Message from the President

Leopalace21's Business Is to Resolve Issues Related to People and Housing

On behalf of Leopalace21, I would like to take this opportunity to convey my gratitude to our shareholders and investors for their continued support.

The value we provide to people will also continually change in response to changes in the times

Leopalace21's business is to build necessary housing on land where demand is high, and then lease it; in other words, to provide land owners with an effective, worry-free way to use their assets, and tenants with convenient and comfortable housing. In that context, our business is to resolve issues related to people and housing. As Leopalace21 is a company that resolves issues in society, the value we provide to people through our business will also have to continually change in response to changes in people's lives, society, and the times.

Medium-term management plan "Creative Evolution 2020" (April 2017 - March 2020)

We have announced the medium-term management plan "Creative Evolution 2020" in May 2017, with a basic policy to "support continuous growth of core businesses in ways that further increase corporate value while constructing a base for growth areas." In the core businesses, we will continue to concentrate apartment construction in the three major metropolitan areas, as well as diversify our construction lineup to include properties other than apartments. We will also concentrate our efforts in the Elderly Care Business and International Business, which are less exposed to the shrinking domestic population, and aim to be in the black in the next three years. Asset holdings will be reviewed with a view to enhancing asset and capital efficiency.

We will set the fiscal year ending March 2019, the second year of our medium-term management plan, as "the year to begin human resources and organization development." We will build the foundation to cultivate human resources with strong entrepreneurial spirits, along with an organization structure which will be able to implement reformation of our businesses.

Concerning profit distribution to shareholders, we have a basic policy of proactive dividend payment and flexible share buybacks. For the fiscal year ended March 31, 2018, a share buyback of 8.0 billion yen has been accomplished, and a dividend payment of 22 yen per share is planned, resulting in a dividend ratio of 37.9% and total payout ratio of 92.3%. In this fiscal year ending March 2019, we also plan a dividend of 22 yen per share and a share buyback of 8.0 billion yen (dividend ratio of 37%, total payout ratio of 90%).

We sincerely apologize for the distress and trouble caused by the construction deficiencies resulting from inadequacies in our management system. We will work together as a company in conducting investigations and repair works, and take effort to restore trust as soon as possible.

Investigations of all buildings are planned to be completed by June 2019, and we will prioritize investigations on the subject series announced in April and May (14,709 buildings). For buildings with construction deficiencies, we will be consulting with specific administrative agencies and conducting repair works at our expense.

We will continue further investigations concerning the cause of the deficiencies, and organize a structure to prevent recurrence and strive for thorough quality control.

I would like to request the continued support and encouragement of all our stakeholders.

August 2018
Eisei Miyama
President and CEO



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