FAQ

Frequently asked questions about Leopalace21's business.

Business as a whole

When was Leopalace21 established?

Leopalace21 was established on August 17, 1973.
Please see the "Corporate Data" section for an outline of the company.

Related information

When were shares made available to the public?

Shares in Leopalace21 were listed on the over-the-counter market (now JASDAQ) on February 3, 1989, and on the 1st Section of the Tokyo Stock Exchange on March 25, 2004.
Please see the "Corporate History" section for an overview of the company's history to date.

Related information

What is Leopalace21's securities code?

Our securities code is 8848.
Please see our "Share Price Chart" for details of our current share price.

Related information

When does your accounting year end?

Leopalace21's accounting year ends on March 31.

Who is Leopalace21's shareholder registry administrator?

Our shareholder registry administrator is Sumitomo Mitsui Trust Bank, Limited.
In fact, we outsource all operations relating to shares in Leopalace21 to Sumitomo Mitsui Trust Bank, Limited. Please see the "Share Procedures" section for contact details.

Related information

Please explain the details about problems concerning construction defects of properties constructed by Leopalace21.

We sincerely apologize to all of our stakeholders, including tenants and property owners, for the distress caused by construction defects in apartments constructed by Leopalace21. We released construction defects of apartment parting walls in April, 2018 and started all-building investigations. Other problems concerning construction deficiencies were found through the investigations and we released each problem subsequently. We are in the process of repair works, however, we determined to our regret to temporarily reduce the scale of repair works and organizational setup to tackle the construction defects from July 2020, as it is essential to recover our business performance. Please refer to our website "Measures against problems concerning construction defects of properties constructed by Leopalace21" for more information.

Please explain the progress of preventive measures for constructive defects.

Heeding the recommendations concerning preventive measures for construction defects of the External Investigation Committee, we have formulated three main Company-wide recurrence prevention measures: (1) fundamental reform of the corporate culture; (2)restructuring of the system for managing compliance and risk; and(3) revision of the construction business framework. We are periodically reporting the progress of each action. Please refer to our website "Fundamental approach to prevent recurrence" for more detail.

Leasing Business

What is the occupancy rate plan?

The construction defects problem among the properties constructed by Leopalace21 was found in 2018. All-building investigations have been almost completed in October, 2019. Since November 2019, we have been focusing on repair works and restart tenant recruitment with a target number of over 50 thousand available rooms between October, 2019 and March, 2020. We have resumed the recruitment for 54,191 rooms, showing a good achievement compared to the target. During Q4 (January-March) in FY20/3, the occupancy rates improved by 4.16 points, which was the third highest in the last 10 years, but did not reach the target of 85% at the end of March. We aim to gradually improve the occupancy rates to average 81.63% for FY21/3, 86.87% for FY22/3 and 89.67% for FY23/3 by increasing the number of corporate sales staff as well as attracting more foreign national tenants and senior tenants in Leasing Business.

occupancy rate plan

What is the reserve for apartment vacancy loss?

The reserve for apartment vacancy loss is set according to the projected loss that could occur during a logically predictable period to prepare for the risk of increased vacancies.
The reserve for apartment vacancy loss is calculated based on the profitability of individual buildings, and is marked to market periodically. Therefore, when profit improves due to various reasons such as (i) recovery of occupancy rate, (ii) earning additional revenue and (iii) reduction of cost, reversal of the reserve account will push profits up in the Leasing business.

What is the plan for acquiring corporate tenants for the Leasing business and what have been the results so far?

In Japan, most company housing and dormitories, primarily owned by large blue-chip companies, are getting old. However, in recent years, instead of rebuilding run-down company housing or making new acquisitions, companies have included cost-reduction as a factor in their housing management strategy and have thus been turning to outsourcing. We have established a corporate sales department and are engaged in sales activities in order to meet the needs of these companies. We are offering the same type of rooms nationwide, the companies (tenants) need to contact with only Leopalace21 for company housing and dormitories, and we are promoting an electronic contract system. These services match our corporate clients' needs and as a result, more than half of our management units are occupied by corporate tenants. In addition, we have increased the coverage of clients in the variety of industries in order to diversify risks.

No. of Units Used by Industry Type

No. of Units Used by Industry Type

How many offices do you have in the Leasing business?

We are operating 295 leasing offices, of which 182 direct offices in Japan and 7 direct offices in overseas and 106 Leopalace Partners (Franchise offices) in Japan as of March 31, 2020. We are implementing a "diversified channel strategy" which reduces fixed costs and secures tenants through various channels. For example, we reduce SG&A expenses by switching from a fixed to a variable cost structure through opening Leopalace Partners. We will further reduce fixed costs by strengthening web-based rental agreement system along with closing direct office.

Leasing Offices (Direct and Leopalace Partners)

Leasing Offices (Direct and Leopalace Partners)

How many apartment rooms are managed domestically?

575,798 rooms as of March 31, 2020.

Development Business

What kind of sales activities are performed towards the property owners?

Our approach to new landlords starts by identifying current land owners through examining the registry documents and the cadastral maps in the Regional Legal Affairs Bureau. This is of course a legitimate method for obtaining personal information.

Then we perform sales activities in steps starting by building connections through sending out questionnaires using sales promotion tools and through invitations to various events held in each neighborhood, and contacting potential customers who show interest.

There are many cases where we receive repeat orders from existing owners and where existing owners introduce us to new owners. Therefore, we have established the Wealth Management Departments in Leasing business nationwide to develop a close relationship with our owners, and hold property owner briefing sessions every 6 months to exchange information.

Furthermore, we pay our most careful attention to the management of our customers' personal information. Awareness-raising posters are hung on walls in all our sales branches for employees' attention, and an agreement for treatment of personal information is signed apart from the concluded contract and a copy is stored by both the landowner and Leopalace21.

treatment of personal information

What is the master leasing system?

The master leasing system is a system to support the apartment management of owners, from construction to management operations, for a maximum of 30 years. The system involves rent payment to the owners, as well as management operation and repair to take the burden off of the owners, contributing to a flow of steady income.

What is the risk of the master leasing system?

The biggest risk in the lease housing management is vacancies. In our case, with the 30-year master leasing contract, a fixed rent is paid to the owners for a certain period regardless of the possibility of vacancies. Therefore, our biggest possible risk is having more vacancies than expected during this period.

Providing apartment properties best suited to the area will be indispensable to minimizing such risk. In addition, we will keep implementing various measures such as the diversification of contract types and enhancement of interior and exterior equipment.

In the Leasing business, to control vacancies, or to raise occupancy rate, as well as the appropriate adjustment of house rent will also become important matters to increase profitability.

There have been many negative media reports about subleasing. Is there any risk for Leopalace21?

There are two reasons concerning the negative reports; (i) proposing to build apartments in an area where there is no demand for occupancy, which leads to vacancy risks in the future, and (ii) building apartments with the assumption that the rent paid to the owner will not change from the one at the time of contract. We are controlling corporate risks by strategically supplying apartments through balancing demand and supply and explaining future risks to owners.

Our measures for (i) is that we continue providing apartments mainly in the three metropolitan areas where the population inflow continues and demand for rental apartment is expected to continue. By strategically limiting the areas, we are reducing the vacancy risk of properties and aiming to stabilize the leasing business in the future.

Construction Offices

Apartments Constructed (FY20/3)

Our measures for (ii) is that the words regarding the risk of fluctuations in rent payment to the owners are written in a large type size in the contracts and pamphlets, and the sales staff verbally explain them. The rent payment to the owners is assumed to gradually decrease in the apartment business plan and we thoroughly explain the risks. In addition, we communicate directly with apartment owners through regular visits as well as hold "owner briefing sessions" across Japan about 420 times a year. We always share information with the apartment owners from the perspective of business partners.

Pamphlets excerpts (Japanese only)

Pamphlets excerpts (Japanese only)
  • * We will consult the apartment owners for a lump sum rent payment every two years after a lapse of a certain fixed period, considering general economic conditions, market rent in the neighborhood, and fluctuation of demand for rental housing.

How to determine rent to apartment owners under master lease system?

We consider the surrounding market conditions, and whether or not rooms are equipped with furniture and home appliances, internet connection services, and security equipment such as security cameras for determining rent payment to the owners. Then we consider vacancy risks and propose appropriate rent from a comprehensive perspective.

The apartment business plan shown at the beginning of the contract is based on the assumption that a certain economic situation will continue, but it is difficult to predict economic fluctuations for the next 30 years. We would like the apartment owners to understand that a review of the rent would be required because of the surrounding market conditions and economics changes.

About the method of renewal for rent payment to apartment owners

There is an opportunity to review the rent payment to the owners every two years after the fixed rent period.

If there is a discrepancy between the rent under master lease system and the neighboring market rent at the time of rent renewal, we will consult for rent renewal by explaining the situation for each property. We will consult the apartment owners for increase of the rent under master lease system if the neighboring market rent is rising and vice versa.

Please note that the details of contract (contract period, building age, layout, location, market rent) differ for each property, so we will discuss rent renewal individually and the rent will be renewed under a mutual agreement between the apartment owners and Leopalace21.

About the owner who has accepted the rent reduction in less than 10 years of fixed rent period

The market rent dropped down due to the sharp deterioration of real estate market after the Lehman collapse. We asked reducing the rent payment to the owners to an appropriate price, and we are sincerely grateful to the owners who accepted our proposal.

Currently, the real estate market is relatively stable, but the recovery level varies from region to region. We will explain based on objective materials such as changes in the surrounding market and economic conditions when reviewing the rent, and we will ask apartment owners for their understandings.

About tightening financing apartment loans by banks and other financial institutions

The banks and other financial institutions in the past promoted financing apartment loans because of its relatively small risks for bad debt and for the soundness of bank finances. However, they will pay now closer attention to whether or not the loans will be provided from the customer's perspective. Important points are whether or not the loan truly saves tax, whether the loan is not an excessive investment compared to the assumed inheritance tax, or whether the loan is not forced to make a negative cash flow.

In addition to the above, Leopalace21 will propose apartment construction for cases in which the landlords fully understand future risks (rising interest rates, falling rent, and vacancy). Further, Leopalace21 proposes an apartment business simulation that allows rental management even if the interest rate of the borrowing is 4%, therefore, our apartment business plan can respond even if the interest rate rises in the future.

About "Long Peace Owners Club"

Some apartment owners are engaged in activities that are not improving the tenants' satisfaction under the association whose name is "LP Owners Association (Long Peace Owners Club)", which misleads as if they have something to do with Leopalace21. To be clear, "LP Owners Association" is the name of "Long Peace Owners Club", and a completely unrelated gathering to Leopalace21 even though they use "LP" which might be misunderstood as Leopalace21.

About propane gas suppliers

The stable and safe use of propane gas at a reasonable price is a minimum requirement for rental housing. Not to mention its importance as a lifeline, Leopalace21 have set certain standards for selecting suppliers. Propane gas suppliers are limited to those that meet our standards.

About maintenance of furniture and home appliances

We have contracted with each owner for "Furniture and Home Appliances Comprehensive Maintenance Service" in order to keep the furniture and home appliances installed in the rooms in good condition at all times and to make sure that the tenants can move in with peace of mind. By paying a service charge of 2,000 yen per room for one month during the master lease period, furniture and home appliances will be replaced after 7 years since the installation, and they will be switched to rental contract after the replacement.

Please note that there is also a case that we cannot replace the home appliances even during the rental contract period because tenants remain occupying the room, or some of the furniture cannot be physically replaced such as built-in furniture. Even in such cases, we will continue to provide our service in the same way as during the maintenance contract period, such as repairing requested from the tenants. Our services are corresponding to the service charge and the owners are responsible for the charge. Please be assured that items that need to be replaced are replaced at any time.

Leopalace21 will continue our attentive management services in providing our tenants with comfortable rooms, and keeping apartments, which are our owners' important assets, always in good conditions.

About "rental house management company registration system"

We have been working on digitizing lease contracts such as web-based rental agreement system ahead of the other companies, and preparing for Leopalace21 to be listed on the "rental housing management company registration system" by creating a business flow that conforms to the business processing rules of the system while ensuring the convenience of electronic contracts. As a result, registration for the "rental housing management company registration system" completed on December 26, 2017.

We will keep in mind the purpose of the system and various measures by the Ministry of Land, Infrastructure, Transport and Tourism to optimize real estate transactions when concluding a contract with a customer. We will explain with due care the future risks of rent reduction and issue a document about important items of the contract so that the customer can fully understand them.

The vacant rooms of rental housing in Japan are increasing year by year. Is it safe to continue to build apartments in the future?

The vacancy rate of rental housing is increasing in Japan.

According to the Housing and Land Survey published by the Ministry of Internal Affairs and Communications in FY2018, the vacancy rate of rental housing has consistently increased in Japan, and we expect this trend continues in the future.

No. and Ratio of Vacant Rentals Nationwide

Vacancy Rates by Area

  • * Excerpted from "FY2018 Housing and Land Survey" (Ministry of Internal Affairs and Communications (MIC))

Population continues to move to the three metropolitan areas centered on the metropolitan area around Tokyo.

As the population keeps declining, continuing to supply new apartments throughout Japan will lead to considerable risks and we feel a sense of crisis. Under such circumstances, we are taking a strategy to limit the supplying area of new apartments in consideration of the population inflow and outflow.

According to the "Report on Internal Migration in Japan Derived from the Basic Resident Registration" released by the Ministry of Internal Affairs and Communications, the number of net inflow in domestic migration into the Tokyo Metropolitan area (Tokyo, Kanagawa, Saitama, and Chiba) in 2018 reached approximately 140,000. Residence are necessary for the domestic in-migrants, therefore building new houses is a natural course of action in the cities where the population continues to grow. We supply new apartments while appropriately balancing supply and demand.

Net population inflows ("-" represent outflows) in 3-metro areas


  • *Excerpted from "Report on Internal Migration in Japan derived from the Basic Resident Registers" issued by Ministry of Internal Affairs and Communications
  • *Figures in parentheses represent ratio of population inflow between age 20 to 39

Net population inflows ("-" represent outflows) near Leopalace21 offices


  • *Excluding Tokyo-metro area

New apartments supply is centered in metropolitan areas

In consideration of the population movement, we are focusing on supplying apartments to areas where there is a large population inflow and high occupancy rates are expected in the future. Also, we withdrew from the supply of apartments in rural cities where the population has continued to outflow. The construction offices, which we had 135 at the peak, are integrated in 29 offices mainly in the three metropolitan areas. The percentage of apartment supplying in the three metropolitan areas exceeds 70% of our total supply. In addition, we are taking measures for the future increasing the number of proposals for utilizing land for facilities such as social welfare facilities, commercial facilities, etc. other than apartments through firmly analyzing the demographics.

Construction Offices

Apartments Constructed (FY20/3)

Differentiation strategies based on added value to apartments

We do not just supply rooms, but we also supply apartments with value-added services that enrich the lives of tenants.

The rooms under our management are equipped with a refrigerator, a washing machine, a microwave oven, an air conditioner, a TV set and other furniture and appliances, so tenants can start their new lives with just a bag of personal belongings. In addition, we are offering a wealth of added value such as Wi-fi connection and CS channel video on demand by a STB device of "Life Stick" equipped with Android TV, security service affiliated with a major security company, and "my DIY" that allows decorating the room to their likings, etc.

Recently, we have been promoting connecting every appliances to the internet in the rooms, and we put "Leo Remocon" for remotely operating home appliances and "Leo Lock" that can lock the door remotely by smartphones as standard equipment for the newly built apartments. We have begun to install an open-type delivery locker "PUDO station" that aims to improve convenience not only for our tenants but also for our neighbors. This is how we achieve the differentiation.

Providing rooms that meet the needs of increasing single households

Promoting IoT by "Leo Remocon"

  • Home appliances can be operated remotely from a smartphone
    Example: Air conditioner operation from outside
  • Installed as standard equipment in all newly constructed apartments (since October 2016)

Open-type delivery locker "PUDO Station"

  • Industry-first open-type delivery locker installed on the premises of an apartment
  • Contribute to the local community by improving the lives of tenants and neighbors around

Smart Lock "Leo Lock"

  • smartphones and IC cards work as a key
  • Remotely lock and confirm of state via smartphones
  • Installed as standard equipment in all newly constructed apartments (since October 2017)

Properties other than those subject to priority investigations maintain a high occupancy rate of over 90%

Although the occupancy rates had been decreasing since April 2018 due to suspension of new tenant recruitment in properties subject to priority investigations and decreasing the number of individual tenants, the occupancy rate for January 2020 was 80.19%, bounced back to 80% mark and kept improving toward the end of March. Rental demand is high backed by external factors such as labor shortages, and the occupancy rate of properties not subject to priority investigations (not suspended) remain more than 90%. We will keep resuming tenant recruitment by repairing properties in an effort to raise the overall occupancy rate.

occupancy rate

The number of students decreases due to the declining birthrate and aging population. Is it safe to continue to build studio type apartments in the future?

Companies have a strong desire to hire employees. For this reason, we are strengthening corporate sales for dormitories and company housing. The majority of the rooms which are contracted by corporate clients are used for dormitories and corporate housing.

Single-person households will remain flat until 2035

According to "Future Estimates of Households in Japan" by National Institute of Population and Social Security Research and "Report on Internal Migration in Japan derived from the Basic Resident Registers" by Ministry of Internal Affairs and Communications in 2018, it is true that the declining birthrate and aging population will progress year by year and the youth population is expected to decline. On the other hand, looking at the estimate of number of single-person households by age, single-person households in the working age (from 15-64 years old) , which are our target, is expected to exceed 10 million and will remain flat until 2035. Therefore we can expect a certain level of demand for rental apartments.

Number of General Households by Categor

Number of General Households by Categor

Number of Single-person Households by Age

Number of Single-person Households by Age
  • *Excerpted from "Future Estimates of Households in Japan" (2018, Institute of Population Problems)

The majority of tenants are contracted by corporate as dormitories and company housing

Our apartments are more often used as corporate dormitories and company housing than used by students. The number of rooms occupied by corporate clients are about 270,000 rooms, or about 57% of all tenants, and about 80% of all listed companies have used our apartments, as of the end of March 2020. Occupancy by group: 57.0% are corporate tenants, 34.6% are individual tenants, and 8.4% are students.
While the number of students will continue to decline, the labor shortage of companies is continuing, and the motivation of recruiting employees, especially new graduates, is strong. It is expected that the more aggressive the companies become in hiring, the more use of our apartments as dormitories and company housing are expected.

The number of rooms occupied by corporate clients (in the number of unit)

The number of rooms occupied by corporate clients (in the number of unit)

What do you think about oversupplying apartments?

Oversupply of apartments can be seen in areas where population outflows are progressing, but population inflow continues in the metropolitan areas. According to "Report on Internal Migration in Japan derived from the Basic Resident Registers" by the Ministry of Internal Affairs and Communications, a population inflow of approximately 140,000 people is confirmed annually only in the Tokyo metropolitan area. Approximately 70% of the apartments managed by Leopalace21 are concentrated in the metropolitan areas, and supply and demand are well balanced.

Net population inflows ("-" represent outflows) in 3-metro areas


  • *Excerpted from "Report on Internal Migration in Japan derived from the Basic Resident Registers" issued by Ministry of Internal Affairs and Communications
  • *Figures in parentheses represent ratio of population inflow between age 20 to 39

Net population inflows ("-" represent outflows) near Leopalace21 offices


  • *Excluding Tokyo-metro area

Other businesses

Please tell me about the resort facility in Guam.

Leopalace Resort is a composite sports resort facility located in the Manenggon hills area near the center of the island. The resort area covers almost 1% of the entire island of Guam with 5.2 million square meters. On-site facilities include a hotel, condominiums, a spa, not to mention the Pan-Pacific Sports Center. This center is a world class sporting complex that draws not just tourists, our apartment owners, and corporate clients but also professional athletes who come here either as part of a team camp or just for their own personal training. However, we plan to make early transfer of the Guam company in the process of the structural reforms for drastic business strategies reconstruction.

Related information

Please tell me about the International Business.

We support Japanese companies who are looking to expand overseas business through our relocation management services using the global network, providing brokerage and introduction services for overseas properties, operating serviced apartments and offices, as well as utilizing local national personnel. However, we plan to transfer or withdraw from the International Business by the end of fiscal year ending March 2021 in the process of the structural reforms for drastic business strategies reconstruction.

What is your policy on profit distribution to shareholders?

Distribution of profit to shareholders is an important management issue. However, in consideration of recent performance, we regrettably decided not to pay dividends. In addition, we have decided to abolish the shareholder benefits program and stop giving complimentary tickets and discount coupons to the shareholders who are listed on the shareholder registry as of March 31, 2020. Please see "Notice Concerning Abolishing Shareholder Benefits Program" for details.

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