Message from the President

We would like to express our gratitude to our shareholders and investors for your continued support.

We deeply apologize to all our stakeholders, including tenants and property owners, for causing anxiety and inconvenience due to construction defects in the properties we built. We would like to express our sincere regret that the business has been very much affected by the difficulties due to the spread of the COVID-19 with disappointing business performance and stock price.

Financial Results for the Third Quarter of the 48th Fiscal Period Ending March 2021

We announced financial results for the Q1-Q3 of the 48th fiscal year ending March 2021. As a consequence of sluggish occupancy rates due to the impact of COVID-19, we recorded sales of 308.3 billion yen, minus 6.2% YoY, operating loss of 16.5 billion yen, an improvement of 6.2 billion yen YoY, and net loss attributable to owners of the parent of 25 billion yen, an increased loss of 0.8 billion yen YoY. Improvement of operating loss was offset by the funding costs of 2.9 billion yen and increased interest expenses associated with the fundraising in non-operating expenses, and impairment loss of 3.7 billion yen related to the sale of properties for lease, special severance allowance of 2.4 billion yen due to voluntary retirement program and loss related repairs of 0.7 billion yen in extraordinary losses despite gains on sale of investment securities of 4 billion yen in extraordinary income.
We assumed that the COVID-19 impact remain unchanged for the rest of Q4 and announced the revision of earnings forecasts at the same time.

The board of directors has resolved by January 2021 the transfer of shares in two subsidiaries in and outside Japan and dissolution of one subsidiary in Japan. Along with the sale of assets of approximately 8.5 billion yen during the first half of FY21/3, we have been making steady progress amid COVID-19 challenges in the transfer or withdrawal from non-core businesses which was stated in the structural reforms announced in the beginning of FY21/3.

Business Strategy

In order to achieve the revised fiscal year-end occupancy target of 84.5%, we are implementing a range of measures including identifying target customers and negotiating customers with no trading experiences in the field of corporate customers, offering early booking service for students to keep the room until announcements of college examination test results to capture the seasonal demand in Q4 and offering relocation service at no extra cost between properties under our management due to COVID-19-triggerd changes in college life. For the benefit of foreign national customers, we introduced an integrated support in five languages on leasing website from room search to application for tenancy contract.

In parallel to the measures for sales increase, we implemented measures for cost control to secure the profitability. We started close monitoring for the cost items such as cleaning expenses and restoration expenses of properties through making those costs visible and reviewing the operational procedures.

Progress of repair works for construction defects

We targeted the completion of repairs for 2,000 units between September and December 2020, and we achieved the target with a successful result. For the months to come until end of June 2021, our repair target is about 6,000 rooms and we aim to complete the repairs for all obvious defects by the end of 2024.

By steadily implementing the above measures, we will strive to achieve our revised plan and work to restore the impaired trust of stakeholders. We look forward to your continued understanding and support for our business in the future.

Bunya Miyao, President and CEO
February 2021

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