Consideration of all services provided to apartment owners as consistent business operation, and converting Leopalace Owners' Mutual Insurance System to business operation

In order to resolve uncertainties relating to the risks of managing apartment units for apartment owners and to be able to promise to deliver stable management of apartment units over long periods of time, we are implementing our master sublease system that ensures rent income and the cooperative program (Leopalace Owners' Mutual Insurance System) that guarantees apartment building maintenance and administration. The master sublease system is implemented as the basic structure of our Leasing Business and the system itself is incorporated into the business. The Leopalace Owners' Mutual Insurance System on the other hand, is a system set up as a contingency to deal with unexpected situations and was operated separately from our business operations.

However, in the future we intend to consider all services provided to apartment owners as a business comprised of a series of consistent services and we aim to centrally manage all our management resources (personnel, properties, funds and information). We are currently preparing to convert the Leopalace Owners' Mutual Insurance System for the Apartment Total Support Business in order to incorporate the business as a part of corporations subject to consolidated accounting, for the fiscal year ending March 2009.

Launching “LEO-REIT” Business aiming for 7% rate of return on operations through strategic real estate investments of approximately \100 billion

We have hotels at seven locations nationwide (with one opening in Hakata in April 2007) and high-rise apartment buildings, “Leopalace Flat” situated at 14 locations, to form synergic effects by complementing the nationwide network of our core business. We will coincide our timing with the exit of the Japanese economy from deflation and in the future conduct strategic real estate investments amounting to approximately \100 billion by the fiscal year ending March 2011, to fulfill and substantiate our business infrastructure, as well as to improve the quality of our fixed assets.

In addition to hotels and high rise apartment buildings, situated on sites near railway stations, the subject of our investments will include retail spaces of our core business (Apartment Construction Subcontracting Business and Leasing Business) as well as for establishing and maintaining the facilities of our strategic business (Silver Business and Broadband Business), even for the fulfillment of venues for various events. Our policy is to implement all these activities as corporation-wide undertakings. Furthermore, facilities arising from these investments will be converted into real estate securities as much as possible and launched as our “LEO-REIT” Business operation, with the aim of securing operational revenue of 7%.

Increasing synergic effects with core business by increasing the number of locations as well as part of strategic real property investments

In April 2007 we opened “Hotel Leopalace Hakata,” our eighth domestic hotel location. Knowhow derived from apartment management is being used effectively in our Domestic Hotel Business. The hotels are available in the ordinary mode of accommodation, for people on tours or business trips, as well as for long-term stays with a “Monthly Leopalace Flat” contract, which is the same as the contract for our apartment leasing. Furthermore, our core business locations are also installed inside these hotels and they are utilized as a sales center for these areas.

We intend to continue increasing the number of locations as needed in the future, through the aforementioned strategic real estate investments and aim to create synergic effects, such as contributing to the enhancement of community based activities for core business.

Increasing revenue at Overseas Resort Business starting on a course for stable growth

Our Overseas Resort Business (in Guam), implemented through our wholly-owned subsidiary, MDI Guam, started on a stable course after completing a series of infrastructure improvements by 2005 and negotiating business in collaboration with major travel agencies, as well as developing our own projects, which resulted in an increased trend of drawing customers. The average availability of Leopalace Resort units during the fiscal year ended March 2007 was 59.9%, with a room occupancy totaling 136,258 rooms, with 28.1% being used by our apartment owners and 2.7% being used by our shareholders. In addition to increasing synergic effects with core business, we are focusing our sights on the development of silver facilities as options for long-term stays.