1. Problems Concerning Construction Defectseg.leopalace21.com/ir/library/pdf/2019/4Q/en_kessan_ppt.pdfCommon hallway Common hallway A-1 A-2 A-3 Construction defects that Leopalace21

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 6

1-4 Number of Buildings with Defects by Time Period 7

1-5 Establishment of External Investigation Committee andMeasures to Prevent Recurrence 8

1-6 Extraordinary Losses 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. FY19/3 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 of ConstructionDefects 19

3-4-1 Main Indicators of Development 20

3-4-2 Orders and Sales 21

4. FY20/3 Plan

4-1 Plan 23

4-2 Plan by Business Segments 24

4-3-1 Main Indicators of Leasing 25

4-3-2 Occupancy Rate Forecasts 26

4-3-3 Demand of Leasing Clients 27

4-4-1 Main Indicators of Development 28

4-4-2 Contracts Plan 29

4-5 Reduction in SGAE 30

5. Overview of Business (Leasing)

5-1-1 Indicator (Occupancy by Group) 32

5-1-2 Indicator (Shares of Occupied Units by Group) 33

5-1-3 Indicator (Occupied Units by Industry) 34

5-1-4 Indicator (Foreign Tenants) 35

5-2-1 Leasing Strategy (Office Expansion) 36

5-2-2 Leasing Strategy (my DIY and Security Systems) 37

5-2-3 Leasing Strategy (Tenant Services) 38

5-2-4 Leasing Strategy (IoT, AI) 39

5-2-5 Leasing Strategy (Subsidiary Businesses) 40

5-2-6 Leasing Strategy (Minpaku) 41

1

6. Overview of Business (Development)

6-1 Indicator (Offices and Apartment Construction) 43

6-2-1 Development Strategy (Ideal Land Usage) 44

6-2-2 Development Strategy (Apartment Construction) 45

6-2-3 Development Strategy (Social Welfare/Stores) 46

6-2-4 Development Strategy (Homes/Development) 47

6-2-5 Development Strategy (After-sale Services) 48

7. Overview of Business (Others and International)

7-1 Others (Elderly Care Business) 50

7-2 Others (Domestic Hotels Business) 51

7-3 Others (Resort Business) 52

7-4-1 International (Leasing Business Overseas) 53

7-4-2 International (Serviced Apartments and Offices) 54

7-4-3 International (Other Services) 55

7-5 Work Style Reforming 56

Appendix 1. Supplementary Data

App.1-1 Corporate Profile 58

App.1-2 Medium-term Management Plan Key Pointsand Strategy 59

App.1-3-1 Numerical Targets (Consolidated) 60

App.1-3-2 Quarter Comparison 61

App.1-3-3 Results of Leopalace21 Group 62

Appendix 1. (cont’d)

App.1-4-1 Indicator (Occupancy by Group) 63

App.1-4-2 Indicator (Foreign Tenants) 64

App.1-4-3 Indicator (Units and Occupancy Rates by Area) 65

App.1-4-4 Indicator (Occupancy Rates by Building Age) 66

App.1-4-5 Indicator (Contract Type) 67

App.1-4-6 Indicator (Solar Power Systems) 68

App.1-4-7 Indicator (Resources of finance for construction) 69

App.1-4-8 Indicator (“Azumi En” Area Disposition) 70

App.1-5-1 Finance (Balance Sheets) 71

App.1-5-2 Finance (Cash/Deposits and Interest-bearing Debt) 72

App.1-5-3 Finance (Cash Flows) 73

App.1-5-4 Finance (Shareholder Composition) 74

Appendix 2. Market Trends

App.2-1 Future Estimate of Population of Japan 76

App.2-2 Number of Households 77

App.2-3 New Housing Starts 78

App.2-4 New Housing Starts (Leased Units) 79

App.2-5 Vacant Rental Dwellings 80

App.2-6 Population Inflows and Outflows 81

App.2-7 Rental Housing Starts and Leopalace21Completions by Area 82

App.2-8 No. of Built Apartments by Area 83

App.2-9 International Students in Japan 84

2

Balcony Upper floor

Ａ-1 Ａ-2

Ａ-3

Balcony

Terrace

Upper floor

Lower floor

Common

hallway

Common

hallway

Ａ-1 Ａ-2

Ａ-3

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.

1. Defects in Parting Walls2. Defects on Insulation Materials in

Walls

3. Defects on Exterior Wall

Specifications4. Defects of Ceiling

DefectsOverview

The parting walls were not constructed insmall-scale attic or spaces above ceiling

The foamed urethane was used as insulationmaterial in parting walls although theconstruction certification documents describeto use glass wool or rock wool

The exterior walls do not meet thespecifications certified by the Minister ofLand, Infrastructure and Transport

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 determine repairwork

Inform tenants about moving

Discuss with property owners and specificadministrative agencies and determine repairwork

Inform tenants about moving

Promptly inform tenants about moving, dueto low fireproof function

Out of 4,518 of tenants living in propertiesmanaged by the company, about 84% havealready moved out or determined the date tomove out (As of April 30)

Example ofIllustration

No parting walls in the entire attic

No parting walls inintermediate floor

Ａ-1

No parting wallsin eavesＡ-2 Ａ-3

【Conceptual diagram】【Conceptual diagram】

【Actual content of work】【Actual content of work】【Actual content of work】

【Conceptual diagram】Exterior wall (outside)

*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.

Parting Walls Exterior Walls Ceiling

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

Base surfaceunder 606mm

Base surface about 455mm

Glass wool

Inside reinforcedplasterboard(Plasterboard is fireproof)

Siding

Exterior wall (inside)

Exterior wall (outside) Exterior wall (inside)

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

Excess space betweenbase surfaces

Urethane foam

SidingInside reinforcedplasterboard(Plasterboard is fireproof)

The red areas indicate areas that do not confirm withthe minister’s certification

The red areas indicate areas that do not confirm withthe minister’s certification

4

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

InsulationMaterials in Walls

✓

Exterior WallSpecifications

✓ ✓

Ceiling ✓

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 1,506 buildings other than buildings subject to top-priority investigations(as of March 31, 2019), and these will also be repaired.

3

Gold Residence andNew Gold Residence

(1,271 buildings)

(53 buildings)

5

Around 50% of a total of 39,085 buildings have been investigated, and we aim to complete investigation of buildings other than those subject to top-priority investigations bysummer 2019. We plan to complete repairs on buildings subject to top-priority investigations by summer 2019 and complete repairs on all buildings by October of the sameyear.

* Apart from listed above, we confirmed minor construction deficiencies in 7,514 buildings out of 20,285 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

191 13,353 13,544 150 21,742 21,892 35,436

Number of buildingscommenced investigation

907 13,286 14,193 46 7,572 7,618 21,811

Number of Investigatedbuildings

902 11,828 12,730 46 7,509 7,555 20,285

Investigation rate（vs number ofconstructed buildings）

98.8% 82.3% 83.3% 30.1% 31.7% 31.7% 51.9%

Number of defective buildings 867 4,712 5,579 10 1,496 1,506 7,085

Defect rate（vs number ofinvestigated buildings）

96.1% 39.8% 43.8% 21.74% 19.92% 19.9% 34.9%

（As of March 31, 2019）

5

(Reference)Number of rooms which resumed tenant recruitment: 22,368

6

8,524

4,208

2,548

1,019458

24,505

8,522

3,031

4,688

822

6,056

0 0

1,848

2260

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 March 31, 2019)

~ 1999

TotalBuildings subject to

top-priorityinvestigations

Others

2000 ~ 2007 2008 ~

TotalBuildings subject to


Others TotalBuildings subject to


Others

60.6%

44.9%

35.6%

17.5%

12.2%

7

As announced on February 27, 2019, in order to objectively investigate construction defects, weestablished an external investigation committee made up of neutral and impartial experts who arecompletely independent from the Company in accordance with the “Third Party CommitteeGuidelines in the Event of Corporate Scandals” (Japan Federation of Bar Associations).

As announced on March 18, 2019, the investigation committee prepared a report.

Going forward, a final report concerning measures to prevent recurrence and responsibilities ofinternal directors is scheduled to be prepared by late May 2019

1. External investigation committee (Nishimura & Asahi)

1-5: Establishment of External Investigation Committee and Measures to Prevent Recurrence

As announced on March 28, 2019, a Compliance Management Division has been newly established,led by newly created position of Chief Legal Officer (CLO).

When launching new products or changing parts and materials for existing products, we will confirmthat there is no doubt about compliance with laws and regulations, through checks by the newlyestablished Construction Legal Department, as well as inquiries to outside experts (third-partyorganizations). Also, this department will be in charge of on-site inspections to function as a checksand balance.

We will consider increasing outside directors to enhance governance.

Following the final report by the investigation committee in late May, we will prepareadditional measures to prevent recurrence

2. Measures to prevent recurrence

8

In the fourth quarter of the fiscal yearended March 31, 2019, we will record anadditional extraordinary loss of 11.7 billionyen (total 54.7 billion yen), due torefinements of repair cost estimates andchanges in defect ratios of properties notsubject to top-priority investigations.

Previously, to prepare for the risk of vacancies, an estimated loss based on current rental income andexpected future occupancy rates for each apartment was recorded in cost of sales in the LeasingBusiness.

We have recorded 9.6 billion yen as a provision to the reserve for apartment vacancy loss, due todecreases in occupancy rates from suspension of tenant recruitment caused by the problem ofconstruction defects. This loss is transient and large, and will not occur in ordinary business activities,and therefore has been recorded in extraordinary losses.

*Cost that we pay as the lessee as a compensation of vacant rooms ofproperties managed by other companies, due to construction defects

Breakdown of reserve

Repair costs

Other expenses(relocation, investigation,rent compensation ofvacant rooms inapartments managed byother companies)

9

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 March 31, 2019

Tokyo metro 170,000

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)

11

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)

12

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 FY19/3

Net sales 733.2 620.3 483.5 458.2 454.2 470.8 483.2 511.5 520.4 530.8 505.2

Leasing 334.5 342.3 355.7 379.0 383.6 388.5 399.3 410.6 421.3 435.5 426.3

Development(Construction)

359.1 237.0 107.8 62.9 53.3 63.1 61.3 74.1 80.3 76.5 58.9

Operating profit 50.1 -29.7 -24.4 3.3 7.4 13.4 14.8 21.0 22.8 22.9 7.3

Leasing -1.5 -47.8 -30.8 4.0 8.7 15.3 20.5 22.8 23.0 26.0 14.9

Development(Construction)

70.1 29.7 11.8 4.2 2.7 2.9 0.2 3.3 5.7 3.6 -0.9

Net income 9.9 -79.0 -41.7 0.3 13.3 15.7 15.1 19.6 20.4 14.8 -68.6

Managed units*(1,000 units)

506 551 571 556 546 549 554 561 568 570 57.4

Occupancy rate* 88.5% 82.3% 80.1% 81.2% 82.9% 84.6% 86.6% 88.0% 88.5% 90.6% 88.3%

Orders received 337.8 250.2 80.3 50.0 73.0 81.1 87.3 86.4 92.8 87.6 73.3

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

13

14

Highlights of Results

We recorded a net loss due to extraordinary losses related to repairs and impairment losses (loss on sales of our apartmentproperties) as well as deterioration of our business results caused by construction defects. A net loss is the first time in eightyears since FY11/3.

*“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.

15

(Million yen)FY18/3Actual

FY19/3

Plan

FY19/3

Actual YoYCompared to

Plan

Sales 530,840510,000

~516,000505,223 -25,616

-4,777~-10,777

Gross profit 96,07780,500

~83,00076,235 -19,842

-4,265~-6,765

% 18.1% 15.8~16.1% 15.1% -3.0p -0.7p

SGAE 73,14773,000

~72,50068,844 -4,302

-4,156~-3,656

Operating profit 22,9307,500

~10,5007,390 -15,539

-110~-3,110

% 4.3% 1.5~2.0% 1.5% -2.8p -0.0p

Recurring profit 22,3547,000

~10,0007,063 -15,291

+63~-2,937

% 4.2% 1.4~1.9% 1.4% -2.8p +0.0p

Net income (loss)* 14,819-40,000

~-38,000-68,662 -83,481

-28,662~-30,662

(Million yen)18/3

Actual19/3Plan

19/3Actual YoY

Compared toPlan

Sales 435,537429,500

~432,500426,388 -9,148

-3,112~-6,112


~71,00062,961 -13,444

-5,739~-8,039

Operating profit 26,06216,600

~19,00014,987 -11,074

-1,613~-4,013

Sales 76,58762,000

~64,00058,992 -17,595

-2,008~-5,008


~14,70014,343 -7,011

+243~-357

Operating profit 3,663-2,800

~-2,200-995 -4,659

+1,805~+1,205

Sales 12,807 14,000 13,922 +1,115 -78

Gross profit -105 500 598 +703 +98

Operating profit -1,596 -1,000 -846 +749 +154

Sales 5,908 5,500 5,919 +11 +419

Gross profit 2,042 1,500 2,094 +51 +594

Operating profit -846 -1,300 -1,346 -500 -46

Adjust-ments

Operating profit -4,353 -4,000 -4,407 -54 -407

In the Leasing Business, both occupancy rates and profits decreased because the Company suspended recruitment of new tenants into buildings subjectto top-priority investigations. In the Development Business, both sales and profits decreased YoY since orders decreased due to the negative environmentsurrounding the apartment construction industry. In the Elderly Care Business, sales and profit exceeded forecasts as a result of improvement of existingfacilities’ occupancy rates. In the Hotels, Resort & Other Businesses, sales exceeded forecasts although sales and profits decreased YoY due to renewalworks.

Results of Business Segments

*Gross profit/Sales*FY19/3 Full-year Plan reflects earnings forecasts revisions announced on February 7, 2019

16

*17.5% *14.8%

*27.9% *24.3%

*16.0%~16.4%

*23.1%~23.0%


FY17/3Actual

FY18/3Actual

FY19/3Actual

Sales 410,641 421,342 435,537 426,388

Gross profit 67,337 70,142 76,406 62,961

Operating profit 22,848 23,009 26,062 14,987

Units under management(as of the end of FY)

561,961 568,739 570,672 574,798戸

Occupancy rate (average) 87.95% 88.53% 90.59% 88.34%

Direct offices(as of the end of FY)

189 189 189 189

Number of corporate salessection (as of the end of FY)

60 60 59 54

Number of employees(non-consolidated, as of the end of FY)

3,150 3,284 3,247 3,241

of which, sales employees 1,603 1,701 1,546 1,494

Main Indicators (Leasing)

*16.4% *16.6% *17.5%

*Gross profit/Sales *Figures for FY17/3 adjusted to new segments

17

*14.8%

82%

84%

86%

88%

90%

92%

94%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

FY 2015/3 FY 2016/3 FY 2017/3 FY 2018/3 FY 2019/3

Occupancy Rate

Occupancy rate for March 2019 was 84.33%, decreasing more than 8p 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 rates remained stable after January, since we were able to resume recruitment in certain properties. However, due todecrease in individual tenants, the occupancy rate in March decreased month-on-month.

(Occupancy rate = Occupied units / Managed units, %)

18

Apr May Jun Jul Aug Sep1H

Avg.Oct Nov Dec Jan Feb Mar Avg.

FY16/3 87.88 87.61 87.59 87.32 87.26 87.70 87.56 87.26 87.14 86.89 88.38 89.80 90.53 87.95

FY17/3 88.97 88.55 88.60 87.95 87.78 88.31 88.36 87.50 87.41 86.97 88.41 90.18 91.66 88.53

FY18/3 90.51 90.28 90.55 89.75 89.88 90.21 90.20 89.73 89.69 89.44 90.83 92.43 93.72 90.59

FY19/3 92.82 92.76 92.10 90.45 89.41 88.40 90.99 87.24 86.38 85.26 85.38 85.57 84.33 88.34

92.82%

92.76%

92.10% 90.45%

89.41%

88.40%

87.24%

86.38%

85.26%

85.38% 85.57%84.33%

92.18%

87.86%

81.98%

77.87%

74.55%

71.11%

68.78%

66.57% 65.65% 66.79%

64.91%

93.09%

94.50%95.25% 95.94% 96.24% 96.36% 96.32% 95.81% 96.51% 96.16%

95.25%

60%

65%

70%

75%

80%

85%

90%

95%

100%


FY19/3 FY19/3Properties subject to top-priority investigations

FY19/3Properties not subject to top-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 95-96%. In the future, we will resume tenantrecruitment by investigating and repairing properties in an effort to raise the overall occupancy rate.

Occupancy rates fell 7.5p from April toDecember 2018, mainly due to suspensionof tenant recruitment in top-priorityproperties.Occupancy rates fell 1p every month.

Since we resumed tenantrecruitment on certain propertiesafter January 2019, there was abottom-up effect on occupancyrates to a certain degree.

19

Main Indicators (Development)


FY17/3Actual

FY18/3Actual

FY19/3Actual

Sales 74,160 80,321 76,587 58,992

Gross profit 20,268 23,124 21,355 14,343

Operating profit 3,340 5,786 3,663 -995

Contract amount 86,439 92,852 87,628 73,325

of which, apartments and

other buildings86,439 87,592 75,905 64,495

of which, real estate

development0 5,260 11,722 8,829

Offices(as of the and of FY)

60 60 60 50

Number of employees(non-consolidated, as of the end of FY)

1,686 1,469 1,450 1,365

of which, sales personnel 427 566 530 475

*27.3% *28.8% *27.9%

*Gross profit/Sales *Figures for FY17/3 adjusted to new segments *For real estate development, contract amount = sales

20

*24.3%

Subcontracting Real estate development

Gross Orders

Orders and Sales

FY17/3 FY18/3

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

FY19/3

(Billion yen)FY17/3 FY18/3 FY19/3

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Orders fromsubcontracting(buildings)

244 254 243 217 958 214 222 204 232 872 212 214 201 143 770

(Billion yen) 22.4 21.8 22.3 20.9 87.5 19.2 18.6 17.6 20.3 75.9 16.3 17.8 18.8 11.4 64.4

Orders outstanding(Billion yen)

72.6 71.9 74.4 67.3 67.3 69.7 68.0 68.7 63.9 63.9 65.6 65.8 71.1 62.3 62.3

Real estate development(Billion yen)

- 0.7 1.2 3.2 5.2 0.5 0.7 1.4 8.9 11.7 0.1 0.8 1.1 6.6 8.8

Sales (Billion yen) 14.3 20.7 17.1 28.0 80.3 14.4 17.5 14.5 29.9 76.5 12.4 14.2 11.5 20.7 58.9

22.4 19.2 16.3 21.8 18.6 17.8 22.3 17.6 18.8 20.9 20.311.4

0.00.5 0.1

0.70.7 0.8

1.21.4 1.1 3.2 8.9

6.6

0

10

20

30

40

Q1 Q2 Q3 Q4

(Billion yen)

22

Plan

*“Net income” refers to “net income attributable to shareholders of the parent”.

23


FY19/3

Actual

FY20/3

PlanFY21/3

(Reference)YoY

Sales 530,840 505,223 502,200 -3,023 539,900

Gross profit 96,077 76,235 66,100 -10,135 87,500

% 18.1% 15.1% 13.2% -1.9p 16.2%

SGAE 73,147 68,844 63,900 -4,944 69,500

Operating profit 22,930 7,390 2,200 -5,190 18,000

% 4.3% 1.5% 0.4% -1.0p 3.3%

Recurring profit 22,354 7,063 1,300 -5,763 17,000

% 4.2% 1.4% 0.3% -1.1p 3.1%

Net income (loss)* 14,819 -68,662 100 +68,762 14,000

(Million yen)18/3

Actual19/3

Actual20/3Plan

FY21/3(Reference)YoY

Sales 435,537 426,388 421,300 -5,088 445,000

Gross profit 76,406 62,961 51,900 -11,061 70,500

Operating profit 26,062 14,987 9,800 -5,187 25,000

Sales 76,587 58,992 59,700 +707 73,000

Gross profit 21,355 14,343 12,800 -1,543 15,000

Operating profit 3,663 -995 -1,700 -704 0

Sales 12,807 13,922 14,800 +877 15,500Gross profit -105 598 1,200 +601 2,000Operating profit -1,596 -846 -100 +746 300Sales 5,908 5,919 6,400 +480 6,400Gross profit 2,042 2,094 1,600 -494 1,500Operating profit -846 -1,346 -1,000 +346 -2,300

Adjust-ments

Operating profit -4,353 -4,407 -4,800 -392 -5,000

Results of Business Segments

*Gross profit/Sales

24

*17.5%

*27.9%

*14.8%

*24.3%

*12.3%

*21.4%

*15.8%

*20.5%


FY18/3Actual

FY19/3Actual

FY20/3Plan

FY21/3Reference

Sales 421,342 435,537 426,388 421,300 445,000

Gross profit 70,142 76,406 62,961 51,900 70,500

Operating profit 23,009 26,062 14,987 9,800 25,000

Units under management(as of the end of FY)

568,739 570,672 574,798 577,000 580,000

Occupancy rate (average) 88.53% 90.59% 88.34% 85.20% 90.20%

Direct offices(as of the end of FY)

189 189 189 －－

Number of corporatesales section (as of the end

of FY)60 59 54 －－

Number of employees(non-consolidated, as of the end ofFY)

3,284 3,247 3,241 －－

of which, sales employees 1,701 1,546 1,494 －－

Main Indicators (Leasing)

*Gross profit/Sales *Figures for FY17/3 adjusted to new segments

25

*16.6% *17.5% *14.8% *12.3% *15.8%

75%

80%

85%

90%

95%


FY 2018/3 FY 2019/3 FY 2020/3 (Plan) FY 2021/3 (Reference)

Occupancy Rate Forecasts

We will resume tenant recruitment during FY March 2020, and aim to improve occupancy rates in FY March 2021.

Average forFY2021/3(Reference)

Average forFY2020/3(Plan)

Average forFY2019/3

85.25%

90.31%

88.34%

Average forFY2018/3 90.59%

26

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

27

Main Indicators (Development)


FY18/3Actual

FY19/3Actual

FY20/3Plan

FY21/3Reference

Sales 80,321 76,587 58,992 59,700 73,000

Gross profit 23,124 21,355 14,343 12,800 15,000

Operating profit 5,786 3,663 -995 -1,700 0

Contract amount 92,852 87,628 73,325 62,000 78,000

of which, apartments and

other buildings87,592 75,905 64,495 42,000 60,000

of which, real estate

development5,260 11,722 8,829 20,000 18,000

Offices(as of the and of FY)

60 60 50 －－

Number of employees(non-consolidated, as of the end ofFY)

1,469 1,450 1,365 －－

of which, sales personnel 566 530 475 －－

*Gross profit/Sales *Figures for FY17/3 adjusted to new segments *For real estate development, contract amount = sales

28

*28.8% *27.9% *24.3% *21.4% *20.5%

71.5

59.6

36.2

55.0

4.1

2.9

12.4

10.9

0

10

20

30

40

50

60

70

80

FY18/3 Actual FY19/3 Actual FY20/3 Plan FY21/3(Reference)

Real estate business (excluding Life Living)

Apartments, etc. (excluding Morizou)

Contracts Plan (non-consolidated)

Due to negative media reports, etc, orders have fallen after February 2019. We expect the same trend during FY March 2020,but will aim to maintain profits by strengthening real estate businesses.

(Billion yen)

Development Business Strategy

Completing repairs of construction defectsis our top priority

We will concentrate on explaining andfollowing up on existing owners

We will strengthen real estate businesses(towards funds)

Change in organization: 35 constructionoffices (formerly 50)

29

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

-0.2Others

-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)

30

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 Mar Sep Mar

FY10/3 FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

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.63

Occupancy by Group

32

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%

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%

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%

473 476 474 495 488 490 487 509 500 499 493 521 517 515 509 535 527 507 489 485

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

FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

Student-occupied units Individual-occupied units Corporate-occupied units

*Figures are as of the end of each quarter*Reference of p.63

Shares of Occupied Units by Group

33

(Thousand units)

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)

34

*No. of companies inparentheses

47,510 48,913 49,242 50,086 44,518

32,022 34,689 39,510 46,379 44,771

35,169 36,911 37,50738,438

35,462

40,878 42,837 45,03445,157

40,97316,635

17,50918,150

18,77716,676

44,39848,489

52,92058,293

52,920

45,96547,913

51,46051,932

45,323

262,577277,261

293,823309,062

280,643

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2015/3 2016/3 2017/3 2018/3 2019/3

YoY +5.6% +6.0% +5.2%

(46,008)(47,217)

(48,609)(49,229)

-9.2%

(43,751)

-9.2%

-11.2%

-9.3%

-7.7%

-3.5%

-11.1%

-12.7%

0

5,000

10,000

15,000

20,000

25,000

Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar

FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

China S. Korea Taiwan Vietnam Thailand Other Southeast Asia Other

Leased Units by Foreign Nationals (Excluding Corporate Contracts)

*Reference of p.64

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 (220 as of Mar. 2019) at 7 domestic offices in theoverseas division. About 74%, 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 7.3% 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

19,519 as of Mar. 31, 2019(YoY +3.6%)

35

(Units)

0

50

100

150

200

250

300

350

400

Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar

FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

(Offices)

Direct Partners

Direct Partners Total

Hokkaido 9 2 11

Tohoku 15 6 21

Kita-kanto 14 5 19

Tokyo metro 49 33 82

Hokuriku & Koshinetsu 13 8 21

Chubu 24 15 39

Kinki 25 10 35

Chugoku 11 10 21

Shikoku 5 5 10

Kyushu & Okinawa 17 19 36

Japan 182 113 295

Overseas 7 0 7

Total(Compared to March 2017)

189

(±0)

113

(-5)

302

(-5)

Leasing Offices

As of Mar. 31, 2019

* Overseas locations operating foreign real estate brokerage servicesnot included. (Thailand, Vietnam, Cambodia, Myanmar, Philippines,Indonesia, Singapore)

36

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. 44,951 contracts have beenacquired as of Mar. 31, 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)

37

Security Systems Installments

FY19/3Actual

Cumulativetotal

% oftotal

Security systems(units)

12,380 308,944 53.7

Security cameras(buildings)

1,586 14,364 39.1

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 461,610 units (about 80%) as ofMar. 31, 2019

Life Stick

L MOVIE

38

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 18,000 cards issued(as of Mar. 31, 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 12,441 units(97.5%)

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.

39

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 5,536 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 114 apartments,accounting for half of theinstallments by real estatecompanies Leopalace Cleino

Cerezo Palthy II

40

Roof-lease Solar Power Systems (from Dec.2013)

FY19/3Actual

Buildingsinstalled* 4,483

Generatingcapacity* 66.9 MW

Generated power* 77,475 MWh *Refer to p.68

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)

41

“Minpaku” Apartments

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㎡）

Opened in Dec 2018: 3 buildings

Fukuoka (Fukuoka), Aichi (Toyota)

Planned to open in 2019: 15 buildings

Tokyo (Ohta-ku, Bunkyo-ku, Toshima-ku),Kanagawa (Yokohama), Aichi (Nagoya),Osaka, Nara,

Leopalace21’s “Minpaku” (image, candidate area)

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 (FY19/3)

Of the 381 buildings completed nationwide, Tokyometropolitan area makes up 51.4% (FY18/3 : 56.0%),and the three metropolitan areas (Tokyo, Kinki, andChubu) make up 75.9% (FY18/3 : 77.6%).

(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.

43

Total 35 offices (As of May. 2019)( ): As of Mar. 2019

TokyoMetropolitan

196

Kinki54

Chubu39

Kyushu,Okinawa

38

Tohoku25

Chugoku18

Other11

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

44

“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.

45

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

46

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)

Nagano-chuo SR, Nagano B

Toyama SR, Toyama B

Saku SR, Saku B

Morizou Club, Nagano B

Showa SR, Yamanashi B

High-quality SR with accommodations

SR with kiso-hinoki experience tour

Utsunomiya-nishi SR, Tochigi B

Mito SR, Ibaraki B

Kumagaya SR, Saitama-Gunma B

Maebashi SR, Saitama-Gunma B

Mitaka SR, Tokyo B

Makuhari SR, Chiba B

Morizou Club, Shizuoka B

Nagoya SR, Tokai B

Yokohama SR, Kanagawa B

Morizou Club, Niigata B

Omiya-kita SR, Saitama B

-47-

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.

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

Establishment of Leopalace Trust

48

Established to support the asset succession of customersand strengthen consulting services

Acquired the “investment-based trust company” licensefrom the Financial Services Agency in May, 2018 (the 2nd

company among real estate industry)

Mainly handling land trusts and real estate managementtrusts

Company Name Leopalace Trust Co., Ltd.

Address 2 Chuo, Nakano-ku, Tokyo

Common Stock 0.3 billion yen

Business

operationsInvestment-based real estate trust business

Main services

1. Land trusts2. Real estate management trusts3. Consulting regarding the above services

Date of salecommencement

July 2018

*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 to correspond to Japan’s agingsociety. There are 87 facilities as of December 1, 2018. Occupancy rates are steady due to measures which improve customer satisfaction.

50


FY19/3

Plan

FY19/3

ActualFY20/3

PlanYoYCompared

to Plan

Sales 12,807 14,000 13,922 +1,115 -78 14,800

Gross profit -105 500 598 +703 +98 1,200

Operating profit -1,596 -1,000 -846 +749 +154 -100

Facilities as of term-end 83 87 87 ±0 ±0 87

Occupancy rate (Day-service) 72.8% 74.3% 72.6% -0.2p -1.7p 77.4%

Occupancy rate (Short-stay) 90.2% 92.9% 93.6% +3.4p 0.7p 96.3%

Occupancy rate(Private residential homes, etc.)

88.8% 92.5% 91.6% +2.8p -0.9p 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.

51

Hotel LeopalaceNagoya


FY19/3

Plan

FY19/3

ActualFY20/3PlanYoY

Comparedto Plan

Sales 1,811 2,000 2,060 +249 +60 2,000

Operating profit -198 -850 -764 -565 +86 -90

Depreciation and amortization 281 400 400 +119 +0 400

Occupancy rate 84.1% 84.7% 83.1% -1.0p -1.6p 87.0%

Resort Business (Leopalace Guam – non-consolidated)

Arrivals in Guam, especially from Japan, decreased drastically due to negative reports in August 2017 concerning a missilelaunch planned by North Korea, which had a negative impact on occupancy rates and profit. An executive floor “Medallion Floor”in Leopalace Hotel (Guam) was certified as “L grade,” the highest rank given by JTB Hotel grade. Please note that the fiscal yearof Leopalace Guam is from January to December.

Leopalace Resort Leopalace Resort Country Club

(Million yen)FY2017/12

Actual

FY2018/12

Plan

FY2018/12

ActualFY19/12

PlanYoYCompared

to Plan

Sales 5,085 5,300 4,771 -313 -529 4,900

Operating profit -261 40 -432 -171 -472 -480

Depreciation and amortization 976 1,000 1,052 +75 +52 1,100

Occupancy rate (Leopalace Resort) 50.7% 55.9% 43.2% -7.5p -12.7p 51.8%

Number of arrivals in Guam 1,545,392 - 1,549,007 +5,017 - -

of which, Japanese 620,376 - 563,386 - 57,161 - -

52

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 2,083managed units as of Mar. 31, 2019 (+654 unitscompared to March 31, 2018)

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.

53

*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 office willopen in Vietnam in June 2019.

Hanoi

Seoul

54

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 (87 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

87 trainees employed as of Mar. 31, 2019 (18 traineesemployed by Leopalace21 since July 1, 2017)

Acceptance of Foreign Technical Intern Trainees

Practical construction training

Language training

On the job training

55


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

56

Ratio of Workforce Turnover,

Reduction in Overtime Hours Parental Leave

Paid Vacation Ratio External Assessment

*Selected as “Telework Pioneer 100” in November, 2018

57

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 Mar. 31, 2019)

Shareholder Composition (as of Mar. 31, 2019)

Group Companies (as of Mar. 31, 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 Eisei Miyama

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 7,600 (consolidated), 6,331 (non-consolidated)Authorized Shares 500,000,000

Outstanding Shares 244,882,515 shares

Shareholders 66,820

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

58

Enplus Inc.Relocation management

Inte

rna

tio

na

l*

Leopalace TrustLand trust, Real estate

management trust


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

59

(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

60

(Million yen)

Q1

Apr – Jun

Q2

Jul – Sep

Q3

Oct – Dec

Q4

Jan – Mar

FY19/3

Actual

FY20/3

Plan

FY19/3

Actual

FY20/3

Plan

FY19/3

Actual

FY20/3

Plan

FY19/3

Plan

FY20/3

Plan

Sales 129,268 119,600 126,210 121,500 120,887 122,700 128,856 138,400

Leasing 111,847 101,200 107,178 103,200 104,326 105,900 103,037 111,000

Development 12,450 13,000 14,297 12,900 11,504 11,700 20,739 22,100

Elderly Care 3,360 3,600 3,509 3,800 3,567 3,700 3,485 3,700

Hotels, Resort

& Others1,611 1,800 1,224 1,600 1,489 1,400 1,594 1,600

Operating profit 4,120 -4,300 3,072 -500 -690 2,000 887 5,000

Leasing 7,214 -1,600 4,966 1,900 2,133 4,100 674 5,400

Development -891 -800 -410 -1,100 -1,317 -800 1,623 1,000

Elderly Care -366 -200 -137 100 -203 0 -139 0

Hotels, Resort

& Others-612 100 -227 -200 -204 -400 -301 -500

Quarter Comparison

61

Results for Leopalace21 and Major Subsidiaries

62


FY19/3

Initial Plan*

FY19/3

Actual YoYCompared

to Plan

Leopalace21Sales 505,849 523,700 477,834 -28,015 -45,866

OP 21,347 21,900 5,561 -15,785 -16,339

Leopalace Leasing(Corporate housing)

Sales 1,781 3,000 2,751 +970 -249

OP 482 700 566 +83 -134

Plaza Guarantee(Rent guarantee)

Sales 4,493 4,800 4,246 -247 -554

OP 295 400 544 +248 +144

ASUKA SSI(Tenant contents insurance)

Sales 1,611 1,800 1,811 +199 +11

OP 70 200 305 +235 +105

Leopalace Power(Roof-lease solar power)

Sales 2,905 2,800 2,884 -21 +84

OP 601 600 775 +173 +175

Morizou(Built-to-order homes)

Sales 4,768 5,200 3,904 -864 -1,296

OP 196 200 - 300 -497 -500

Life Living(Real estate development)

Sales 8,318 10,000 9,008 +690 -992

OP 1,063 800 964 -99 +164

WING MATE(Travel management)

Sales 2,978 2,400 3,136 +157 +736

OP - 51 0 164 +216 +164

*Initial plan was announced on May 11, 2018

FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

Q4 Q4 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Units undermanagement

548,912 554,948 561,961 568,739 570,842 570,802 569,289 570,672 571,927 527,972 573,671 574,798

A. Occupied units 480,110 495,487 508,720 521,298 516,886 514,946 509,172 534,847 526,738 506,511 489,100 484,718

Occupancy rate(average)

FY84.6% FY86.6% FY88.0% FY88.5% 90.5% 90.0% 89.6%92.3%

FY90.6%92.6% 89.4% 86.3%

85.1%FY88.3%

B. Corporate-occupiedunits

246,272 262,577 277,261 293,824 292,581 291,085 287,629 309,062 303,701 287,615 275,786 280,643

Corporate share (B /A)

51.3% 53.0% 54.5% 56.4% 56.6% 56.5% 56.5% 57.8% 57.7% 56.8% 56.4% 57.9%

C. Individual-occupiedunits

179,036 182,142 183,008 180,617 178,802 178,016 175,872 178,643 177,072 173,189 168,462 163,318

Individual share (C /A)

37.3% 36.8% 36.0% 34.6% 34.6% 34.6% 34.5% 33.4% 33.6% 34.2% 34.4% 33.7%

D. Student-occupiedunits

54,802 50,768 48,451 46,857 45,503 45,845 45,671 47,142 45,965 45,707 44,852 40,757

Students share (D /A)

11.4% 10.2% 9.5% 9.0% 8.8% 8.9% 9.0% 8.8% 8.7% 9.0% 9.2% 8.4%

*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

63

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 4.0% of total contracts (12.0% of individual and student contracts). Foreign nationals comprised ofstudents 61% and working-class 39%. 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 7.3% of the total occupied units.

64

(Units)

FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

Q4 Q4 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

China 6,125 7,033 6,627 6,490 6,224 6,534 6,512 7,048 6,592 6,640 6,551 6,635

South Korea 1,298 1,336 1,447 1,479 1,459 1,478 1,512 1,594 1,622 1,602 1,625 1,604

Taiwan 658 747 949 951 899 873 946 1,005 994 990 980 947

Southeast Asia 1,833 2,859 3,116 3,708 3,875 4,307 4,646 5,339 5,614 6,121 6,160 6,362

of which,Vietnam

1,059 1,995 2,142 2,604 2,773 3,166 3,478 4,028 4,287 4,751 4,792 5,000

Others 2,013 2,391 2,874 3,199 3,230 3,356 3,536 3,862 3,872 3,882 3,888 3,971

of which,North America

462 499 567 610 600 620 620 657 640 635 617 657

Total 11,927 14,366 15,013 15,827 15,687 16,548 17,152 18,848 18,694 19,235 19,204 19,519

Managed Units (1,000 units) and Occupancy Rates by Area

65

(1,000units, %)

FY17/3 FY18/3 FY19/3

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

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

Managedunits

Occup-ancy rate YoY

Hokkaido 14 85% 14 89% 14 89% 14 84% 14 87% 14 87% 14 76% 14 69% 14 69% -18p

Touhoku 35 94% 35 94% 35 93% 35 92% 35 95% 36 94% 36 90% 36 86% 35 85% -10p

North Kanto 41 87% 41 87% 41 87% 40 86% 40 91% 40 88% 40 85% 40 82% 40 80% -10p

Tokyo metro 166 93% 167 90% 168 88% 168 88% 168 94% 169 91% 169 88% 170 86% 170 86% -8p

Hokuriku,Koshinetsu

41 90% 41 91% 41 92% 40 90% 40 93% 40 92% 40 87% 40 82% 40 79% -14p

Chubu 88 91% 88 90% 88 91% 88 91% 88 95% 88 93% 88 90% 88 87% 88 85% -9p

Kinki 81 91% 81 90% 80 90% 80 89% 80 94% 80 92% 81 88% 81 85% 81 83% -11p

Chugoku 39 94% 39 93% 39 91% 39 90% 39 93% 39 93% 39 92% 39 89% 39 88% -5p

Shikoku 15 90% 15 89% 15 91% 15 88% 15 92% 15 92% 15 87% 15 84% 15 84% -8p

Kyushu,Okinawa

50 94% 51 94% 51 93% 51 92% 51 96% 51 95% 51 91% 51 88% 51 88% -9p

Total 569 92% 571 91% 571 90% 569 89% 571 94% 572 92% 573 88% 574 85% 574 84% -9p

Occupancy rates decreased since the Company stop recruiting new tenants into rooms subject to top-priority investigations(about 210,000 units) .

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

Occupancy Rates by Building Age (as of Mar. 31 of each year)

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.

114(24%)

94(20%)

79(17%)

68(14%)

58(12%)

52(10%)

52(10%)

48(9%)

29(6%)

365370 384 412 438 457 469 487

456

478464 463

480495

509 521535

485

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

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)

67

Tokyo-metro4,370

Chubu2,506

Kinki1,654

NorthKanto1,203

Kyushu,Okinawa

1,175

Chugoku961

Tohoku454

Others675

0

5,000

10,000

15,000

FY16/3…Q2 Q3 Q4FY17/3…Q2 Q3 Q4FY18/3…Q2 Q3 Q4FY19/3…Q2 Q3 Q4

68

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 March 31, 2019(roughly 59% of buildings that can be installed). Roof-lease solar power systems has started since December 2013.

Installments by Schemes

Schemes Start FY18/3 FY19/3

1. Solar power systems installed with apartmentowners’ burden

Mar 2011 7,245 buildings (90.9MW) 7,248 buildings (90.9MW)

2. Roof-lease solar power systems Sep 2012 5,750 (91.6MW) 5,750 (91.6MW)

a. SPC and other tie-up installments Feb 2013 1,256 (24.5MW) 1,256 (24.5MW)

b. Installments by Leopalace21 Group* Dec 2013 4,494 (67.1MW) 4,494 (67.1MW)

3.Mega-solar power plants utilizing idle land Sep 2013

Tomisato,Chiba

（1.7MW） Tomisato, Chiba （1.7MW）

Total: 12,995 (182.5MW) 12,998 (182.7MW)

(Cumulative total)

Installments by Area

(Buildings)

21.1% 22.6% 23.3% 25.0% 22.4% 21.1%

48.7%51.1% 52.1% 51.6% 55.9%

55.0%

20.2%19.5% 17.8% 15.0% 14.0% 15.3%

9.6% 6.4% 6.8% 7.0% 5.1% 5.7%

0%

25%

50%

75%

100%

FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

20.2%26.3% 24.4% 26.9%

23.3% 23.0%

47.5%

50.4%48.7%

48.0% 54.5% 54.0%

21.9%

17.5%19.6% 17.0%

15.6% 16.1%

10.1%5.5% 7.2% 7.4% 5.5% 5.6%

0%

25%

50%

75%

100%

FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3

69

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

Elderly Care Facilities “Azumi En” Area Disposition (87 as of April 1, 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

70

Maebashi

* Shizuoka Jul. 2018 opened* Mito Aug. 2018 opened* Iwata Sep. 2018 opened* Atsugi Dec. 2018 opened

Ohgaki

Yaizu

*

*

Utsunomiya-Minami*

FujiShizuoka

*Iwata

*Mito

*Atsugi

Shizuoka

(Million yen) FY18/3 FY19/3

Cash and cash equivalents 106,543 84,536

Trade receivables 7,626 6,908

Accounts receivables for completedprojects

1,957 1,709

Real estate for sale and in progress 3,523 6,582

Prepaid expenses 3,544 2,952

Current assets 130,167 110,757

Buildings and structures 42,705 40,542

Machinery, equipment, and vehicles 12,547 11,185

Land 63,638 49,221

Leased assets 16,028 11,732

Intangible assets 10,988 9,575

Long-term prepaid expenses 3,831 3,252

Deferred tax assets (long-term) 26,639 23,650

Fixed assets 206,527 180,705

Deferred assets 440 327

Total assets 337,134 291,790

(Million yen) FY18/3 FY19/3

Bonds and borrowings (short-term) 6,930 7,804

Lease obligations (short-term) 5,960 5,320

Accounts payable for completed projects 7,832 4,715

Advances received 39,964 34,635

Reserve for losses related to repairs - 50,707

Reserve for apartment vacancy loss(short-term)

- 8,826

Current liabilities 100,212 141,765

Interest-bearing debt (long-term) 28,712 26,421

Lease obligations (long-term) 12,226 8,501

Reserve for apartment vacancy loss(long-term)

3,044 3,902

Lease/guarantee deposits received 6,989 6,599

Long-term advances received 15,853 11,869

Long-term liabilities 77,483 68,687

Total liabilities 177,696 210,452

Common stock 75,282 75,282

Capital surplus 45,235 45,148

Retained earnings 37,839 -38,635

Total net assets 159,438 81,338

Shareholders’ equity ratio 47.2% 27.7%

Balance Sheets

Compared to March 31, 2018, assets decreased 45.3 billion yen (-22.0 billion yen in cash and cash equivalents, -14.4 billion yen in land,-4.2 billion yen in lease assets, and +3.0 billion yen in real estate for sales). Liabilities increased 32.7 billion yen (+50.7 billion yen in reservefor losses related to repairs, -5.7 billion yen in bonds, borrowings, and lease obligations, and -3.1 billion yen in accounts payable –others).Net assets decreased 78.1 billion yen (net loss of -68.6 billion yen, dividend payment of -3.0 billion yen, and share buybacks of -5.0 billionyen).

71

40.134.5 35.6 34.2

88.0

104.4 106.5

84.5

-0.33-0.44 -0.45

-0.62

-0.80

-0.60

-0.40

-0.20

0.00

0.20

0.40

0

20

40

60

80

100

120

FY16/3 FY17/3 FY18/3 FY19/3

(Ratio)(Billion yen)

Interest-bearing debt Cash Net DE ratio

NDE Ratio

*Net DE ratio = (Interest-bearing debt – Cash) / Shareholders’ equity*Lease obligations are not included in interest-bearing debt

*

72

As of March 31, 2019: 22.1 billion yen in borrowings (+2.5 billion yen yoy), 12.1 billion yen in bonds (-4.0 billion yen yoy)

83.0

98.2

60

80

100

Cash and cash equivalentsat end of period

-15.1

7.3

-7.2

-18.3

-2.3

27.3

-30

-20

-10

0

10

20

30

Cash flows fromfinancing activities

Cash flows frominvesting activities

Cash flows fromoperating activities

Cash Flows

(Billion yen)

(Billion yen)

73

*excludes 1.5 bn yenof fixed deposits

・Purchase of property -7.7 bn yen・Sale of property +10.0 bn yen・Purchase of intangible assets -1.8 bn yen・Proceeds from withdrawal of

fixed deposits +8.1 bn yen

・Loss before income taxes -64.8 bn yen・Reserve for losses related to repairs +50.7 bn yen・Loss related to repairs +4.0 bn yen・Impairment loss +7.5 bn yen・Deprecation, amortization of goodwill +13.5 bn yen・Decrease in accounts payable -8.1 bn yen・Decrease in advances received -9.3 bn yen・Increase in real estate for sale -3.0 bn yen

・Proceeds from short-term debt +1.0 bn yen・Proceeds from long-term debt +3.9 bn yen・Repayment of long-term debt -2.3 bn yen・Repayment of bonds -3.9 bn yen・Repayment of lease obligations -5.6 bn yen・Dividends paid to shareholders -3.0 bn yen・Share repurchase -5.0 bn yen

FY18/3 Full year FY19/3 Full year

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.

74

75

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

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

(%)

76

(Million people)

0-14 15-64 65-74 Over 75 Unknown % of Over 75

*Excerpted from “White paper on aging society” (Cabinet Office, Government of Japan)

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)

77

*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

1,663 1,673 1,665

1,343

1,420

1,5101,561

1,485

1,630

1,341

1,1801,226 1,213

1,1731,146

1,174 1,1931,249

1,285

1,036 1,039

775819 841

893

987

880921

974946 953

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

(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 0.7% YoY duringFY2018 (April to March).

*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

78

②Consumption tax: 5% to 8%(April 2014)

FY1996: +10.5% YoYFY1997: -10.8% YoY

YoY

Company housing +46.4%

Owner-occupied houses +2.0%

House for sale +5.2%

Condominiums +10.5%

Leased units -4.9%

①

②

New Housing Starts of Leased Units by Fiscal Year

Leased units starts during FY2018 (April to March) decreased 4.9% YoY, and leased units under 30 m2 decreased 7.5% YoY.


(Thousand units)

79

YoY

Over 30 m2 -4.3%

Under 30 m2 -7.5%

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 73

842821

767

582

687652

574 564

616

516

444426 418

442 455 459 467

518538

431 445

311292 290

321

370 358384

427 410390

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

Leased units under 30㎡ Leased units over 30㎡

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))

80

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

81

(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

82

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


New rental housing starts has increased nationwide, but Leopalace21 apartment constructions has increased mainly in the threemetropolitan areas (71.1% in FY19/3)

83

(棟)

Company A Company B Company CLeopalace21

0

2,000

4,000

6,000

8,000

10,000

Leopalace21 Company A Company B Company C

Central districts of three major metro areas(Tokyo + Aichi Pref. + KOK)

Other areas of three metro areas(Kinki and Chubu ex-Aichi Pref. + ex-KOK)

Other areas(Buildings)

74%3%22%

35%

13%

52%

44%

8%

48%

60%

6%

34%

Tokyo Metro

Chugoku & Shikoku

Chubu 1 (Aichi Pref.)

Kyushu & Okinawa

Kinki 1 (KOK*)

Hokkaido & Tohoku

Chubu 2 (ex.-Aichi Pref.)

Kita Kanto, hokuriku, Koushinetsu

Kinki 2 (ex.-KOK*)

*Kyoto-Osaka-Kobe

*Excerpted from “2017 Competitiveness Analysis of Housing Manufacturers” (JUTAKU SANGYO KENKYUSHO CO.,LTD.)

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)

84

Documents

1. Problems Concerning Construction Defectseg.leopalace21.com/ir/library/pdf/2019/4Q/en_kessan_ppt.pdfCommon hallway Common hallway A-1 A-2 A-3 Construction defects that Leopalace21