PMC”
Established with South Korea’s largest residentialproperty management company
Woori & Leo PMC will provide South Korea’s firstsystematic leasing management services
Full-scale operations started after the local lawenactment on February 2014, with 2,556managed units as of June 30, 2019 (+473 unitscompared to March 31, 2019)
Introduce Japaneseapartments toforeigners
Foreign real estatebrokerage targetingJapanese individualsand companies
Promotingbusinesses ofserviced apartmentsand serviced offices
Traditional
In the future
China Beijing, Dalian, Guangzhou, Shanghai
South Korea Busan, Seoul
Taiwan Taipei
Thailand Bangkok, Sriracha
Vietnam Ho Chi Minh, Ha Noi
Cambodia Phnom Penh
Myanmar Yangon
Philippines Manila
Indonesia Jakarta
Singapore Singapore
Leopalace21 will expand its leasing business overseas. In addition to introducing Japanese apartments to foreigners, we have started foreign realestate brokerage services in Southeast Asia targeting Japanese individuals and companies. Also, we have entered the Korean market through aleasing management venture with a local enterprise.
46
*Results of the International Business are reported under the “Leasing Business” segment
Type Location Starting date No. of rooms
Serviced apartment
Thailand (Sriracha) October 2015 8 stories, 72 rooms
Vietnam (Hanoi) August 2016 10 stories, 56 rooms
Cambodia (Phnom Penh) December 2017 14 stories + basement, 56 rooms
Serviced office
Philippines (Makati) 1 November 2015 49 rooms
Philippines (Makati) 2 April 2019 49 rooms
Myanmar (Yangon) April 2016 15 rooms
South Korea (Seoul) May 2018 20 rooms
Vietnam (Ho Chi Minh) June 2019 (Plan) 32 rooms (plan)
List of Serviced Offices and Serviced Apartment
Thailand(Serviced apartment)Room
Cambodia(Serviced apartment)
Philippines(Serviced office)
New office
In addition to introduction and brokerage of both domestic and overseas real estate, Leopalace21 have started construction andoperation of serviced apartments (3 buildings, 184 rooms) and serviced offices (4 locations, 133 rooms). New serviced officehave opened in Vietnam in June 2019.
Hanoi
Seoul
47
Myanmar(Serviced office)Private room (for 10 people)
Acquired Enplus Inc. and made into an affiliate
Offering “RM Plus,” a total management service of globalpersonnel affairs
Targeting 250 client companies and 10,000 users in 5 years
Relocation Management Business
In addition to managing serviced apartments, Leopalace21 offers one-stop service concerning personnel transferring by acquiring Enplus Inc. andmade into an affiliate. Also, in response to the shortage of construction labor supply, we have begun supporting the acceptance of technical interntrainees by our partnering contractors (70 since July 2015), in cooperation with the Technical Intern Training Program (TITP).
In cooperation with TITP, we have implemented practicalconstruction training and Japanese language training ofVietnamese trainees, and supported acceptance to ourpartnering contractors
70 trainees employed as of June 30, 2019(15 trainees employed by Leopalace21)
Acceptance of Foreign Technical Intern Trainees
Practical construction training
Language training
On the job training
48
*Results of the International Business are reported under the “Leasing Business” segment
Cloud-typedplatform ”RM+Online”
• Managing personnelinformation of expatriateemployees
• Progress, datemanagement, and dataanalysis on cloud
• Enabling efficienciesand optimization ofmobility works
27.9 27.8
22.420.0
18.3
15.0
11.3%
9.1%8.0%
7.1%8.1%
9.3%
0%
10%
20%
0
10
20
30
40
FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3
No. of overtime hours (monthly average) Total
137 137113
144177 183
1 03
5
80 55
1.1% 2.9%
25.5%23.7%
0%
10%
20%
30%
0
100
200
300
FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3
No. of maternity leave No. of paternity leave % of paternity leave
31.7% 33.0%
70.1% 72.2% 74.1% 76.8%
0%
50%
100%
FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3
49
Ratio of Workforce Turnover,
Reduction in Overtime Hours Parental Leave
Paid Vacation Ratio External Assessment
*Selected as “Telework Pioneer 100” in November, 2018
50
Hote
ls,
Resort
&O
thers
Leopalace GuamResort Business
WING MATEBusiness travel
management
Leopalace SmileSpecial subsidiary
Eld
erly
Care Azu Life Care
Elderly care service
Corporate Data (as of June 30, 2019)
Shareholder Composition (as of Mar. 31, 2019)
Group Companies (as of June 30, 2019)
Company Name Leopalace21 Corporation
Head Office 2-54-11 Honcho, Nakano-ku, Tokyo
TEL. +81-3-5350-0001 (Main Line)
Established August 17, 1973
Paid-in Capital 75,282 million yen
President President and CEO Bunya Miyao
Operations
Construction, leasing and sales of apartments,
condominiums, and residential housing; development
and operation of resort facilities; hotel business;
broadband business; and elderly care business, etc.
Employees 7,608 (consolidated), 6,313 (non-consolidated)Authorized Shares 500,000,000
Outstanding Shares 244,882,515 shares
Shareholders 66,820(as of March 31, 2019)
Le
asin
g
LeopalaceLeasingCorporate
housing agent
Plaza GuaranteeRent guarantee
Leopalace PowerPower generation
ASUKA SSITenant contents insurance
Woori & Leo PMCLeasing management
in South Korea
Leopalace21(Thailand)
Real estate brokeragein Thailand
Leopalace21Business Consulting
(Shanghai)Tenant recruitment¥
LEOPALACE21VIETNAM
Real estate brokeragein Vietnam
Leopalace21(Cambodia)
Real estate brokeragein Cambodia
PT. LeopalaceDuasatu Realty
Real estate brokeragein Indonesia
LEOPALACE21PHILIPPINES INC.Real estate brokerage
in the Philippines
Leopalace21Singapore Pte. Ltd.Investment consulting
Develo
p-
ment
MorizouCustom-built homes
Life LivingReal estate development
51
Enplus Inc.Relocation management
Inte
rna
tio
na
l*
*Results of the International Business are reported under the “Leasing Business” segment
Individuals and Other27.68%
Business Corporationsand Other Legal Entities
10.49%Foreign Corporations
38.96%
Financial Institutions14.73%
Financial InstrumentsBusiness Operations
(Securities Companies)7.70%
Treasury Stocks0.44%
Support continuous growth of core businesses in ways that furtherincrease corporate value while constructing a base for growth areas
Core businesses: Balance apartment supply and management, and enforce concentrationand diversification
Growth businesses: Move the Elderly Care Business and International Business into profit,which are less exposed to shrinking domestic population
Introduce ROIC as a key indicator
Review assert holdings with a view to enhancing asset and capital efficiency
Improve and strengthen distributions to shareholders
52
(Billion yen)FY18/3Plan
FY18/3Actual
FY19/3Initial Plan*3
FY19/3Actual
FY20/3Plan
Sales 540.0 530.8 553.0 505.2 502.2
Operating profit 23.5 22.9 24.5 73.0 22.0
Net income 14.2 14.8 15.0 -68.6 0.1
ROIC*1 － 7% 8% 3% 0%
Occupancy rate*2 89.5% 90.6% 91.5% 88.3% 85.2%
Orders 92.0 87.6 75.0 73.3 62.0
Share buybacks － 8.0 5.0 5.0 －
Total return ratio 50.0% 92.3% － － －
The Leopalace21 Group expects to reverse deferred tax assets during the span of the “Creative Evolution 2020” medium-termmanagement plan; management indicators are calculated based on normalized earnings that exclude one-off gains or losses.
*1 Return on invested capital (ROIC) = Net operating profit after taxes (NOPLAT) /Interest-bearing debt + Net assets*2 Occupancy rate is the average rate during each fiscal year*3 Figures for FY19/3 Initial Plan are forecasted figures announced on May 11, 2018
53
(Million yen)
Q1
Apr – Jun
Q2
Jul – Sep
Q3
Oct – Dec
Q4
Jan – Mar
FY19/3
Actual
FY20/3
Actual
FY19/3
Actual
FY20/3
Plan
FY19/3
Actual
FY20/3
Plan
FY19/3
Plan
FY20/3
Plan
Sales 129,268 113,324 126,210 121,500 120,887 122,700 128,856 138,400
Leasing 111,847 100,380 107,178 103,200 104,326 105,900 103,037 111,000
Development 12,450 7,330 14,297 12,900 11,504 11,700 20,739 22,100
Elderly Care 3,360 3,606 3,509 3,800 3,567 3,700 3,485 3,700
Hotels, Resort
& Others1,611 2,008 1,224 1,600 1,489 1,400 1,594 1,600
Operating profit 4,120 -4,235 3,072 -500 -690 2,000 887 5,000
Leasing 7,214 -1,735 4,966 1,900 2,133 4,100 674 5,400
Development -891 -1,515 -410 -1,100 -1,317 -800 1,623 1,000
Elderly Care -366 -170 -137 100 -203 0 -139 0
Hotels, Resort
& Others-612 299 -227 -200 -204 -400 -301 -500
Quarter Comparison
54
Results for Leopalace21 and Major Subsidiaries
55
(Million yen)FY19/3 Q1
Actual
FY20/3 Q1
Plan
FY20/3 Q1
Actual YoYCompared
to Plan
Leopalace21Sales 124,100 114,400 107,768 -16,331 -6,632
OP 3,520 -4,700 -5,047 -8,568 -347
Leopalace Leasing(Corporate housing)
Sales 595 800 846 +250 +46
OP 128 100 176 +47 +76
Plaza Guarantee(Rent guarantee)
Sales 1,091 900 963 -128 +63
OP 143 0 134 -8 +134
ASUKA SSI(Tenant contents insurance)
Sales 503 500 465 -38 -35
OP 120 100 98 -21 -2
Leopalace Power(Roof-lease solar power)
Sales 906 900 938 +32 +38
OP 375 400 464 +89 +64
Morizou(Built-to-order homes)
Sales 970 700 783 -187 +83
OP -162 -100 -78 +84 +22
Life Living(Real estate development)
Sales 285 100 301 +16 +201
OP -115 -200 -127 -12 +73
WING MATE(Travel management)
Sales 778 700 773 -4 +73
OP 59 0 64 +5 +64
*Initial plan was announced on May 11, 2018
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
Q4 Q4 Q4 Q4 Q1 Q2 Q3 Q4 Q1
Units under management 554,948 561,961 568,739 570,672 571,927 572,972 573,671 574,798 575,196
A. Occupied units 495,487 508,720 521,298 534,847 526,738 506,511 489,100 484,718 468,225
Occupancy rate (average)88.4%
(86.6%)89.6％
(88.0%)90.1%
(88.5%)93.7%
(90.6%)92.6% 89.4% 86.3%
85.1%(88.3%)
81.9%
B. Corporate-occupiedunits
262,577 277,261 293,824 309,062 303,701 287,615 275,786 280,643 270,586
Corporate share (B / A) 53.0% 54.5% 56.4% 57.8% 57.7% 56.8% 56.4% 57.9% 57.8%
C. Individual-occupied units 182,142 183,008 180,617 178,643 177,072 173,189 168,462 163,318 158,634
Individual share (C / A) 36.8% 36.0% 34.6% 33.4% 33.6% 34.2% 34.4% 33.7% 33.9%
D. Student-occupied units 50,768 48,451 46,857 47,142 45,965 45,707 44,852 40,757 39,005
Students share (D / A) 10.2% 9.5% 9.0% 8.8% 8.7% 9.0% 9.2% 8.4% 8.3%
*Occupancy rate is the average value for each period (full-year or quarter)*Figures for units under management and occupied units are as of the end of the final month for the relevant period
Occupancy by Group
56
Units Occupied by Foreign Tenants (Chintai Contracts*)
*Figures are as of the end of the final month for the relevant period*Chintai contracts are long-term (more than one year) leasing contracts with monthly rent payments
Foreign customers make up 4.2% of total contracts (9.9% of individual and student contracts). Foreign nationals comprised ofstudents 60% and working-class 40%. Vietnam, the second highest in occupied units, is steadily increasing.By adding 15 thousand units contracted by corporate foreign tenants, totally about 35 thousand units are contracted by foreigntenants, making up 7.5% of the total occupied units.
57
(Units)
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
Q4 Q4 Q4 Q4 Q1 Q2 Q3 Q4 Q1
China 7,033 6,627 6,490 7,048 6,592 6,640 6,551 6,635 6,589
South Korea 1,336 1,447 1,479 1,594 1,622 1,602 1,625 1,604 1,587
Taiwan 747 949 951 1,005 994 990 980 947 935
Southeast Asia 2,859 3,116 3,708 5,339 5,614 6,121 6,160 6,362 6,448
of which,Vietnam
1,995 2,142 2,604 4,028 4,287 4,751 4,792 5,000 5,122
Others 2,391 2,874 3,199 3,862 3,872 3,882 3,888 3,971 3,953
of which,North America
499 567 610 657 640 635 617 657 632
Total 14,366 15,013 15,827 18,848 18,694 19,235 19,204 19,519 19,512
Managed Units (1,000 units) and Occupancy Rates by Area
58
(1,000units, %)
FY16/3 FY17/3 FY18/3 FY19/3 FY20/3
Q4 Q4 Q4 Q1 Q2 Q2 Q4 Q1
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate
Managedunits
Occup-ancy rate YoY
Hokkaido 14 82% 14 85% 14 87% 14 87% 14 76% 14 69% 14 69% 14 70% -16p
Touhoku 35 94% 35 94% 35 95% 36 94% 36 90% 36 86% 36 85% 36 83% -11p
North Kanto 40 85% 41 87% 40 91% 40 88% 40 85% 40 82% 40 80% 41 77% -12p
Tokyo metro 162 93% 166 93% 168 94% 169 91% 169 88% 170 86% 170 86% 171 83% -9p
Hokuriku,Koshinetsu
41 88% 41 90% 40 93% 40 92% 40 87% 40 82% 40 79% 40 76% -16p
Chubu 88 89% 88 91% 88 95% 88 93% 88 90% 88 87% 88 85% 88 82% -12p
Kinki 80 91% 81 91% 80 94% 80 92% 81 88% 81 85% 81 83% 81 80% -12p
Chugoku 38 93% 39 94% 39 93% 39 93% 39 92% 39 89% 39 88% 39 86% -7p
Shikoku 14 87% 15 90% 15 92% 15 92% 15 87% 15 84% 15 84% 15 82% -10p
Kyushu,Okinawa
50 91% 50 94% 51 96% 51 95% 51 91% 51 88% 51 88% 51 86% -9p
Total 562 91% 569 92% 571 94% 572 92% 573 88% 574 85% 574 84% 575 81% -11p
Occupancy rates decreased since the Company stop recruiting new tenants into rooms subject to top-priority investigations(about 220,000 units) .
Occupancy rates of building age from 15 to 20 years and 20+ years, in which there are lot of rooms subject to top-priorityinvestigations, decreased drastically.
Occupancy Rates by Building Age (as of June 30 of each year)
Occupancy Rates by Area (as of March 31 of each year)
59
90.5%93.6%
91.9%90.3%
88.3%86.4%
92.1%
96.5%94.0%
92.4%88.9% 88.5%
81.4%
96.5%
90.1%
82.8%
76.6%
64.5%
60%
70%
80%
90%
100%
Total Under 5 years 5-10 years 10-15 years 15-20 years Over 20 years
2017/6 2018/6 2019/6
91.7%
96.3%
93.2%91.2%
88.9%86.9%
93.7%
97.5%
94.6%93.8%
92.3%
89.5%
84.3%
97.5%
91.4%
85.4%
78.0%
72.7%
70%
80%
90%
100%
Total Under 5 years 5-10 years 10-15 years 15-20 years Over 20 years
2017/3 2018/3 2019/3
114(24%)
94(20%)
79(17%)
68(14%)
58(12%)
52(10%)
52(10%)
48(9%)
29(6%)
47(9%)
31(7%)
365370 384 412 438 457 469 487
456480
437
478464 463
480495 509 521
535
485
527
468
0
50
100
150
200
250
300
350
400
450
500
550
'11/3 '12/3 '13/3 '14/3 '15/3 '16/3 '17/3 '18/3 '19/3 '18/6 '19/6
Chintai (General) Monthly
1. Chintai (General) Contract
• No deposit or brokerage fee
• Monthly payments
• Contracts for more than one year
2. Monthly Contract
• Equipped with basic furniture andappliances
• No utility cost
• One-time payment
• Contracts starting from 30 days
Tenants by Contract Type Two Types of Contracts
Due to promotion of long-term tenancies, shares of short-term “monthly contracts” have decreased.
(Thousand units)
60
Same period
last year
Tokyo-metro4,370
Chubu2,506
Kinki1,654
NorthKanto1,203
Kyushu,Okinawa
1,175
Chugoku961
Tohoku454
Others675
61
FY12/3 Q2 FY12/3 Q4 FY13/3 Q2 FY13/3 Q4 FY14/3 Q2 FY14/3 Q4 FY15/3 Q2
Owner-invested Roof-lease (SPC) Roof-lease (Leopalace21 Group)
Solar power installments started in March 2011. Solar power systems are installed on 12,998 buildings as of June 30, 2019(roughly 59% of buildings that can be installed). Roof-lease solar power systems has started since December 2013.
Installments by Schemes
Schemes Start FY19/3 FY20/3 Q1
1. Solar power systems installed with apartmentowners’ burden
Mar 20117,259
buildings（89.6MW）
7,259buildings
（89.6MW）
2. Roof-lease solar power systems Sep 2012 5,739 （91.4MW） 5,739 （91.4MW）
a. SPC and other tie-up installments Feb 2013 1,256 （24.5MW） 1,256 （24.5MW）
b. Installments by Leopalace21 Group* Dec 2013 4,483 （66.9MW） 4,483 （66.9MW）
3.Mega-solar power plants utilizing idle land Sep 2013
Tomisato,Chiba
（1.7MW）Tomisato,
Chiba（1.7MW）
Total: 12,998 （182.7MW） 12,998 （182.7MW）
(Cumulative total)
Installments by Area
(Buildings)
0
5,000
10,000
15,000
FY16/3Q1
Q2 Q3 Q4 FY17/3Q1
Q2 Q3 Q4 FY18/3Q1
Q2 Q3 Q4 FY19/3Q1
Q2 Q3 Q4 FY20/3Q1
62
Based on number of buildings Based on monetary amount
City banks Regional banks Shinkin banks and Credit associations Agricultural/Fisheries Cooperative Japan Housing Finance Agency Others
22.6% 23.3% 25.0% 22.4% 21.1%15.1%
20.5%
51.1% 52.1% 51.6% 55.9% 55.0%
56.3%
60.3%
19.5% 17.8% 15.0% 14.0% 15.3% 21.4%
14.1%
6.4% 6.8% 7.0% 5.1% 5.7% 4.0% 1.3%
0%
25%
50%
75%
100%
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY18/6 FY19/6
26.3% 24.4% 26.9%23.3% 23.0%
16.6%21.0%
50.4%48.7%
48.0% 54.5% 54.0%60.1%
60.4%
17.5%19.6% 17.0%
15.6% 16.1% 18.9%
16.1%
5.5% 7.2% 7.4% 5.5% 5.6% 3.4%0.5%
0%
25%
50%
75%
100%
FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY18/6 FY19/6
Same period
last year
Same period
last year
Elderly Care Facilities “Azumi En” Area Disposition (87 as of June 30, 2019)
(Number of facilities)
Facilities which include elderlyhomes with nursing careservices
1 1 1 3 2 8
Facilities which includeresidential style elderly homes
1 5 2 2 2 1 13
Day-services and Short-stays 4 3 13 18 4 7 4 3 4 4 64
Group homes 1 1 2
Total 6 5 20 23 8 9 5 3 4 4 87
★Elderly homes with nursing care services, Day-services, Short-stays
Elderly homes with nursing care services, Short-stays
■ Elderly homes with nursing care services, Day-services
● Elderly homes with nursing care services
★ Residential style elderly homes, Day-services, Short-stays
● Residential style elderly homes
○ Group homes
▲ Day-services, Short-stays
● Day-services
Short-stays
Legend
“Azumi En Kisarazu” (the first elderly care facility managed by subsidiary “Azu Life Care”) opened on November 1, 2014.7 facilities opened during FY18/3, and 4 opened during FY19/3, totaling 87 facilities during the current midterm managementplan.
Gifu
Kasugai
Kakamigahara
Moriyama
SekigawaHorigome
Ota
TatebayashiHanyu
Kanuma
Utsunomiya Yaita
ShimodateYuki
KogaKoga-Chuou
Iwai
Nogi
Shinkoga
TsuchiuraKokinuYanagisawa
Showa
Minamisakurai
InaKitamoto
GyodaHigashi-Matsuyama
Honjyo
Chichibu
Ome
Hirasawa
Tatemachi Nakano
Yamakita
Tsurumaki
Tsukuihama
Ichihara
OyumiKatsuragi
WakabaIno
TakaokaNakazawaNamikicho
MisakiTakatsukashinden Tokiwadaira
SakasaiAbiko
Takamihara
KomakidaiSouka
Irumagawa
Sayama
Komuro
MizuhoMihashi
Goseki
Hanasaki-nookaAgeo
YoshikawaGamou
Yashio
Kisarazu
Shimizukoen
Katsu-tadai
Hamura
Tochigi-DaichoIsezaki
Gifu
Anjo
Aichi
Toyata
Hiratsuka
Higashi-Yamato
KamagayaNishi-Funabashi
●Sakura*
Takasaki
63
Maebashi
Ohgaki
Yaizu
Utsunomiya-Minami
FujiShizuoka
Iwata
*Mito
Atsugi
Shizuoka
(Million yen) FY19/3 FY19/6
Cash and cash equivalents 84,536 71,309
Trade receivables 6,908 6,786
Accounts receivables for completedprojects
1,709 1,317
Real estate for sale and in progress 6,582 7,833
Prepaid expenses 2,952 3,050
Current assets 110,757 97,301
Buildings and structures 40,542 40,282
Machinery, equipment, and vehicles 11,185 10,923
Land 49,221 49,236
Leased assets 11,732 10,621
Intangible assets 9,575 8,973
Long-term prepaid expenses 3,252 3,017
Deferred tax assets (long-term) 23,650 26,066
Fixed assets 180,705 178,136
Deferred assets 327 299
Total assets 291,790 275,737
(Million yen) FY19/3 FY19/6
Bonds and borrowings (short-term) 7,804 7,266
Lease obligations (short-term) 5,320 5,085
Accounts payable for completed projects 4,715 2,507
Advances received 34,635 31,979
Reserve for losses related to repairs 50,707 51,685
Reserve for apartment vacancy loss(short-term)
8,826 9,297
Current liabilities 141,765 133,502
Interest-bearing debt (long-term) 26,421 25,757
Lease obligations (long-term) 8,501 7,534
Reserve for apartment vacancy loss(long-term)
3,902 3,902
Lease/guarantee deposits received 6,599 6,508
Long-term advances received 11,869 11,217
Long-term liabilities 68,687 66,338
Total liabilities 210,452 199,841
Common stock 75,282 75,282
Capital surplus 45,148 45,148
Retained earnings -38,635 △44,374
Total net assets 81,338 75,895
Shareholders’ equity ratio 27.7% 27.4%
Balance Sheets
Compared to March 31, 2019, assets decreased 16.0 billion yen (-13.2 billion yen in cash and cash equivalents, -1.1 billion yenin lease assets, -1.3 billion yen in real estate for sales). Liabilities decreased 10.6billion yen(+0.9billion yen in reserve for lossesrelated to repairs, -2.4billion yen in bonds, borrowings, and lease obligations, -2.1billion yen in accounts payable–others, 3.3billion yen in advances received), Net assets decreased 5.4billion yen(net loss of 5.7 billion yen)
64
NDE Ratio
*Net DE ratio = (Interest-bearing debt – Cash) / Shareholders’ equity*Lease obligations are not included in interest-bearing debt
*
65
34.5 35.6 34.2 36.633.0
104.4 106.5
84.5
93.0
71.3
-0.44 -0.45
-0.62
-0.37
-0.51
-0.80
-0.60
-0.40
-0.20
0.00
0.20
0.40
0
20
40
60
80
100
120
FY17/3 FY18/3 FY19/3 FY19/3 Q1 FY20/3 Q1
(Ratio)(Billion yen)
Interest-bearing debt Cash Net DE ratio
69.4
83.085.1
0
20
40
60
80
100
Cash and cash equivalentsat end of period
-2.5
3.0
-13.7-15.1
7.3
-7.2-4.1-3.6-4.6
-20
-10
0
10
20
30
Cash flows fromfinancing activities
Cash flows frominvesting activities
Cash flows fromoperating activities
Cash Flows
(Billion yen)
(Billion yen)
66
* Proceeds from sales ofinvestment securities: 3.4billion yen
・Purchase of property -1.4 bn yen・Sale of property +2.0 bn yen・Proceeds from withdrawal of
fixed deposits +1.5 bn yen
・Loss before income taxes -7.6 bn yen・Reserve for losses related to repairs +0.9 bn yen・Loss related to repairs +0.6 bn yen・Deprecation, amortization of goodwill +3.2 bn yen・Decrease in accounts payable -5.8 bn yen・Decrease in advances received -3.3 bn yen・Increase in real estate for sale -1.2 bn yen・Payment of income taxes -0.7 bn yen
・Repayment of long-term debt -0.7 bn yen・Repayment of bonds -0.4 bn yen・Repayment of lease obligations -1.3 bn yen
FY19/3 Q1 FY19/3 Full year FY20/3 Q1
2014/3 2014/9 2015/3 2015/9 2016/3 2016/9 2017/3 2017/9 2018/3 2018/9 2019/3
Individuals and other 20.7% 17.1% 16.7% 18.3% 16.6% 15.3% 20.5% 14.3% 13.9% 15.2% 27.7%
Foreign corporations 49.1% 46.8% 50.7% 55.3% 54.6% 55.3% 49.7% 55.1% 58.3% 54.2% 39.0%
Trust banks 17.6% 23.6% 23.2% 17.6% 21.0% 21.5% 21.5% 20.2% 21.5% 17.9% 12.5%
Financial institutions other than trust banks 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.0% 1.7% 2.0% 1.8% 2.3%
Business corporations and other legal entities 6.9% 6.6% 2.5% 2.6% 2.4% 2.4% 2.6% 2.5% 2.4% 2.5% 10.5%
Securities companies 2.4% 2.3% 3.4% 2.5% 1.7% 1.7% 1.9% 1.9% 1.7% 4.9% 7.7%
Treasury stock 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 4.3% 0.2% 3.5% 0.4%
0%
50%
100%
*Based on number of stock
Shareholder Composition
Institutional investors make up 51.4% of our shareholder composition, with 39.0% in foreign corporations and 12.5% in trust banks.
67
68
According to “Future Estimate of Population by Areas in Japan” (2018, Institute of Population Problems), total population will decrease from127.09 million in 2015 to 106.42 million in 2045 (-20.67 million, -16.2%). However, population in Tokyo will be stable, decreasing only 6%during 2015-2045 in the metropolitan areas (Tokyo, Kanagawa, Saitama, Chiba), meaning centralization of population is continuing. Inaddition, working age population (16-64 age) will also decrease from 7.72 million in 2015 to 5.58 million in 2045, accelerating the aging ofsociety in Japan. Japanese population
(%)
69
(Million people)
*Excerpted from “White paper on aging society” (Cabinet Office, Government of Japan)
8490
9499
105112
117121 124 126 127 128 128 127 125 123
119115
111106
10297
9388
1.3 1.5 1.7 1.9 2.1 2.5 3.13.9
4.85.7
7.1
9.1
11.0
12.7
14.9
17.819.2 19.6 20.2
21.4
23.725.1 25.7 25.5
0
5
10
15
20
25
30
0
50
100
150
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065
0-14 15-64 65-74 Over 75 Unknown % of Over 75
14,457 16,785 18,418 19,342 19,960 20,254 20,233 19,944
9,63710,269
10,758 11,101 11,203 11,138 10,960 10,715
14,64614,474
14,342 14,134 13,693 13,118 12,465 11,824
4,1124,535
4,770 5,020 5,137 5,141 5,0744,9246,212
5,7795,044 4,510 4,123 3,833 3,583
3,35049,063
51,84253,332 54,107 54,116 53,484 52,315
50,757
0
10,000
20,000
30,000
40,000
50,000
60,000
2005 2010 2015 2020(E)
2025(E)
2030(E)
2035(E)
2040(E)
Singles Married couples
Married couples with child Single parents with child
Others
(29.5%) (32.4%) (34.5%)(39.3%)(37.9%)(36.9%)(35.7%)
(38.7%)
Number of general households are predicted to decrease, but single-person households are expected to increase.Single-person households in the working age population, which is also our target, is expected to stay from 10-12 millionhouseholds for the next 20 years.
Number of General Households by Category
(Thousand units) (Thousand units)
70
*Excerpted from “Future Estimates of Households in Japan” (2018, Institute of Population Problems)
Number of Single-person Households by Age
2,178 2,060 2,021 2,009 1,879 1,781 1,681 1,584
2,971 2,999 2,987 2,830 2,795 2,705 2,558 2,429
5,4446,745 7,157 7,479 7,774 7,809 7,577
6,968
1,898
2,2872,884 3,067 2,812 2,913 3,343
3,8411,967
2,693
3,3693,958 4,700 5,045 5,075 5,122
14,457
16,785
18,41819,342
19,960 20,254 20,233 19,944
0
5,000
10,000
15,000
20,000
25,000
2005 2010 2015 2020(E)
2025(E)
2030(E)
2035(E)
2040(E)
under 25 25-34 35 - 64 65-74 Over 75
1,6631,6731,665
1,343
1,420
1,5101,561
1,485
1,630
1,341
1,1801,2261,213
1,1731,146
1,1741,1931,249
1,285
1,0361,039
775819 841
893
987
880921
974946 953
245 234
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 18 19
(Thousand units)
Leased units Condominiums House for sale Owner-occupied houses Company housing
New Housing Starts by Fiscal Year
Although new housing starts have been on an increasing trend after the Lehman collapse, starts increased 4.7% YoY duringApril to June in 2019.
*Excerpted from “Housing Start Statistics” (Ministry of Land, Infrastructure and Transport)
①Consumption tax: 3% to 5%(April 1997)
FY1996: +9.8% YoYFY1997: -17.7% YoY
71
②Consumption tax: 5% to 8%(April 2014)
FY1996: +10.5% YoYFY1997: -10.8% YoY
YoY
Company housing -25.6%
Owner-occupied houses +9.6%
House for sale +4.3%
Condominiums -13.0%
Leased units -14.9%
①
②
Apr-Jun
240 262 274
178 186149 117 126 128 114 102 80 80 97 104 108 113 123 128 112 117
60 39 31 31 36 48 61 76 79 7320 14
842821
767
582
687652
574 564
616
516
444426 418
442 455 459 467
518538
431 445
311292 290
321
370 358384
427 410390
101 85
0
100
200
300
400
500
600
700
800
900
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 18 19
Leased units under 30㎡ Leased units over 30㎡
New Housing Starts of Leased Units by Fiscal Year
Leased units starts during April to June in 2019 decreased 16.6% YoY, and leased units under 30 m2 decreased 30.4% YoY.
*Excerpted from “Housing Start Statistics” (Ministry of Land, Infrastructure and Transport)
(Thousand units)
72
YoY
Over 30 m2 -13.3%
Under 30 m2 -30.4%
Apr-Jun
16.8%17.3%
18.0%18.8%
17.7%
18.8% 19.1%19.6%
17.0%
20.6%
23.3%
22.2%
10%
15%
20%
25%
1998 2003 2008 2013
Tokyo metro
Three major metro areas
Other
1,834
2,336 2,619
3,520
3,978
4,4764,600
12.4%
14.3%14.3% 17.4%
18.8%20.1% 19.9%
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1983 1988 1993 1998 2003 2008 2013
Vacant Dwellings Available for Rent or Sale (Left)
Vacancy Rate (Right)
Number of vacant rental units in Japan has risen steadily. When a nationwide recovery in demand is unlikely; it will be importantto supply properties to areas where occupancy rates are high, to introduce differentiated products and to adopt measures thatenhance property values in ways that perceive tenant needs.
*Excerpted from “FY2013 Housing and Land Survey” (Ministry of Internal Affairs and Communications (MIC))
73
No. and Ratio of Vacant Rentals Nationwide Vacancy Rates by Area
(1,000 rooms)
Net population inflows (“-” represent outflows)in 3-metro areas
*Excerpted from “report on internal migration in Japan derived from the basic resident registers” (Ministry of Internal Affairs and Communications)
Net inflow of domestic migration into the three metro areas (Tokyo, Chubu, Kinki) continues, and Leopalace21 concentratesapartment construction in these areas with high leasing demand.
(No. ofpeople)
Construct-ion Offices
2016 2017 2018
Tokyo 1874,324(93%)
73,124(95%)
79,844(96%)
Saitama 6 21,702 22,181 24,652
Kanagawa 7 16,093 17,514 23,483
Chiba 1 13,163 12,711 11,889
Tokyo-metro
32125,282
(78%)125,530
(80%)139,868
(79%)
Aichi 4 8,968 5,710 3,112
Osaka 3 404 1,136 2,388
Kyoto 1 -1,028 -1,428 -2,536
Hyogo 2 -6,305 -5,947 -5,330
3-metroareas
42 127,321 125,001 137,502
(No. ofpeople)
Construct-ion Offices
2016 2017 2018
Sendai 1 615 1,399 1,979
Nagoya 3 5,934 3,750 1,868
Kyoto 1 -121 -1,385 -1,273
Osaka 3 8,846 9,453 12,081
Kobe 1 -550 -2,168 -2,331
Okayama 1 -667 -1,268 -1,538
Hiroshima 1 119 -359 -661
Fukuoka 3 7,287 6,986 6,138
Net population inflows (“-” represent outflows)near Leopalace21 offices
*Excluding Tokyo-metro area*Figures in parentheses represent ratio of population inflow between age20 to 39
74
(Rooms) FY17/3 FY18/3 FY19/3
Hokkaido 21,810 21,052 19,535
Tohoku 26,587 24,138 22,430
Kita-kanto 19,824 17,265 14,145
Tokyo metro 153,742 148,557 140,539
Hokuriku & Koshinetsu 17,629 16,185 15,123
Chubu 40,915 39,736 40,567
Kinki 59,866 58,442 58,058
Chugoku 19,819 20,551 18,893
Shikoku 8,789 9,097 7,865
Kyushu & Okinawa 58,294 55,332 52,938
Nationwide 427,275 410,355 390,093
75
New rental housing starts by region Leopalace21 completions by region
(Rooms) FY17/3 FY18/3 FY19/3
Hokkaido 0 0 0
Tohoku 352 258 314
Kita-kanto 346 220 128
Tokyo metro 4,267 3,797 2,258
Hokuriku & Koshinetsu 58 24 0
Chubu 536 521 461
Kinki 1,146 963 581
Chugoku 450 456 282
Shikoku 166 24 34
Kyushu & Okinawa 843 928 584
Nationwide 8,164 7,191 4,642
*Excerpted from “Housing Start Statistics” (Ministry of Land, Infrastructure and Transport)
New rental housing starts has increased nationwide, but Leopalace21 apartment constructions has increased mainly in the threemetropolitan areas (71.1% in FY19/3)
Private229,99076.9%
Public68,99023.1%
161,848 161,145
184,155
208,379
239,287
267,042
298,980
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2012 2013 2014 2015 2016 2017 2018
International Students in Japan
*Excerpt from “Result of an Annual survey of International Students in Japan 2017” (Japan Student Services Organization)
International students in Japan are increasing every year. 2015: +13.2%, 2016: +14.8%, 2017: +11.6%, 2018: +12.0%76.9% live in private housing (not set up by schools or government), leading to continuing leasing demand.
International Students by Housing
76.9% of international studentsin Japan live in private housing(+24,831 year-on-year)
Public housing are set up byschools, local government, etc.
(As of May 2018)(People)
76
