Message from the President

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

We recently announced the financial results of our 45th term (six months ended September 2017), recording a year-on-year increase in net sales and operating profit of 1.4% and 23.4%, respectively, and a decrease in net income of 2.1%. Compared to forecasts, net sales were as planned, but profits exceeded forecasts due to cost cuts. Impairment losses were realized due to asset sales, but losses were covered by tax effects, and net income exceeded forecasts.

In the Leasing Business, due in part to the Company capturing corporate dormitory demand which increased as employment rates improved, the average occupancy rate was 90.20% (+1.84p year-on-year). We will continue to expand tenant services such as the introduction of IoT in our apartments, aiming for stable profits led by occupancy improvement.

In the Development Business, we concentrated orders in metropolitan areas such as Tokyo, and orders received reached 37.8 billion yen (-14.5% year-on-year). Although orders did not meet forecasts because of the rough battles against competitors in the metropolitan areas, we will not expand our orders nationwide. Instead, we focus on supplying apartments in the three metropolitan areas where solid leasing demand is anticipated supported by an increase in population.

We have received permission as a real estate specified joint enterprise on October 2, and will start to sell real estate specified joint enterprise products which enable individuals to invest in small amounts. In addition, "Stockholding Association for Leopalace21's Owners" has been founded by apartment owners on October 23. We have been providing services for owners through "Life Stage Support," and will continue to keep long-term relationships by further strengthening the services for owners.

In the International Business, we acquired Enplus Inc. and made it into an affiliate. We will provide one-stop services concerning global personnel transferring for both domestic and international companies by subsidizing Enplus.

Concerning profit distribution to shareholders, we paid a midterm dividend of 10 yen and plan to pay a year-end dividend of 12 yen, totaling 22 yen per share. In addition, we have completed a share buyback program of 8 billion yen, or 10.76 million shares, as of the end of August and retirement of the treasury stocks of 10.76 million shares as of the end of October. As a result, the dividend ratio and a total return ratio will be 40.1% and 96.4%, respectively. This number greatly exceeds the total return ratio target of 50.0% in our mid-term management plan.

Leopalace21 would like to request the continued support and encouragement of all our stakeholders.

November 2017
Eisei Miyama
President and CEO

President and CEO Eisei Miyama
President and CEO Eisei Miyama

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