LEOPALACE21 : Consolidated Financial Statements (Japanese Accounting Standard, for the nine months ended December 31, 2016)

Consolidated Financial Stat ements (Japanese Account ing St andar d) February 10, 2017 (For the nine months ended December 31, 2016)

Name of Company Listed: Leopalace21 Corporation Stock Listing: Tokyo Stock Exchange Code Number: 8848 URL: http://eg.leopalace21.com/ Location of Head Office: Tokyo Representative: Position: President and CEO Name: Eisei Miyama

Name of Contact Person: Position: Director Name: Bunya Miyao Telephone: +81-3-5350-0216 Scheduled Date of Filing of Securities Report (Japanese only): February 13, 2017

Supplemental Explanatory Material Prepared: Yes Results Briefing Held: No

1. Results for the nine months ended December 31, 2016 (April 1, 2016 through December 31, 2016)

2. Consolidated financial results (Amounts less than one million yen are omitted) (The percentage figures indicate rate of gain or loss compared with the same period last year)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent
   Nine months ended December 31, 2016 Nine months ended December 31, 2015	Million yen 380,634 376,863	% 1.0 -	Million yen 15,802 15,930	% -0.8 -	Million yen 15,465 14,985	% 3.2 -	Million yen 12,854 12,670	% 1.5 -

   (Note) Comprehensive income in the nine months ended December 31, 2016: 5,570 million yen (-56.2%); nine months ended December 31, 2015: 12,704 million yen (-%)

   Net income per share	Diluted net income per share
   Nine months ended December 31, 2016 Nine months ended December 31, 2015	Yen 48.90 48.20	Yen 48.88 -

   (Note) Rate of gain or loss compared to the previous year are omitted, since figures are retrospectively adjusted due to changes in accounting

   policies.

3. Consolidated financial position

4. Total assets	Net assets	Equity ratio		Equity per share
   As of December 31, 2016	Million yen	Million yen	%	Yen
   	315,246	145,252	46.0	552.12
   As of March 31, 2016	327,609	144,865	44.2	550.94

   (Reference) Shareholders' equity as of December 31, 2016: 145,139 million yen; as of March 31, 2016: 144,827 million yen (Note) Figures as of March 31, 2016 are retrospectively adjusted due to changes in accounting policies.

5. Dividend Status

   Dividend per share
   End of Q1	End of Q2	End of Q3	End of FY	Annual
   FY ended March 31, 2016	Yen	Yen	Yen	Yen	Yen
   	―	0.00	―	10.00	10.00
   FY ending March 31, 2017	―	10.00	―
   FY ending March 31, 2017 (Estimate)	12.00	22.00

   (Note) Restatement of most recent dividend forecast: None

6. Estimation of Consolidated Business Results for the Fiscal Year ending March 31, 2017 (April 1, 2016 through March 31, 2017)

   (The percentage figures for full year indicate rate of gain or loss compared with the previous FY)

   Net sales		Operating profit		Recurring profit		Net income attributable to shareholders of the parent		Net income per share
   FY ending March 31, 2017	Million yen 528,000	% 3.2	Million yen 22,500	% 6.7	Million yen 21,500	% 8.0	Million yen 18,500	% -5.8	Yen 70.38

   (Note) Restatement of most recent consolidated business results forecast: None

   (Note) Since previous year figures are retrospectively adjusted due to changes in accounting policies, rate of gain or loss compared to the previous year are adjusted.

7. Other

9. Changes in major subsidiaries during the subject period (change in specific subsidiaries resulting in a change in the scope of consolidation): None

10. Use of accounting procedures specific to the preparation of quarterly financial statements: Yes

    (Note) Refer to P.6 "2. Matters Relating to Summary Information (Notes) (2) Application of Accounting Methods Specific to the Preparation of Quarterly Consolidated Financial Statements" for details.

11. Changes in accounting principles, procedures or reporting methods used in preparation of financial statements

12. Changes in accounting policies accompanying revision of accounting standards, etc.: Yes

13. Changes in accounting policies other than (i) above: Yes

14. Changes in accounting estimates: None

15. Restatements: None

16. (Note) For details, please refer to P.6 "2. Matters Relating to Summary Information (Notes) (3) Changes in Accounting Policy, Changes in Accounting Estimates, and Restatements."

17. Total number of outstanding shares (common stock)

18. Total number of outstanding shares at term end (including treasury stock)

    As of December 31, 2016: 267,443,915 shares; as of March 31, 2016: 267,443,915 shares

19. Total treasury stock at term end

    As of December 31, 2016: 4,569,840 shares; as of March 31, 2016: 4,569,520 shares

20. Average number of outstanding shares during the period

21. As of December 31, 2016: 262,874,301 shares; as of December 31, 2015: 262,874,485 shares

    *Indication regarding the status of auditing:

    These financial statements are not subject to auditing under the Financial Instruments and Exchange Act. The review of financial statements in accordance with the Financial Instruments and Exchange Act are completed at the time of disclosure.

    *Explanation on the proper use of the business forecasts, and other special notices: (Note on the business forecasts and other forward-looking statements)

    The business forecasts and other forward-looking statements contained in this report are based on information currently available to the Company and on certain assumptions that Leopalace21 has judged to be reasonable. Readers should be aware that a variety of factors might cause actual results to differ significantly from these forecasts.

    For assumptions of business forecasts and notes on the proper use of these forecasts, please refer to P.5 "1. Business Results (3) Explanation Concerning Business Forecasts and Other Forward-looking Statements."

    (Method for the acquisition of supplemental explanatory material)

    Supplemental Explanatory Material on quarterly financial statements is scheduled to be posted on the Company's web site on February 10, 2017.

    【Table of Contents】
22. Business Results 4

23. Analysis of Business Results 4

24. Analysis of Consolidated Financial Position 5

25. Explanation Concerning Business Forecasts and Other Forward-looking Statements 5

26. Matters Relating to Summary Information (Notes) 6

27. Changes in Significant Subsidiaries during the Third Quarter under Review 6

28. Application of Accounting Methods Specific to the Preparation of Quarterly Consolidated Financial Statements 6

29. Changes in Accounting Policy, Changes in Accounting Estimates, and Restatements (Changes in accounting policies) 6

30. Consolidated Financial Statements 7

31. Consolidated Balance Sheets 7

32. Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income 9

    Consolidated Statements of Operations 9

    Consolidated Statements of Comprehensive Income 10

33. Notes Regarding Consolidated Financial Statements 11

34. (Segment Information) 11

    1. Business Results

    The accounting policy concerning revenue recognition has been changed from the previous quarter, and previous figures have been retrospectively adjusted. Please refer to P.6 "2. Matters Relating to Summary Information (Notes) (3) Changes in Accounting Policy, Changes in Accounting Estimates, and Restatements" for details.

    (1) Analysis of Business Results

    (Million yen)

    Net sales	Operating profit	Recurring profit	Net income attributable to shareholders of the parent
    Nine months ended December 31, 2016	380,634	15,802	15,465	12,854
    Nine months ended December 31, 2015	376,863	15,930	14,985	12,670
    Difference	3,770	(128)	480	184

    During the subject nine months, the domestic economy showed gradual progression supported by improvements in employment and income, despite the standstill in corporate earnings.

    New housing starts of leased units has trended strongly, due to the prolonged period of low interest rates and strong demand for apartment construction as a strategy to reduce inheritance taxes. On the other hand, as the number of vacant houses continues to increase and recovery in nationwide demand becomes difficult, achieving stable occupancy rates requires constructing apartments in areas with high demand, in addition to providing high-quality products and services that meet tenants' needs.

    Under these conditions, the Leopalace21 Group (the "Group") aims to achieve targets of the Medium-term Management Plan "EXPANDING VALUE," by building a solid management structure focusing on the core businesses, made up of Leasing and Construction. In addition, the Group aims to establish new businesses that will contribute to future growth.

    As a result, consolidated net sales for the subject nine months came to 380,634 million yen (up 1.0% year-on-year). Operating profit was 15,802 million yen (down 0.8% year-on-year), recurring profit was 15,465 million yen (up 3.2% year-on-year), and net income attributable to shareholders of the parent was 12,854 million yen (up 1.5% year-on-year).

    (Actual figures by segment) (Million yen)

    Net sales			Operating profit
    Nine months ended December 31, 2015	Nine months ended December 31, 2016	Difference	Nine months ended December 31, 2015	Nine months ended December 31, 2016	Difference
    Leasing Business	305,309	310,304	4,995	18,472	17,077	(1,395)
    Construction Business	51,494	49,990	(1,503)	856	1,992	1,136
    Elderly Care Business	8,072	8,594	522	(934)	(1,235)	(301)
    Hotels & Resort Business	8,518	5,763	(2,754)	(388)	(373)	14
    Others	3,468	5,980	2,511	530	1,006	475
    Adjustments	－	－	－	(2,605)	(2,664)	(59)
    Total	376,863	380,634	3,770	15,930	15,802	(128)

    (i) Leasing Business

    The occupancy rate at the end of the third quarter was 86.97% (up 0.08 points from the end of the same quarter last year) and the average occupancy rate for the period was 88.00% (up 0.59 points year-on-year).

    In the Leasing Business, to establish stable profits led by occupancy improvement, the Group implemented measures to promote longer rent periods such as expanding tenant services including "my DIY" (formerly known as "Room Customize") and providing a website for tenants, as well as further strengthening sales for female and corporate customers by security system installations. In addition, the Group aims to increase foreign tenants by refining customer support.

    The number of units under management at the end of the third quarter was 567 thousand (increasing 5 thousand from the end of the previous fiscal year), the number of direct offices was 189 (no change from the end of the previous fiscal year), and the number of franchise offices was 117 (decreasing 13 from the end of the previous fiscal year).

    As a result, net sales amounted to 310,304 million yen (up 1.6% year-on-year), and operating profit was 17,077 million yen (down 7.6% year-on-year).