LEOPALACE21 : Notice Concerning Formulation of the New Medium-term Management Plan Creative Evolution 2020

May 15, 2017

Company Name: Leopalace21 Corporation

Representative: Eisei Miyama, President and CEO

Code Number: 8848 (Tokyo Stock Exchange, First Section) Contact: Bunya Miyao, Director

Tel: +81-3-5350-0216

E-mail: ir@leopalace21.com

Leopalace21 Corporation ("the Group") has created a new three-year Medium-Term Management Plan "Creative Evolution 2020", launching April 2017.

In the new Medium-Term Management Plan "Creative Evolution 2020", the Group will determine its ideal state in the present business environment, and aim to create corporate and social value. The group will achieve this goal by continuing to grow in its core businesses, as well as building a strong growth business structure for future growth.

1. Review of the previous Medium-Term Management Plan

   The Group's mission is "Creating New Value", and the Group implements business with aim of creating an affluent society with a pleasant lifestyle.

   Under the previous medium-term management plan "Expanding Value" announced in May 2014, the Group had been aiming to build a solid management structure by focusing on the leasing and construction businesses while expanding our business territory, based on its fundamental policy of "focusing on core businesses and challenging itself with new business fields".

   The group has accelerated growth in the core businesses, especially in the stock-based Leasing Business, and achieved a three-year-total operating and recurring profit of 56 billion yen and 52 billion yen, respectively, which surpassed our initial plan. Also, non-consolidated retained earnings had been negative at the start of the previous plan, but have turned positive and the Group has returned profit to shareholders through dividend payments.

   Previous Medium-Term Management Plan "Expanding Value"
   Plan	Actual
   Total net sales Total operating profit Total recurring profit Total net income	1,558.5 billion yen 56.0 billion yen 52.0 billion yen 47.0 billion yen	1,515.1 billion yen 58.8 billion yen 55.7 billion yen 55.1 billion yen
   Final year net assets	152.0 billion yen	158.8 billion yen
   Average shareholders' equity ratio	44.7%	44.2%
   Average ROE	11.4%	13.6%
   Average EPS	59.7 yen	70.0 yen
   Average ROA	5.2%	5.7%

2. Overview of the new Medium-Term Management Plan "Creative Evolution 2020"

   ① Basic policy

   Support continuous growth of core businesses in ways that further increase corporate value while constructing a base for growth areas

   • Business Strategies (Cash flow generation for value creation)

     • Core businesses: Balance apartment supply and management & operation, diversify

     • Growth businesses: Move the Elderly Care Business and International Business into profit, which are less exposed to the aging, shrinking domestic population

   • Financial Strategies (Value creation via balance sheet management)

     • Introduce ROIC as a key indicator

     • Review asset holdings with a view to enhancing asset and capital efficiency

② Corporate Slogan

③ Plan period April 2017 to May 2020 (three years)

④ Numerical targets (consolidated)

A reversal of deferred tax assets is expected during the subject plan period, and therefore the Group will calculate management indices with figures excluding temporary profits and losses.

*1: Adjusted net income = Net income + deferred income taxes

*2: ROIC = After-tax operating profit (NOPLAT) / (interest-bearing debt + net assets)

*3: Adjusted ROE = Adjusted net income / average net assets

Note: Revised business forecasts are calculated based on information available to the Group as of this announcement. Actual results may differ from these forecasts for a variety of reasons.

END