Leopalace 21 Medium-term Management Strategy-1

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	Medium-term Management Strategy-1

Strategy of Core Business

Promote quantitative increases and qualitative improvements simultaneously for converting into a “property asset management company for housing”

■ Number of apartment units under management and rate of tenancy (plan)

■ Number of apartment units under management and rate of tenancy (plan)

We have been aggressively consigning apartments that we have completed through our Apartment Construction Subcontracting Business, thereby increasing our stock of consignments (number of apartment units under management), based on our belief that successful leasing operations are the key to the apartment business. We increased the number of apartment units under management by approximately 2.3 times, from 152 thousand units to 344 thousand units in five years from the end of March 2001 to the end of March 2006 as a result, rapidly increasing the volume of stock that we handle.

We decided that the building of a foundation for a new business, which can fully utilize the strengths of a stock business, was essential and for this reason we determined the “conversion to a property asset management company for housing” is the direction we should be taking our core business. In the future we will be simultaneously promoting the “quantitative increase strategy” to increase the benefits that comes with this scale of business and the “qualitative improvement strategy” for raising efficiency and productivity.

1.[Quantitative increase strategy - 1 ] Introduce new apartment products and services
The first quantitative increase strategy is enhancement of the Apartment Construction Subcontracting Business, which is the driving force behind further increases in the volume of our stock in the future. It is essential that the properties and services match the needs of the tenants in order to secure a high rate of tenancy, which is an important key for successful apartment management. We are currently offering 20 types of properties for the standard series alone, with the intention for substantiating the product to match the needs of prospective tenants, increasing in recent years, such as units suitable for couples living together, persons living with pets, as well as substantiated security. We will continue to aggressively introduce new apartments and services in the future to maintain a stable increase in the number of orders received.

2.[Quantitative increase strategy - 2] Establish an organizational framework with 400 outlets and 2,400 sales persons in Leasing Business
As the second strategy of the quantitative increase strategy, the enhancement of the corporate organization for the Leasing Business is promoted, corresponding to the number of units, which continue to increase into the future. Currently 1,859 sales personnel at 280 sales offices (Leopalace Centers) handle our Leasing Business as of the end of March 2007. We intend to enhance this organization by increasing the number of sales locations nationwide to 400 and the number of sales personnel to 2,400 to maintain a high rate of tenancy by the fiscal year ending March 2011.

3.[Qualitative improvement strategy] Complete leasing ALM system (first phase plan) and operate at full-scale (second phase plan)

As a strategy to improve quality, on the other hand, we are proceeding with our construction of the “leasing ALM system,” a new business base for maximizing operating revenue with regards to apartment units managed by us (assets being held on behalf of apartment owners), which are expected to increase to about 592 thousand units by the end of the final fiscal year of the plan (fiscal year ending March 2011). We aim to complete the construction of this system during the first phase of the plan (until fiscal year ending March 2009) and target full-scale operations from the fiscal year ending March 2010, during which the second phase of the plan will begin.

This system organically links abundant management data accumulated through over 20 years of our apartment business with external market data to optimally control operations of a gigantic number of assets under our care. We intend to build this system to a level that rivals the sophistication of systems used by financial institutions in order to deliver the utmost in terms of quality and to bring out the best of our strengths in the stock business.