Message from the President and CEO

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Business Remains Strong in the First Half of the Year. Achieved nearly 70% of the Full-year Profit Plan.

 In the real estate investment market focused on the Greater Tokyo area, which is the Company’s main target market, financing conditions remain favorable, supported by a long-term policy of monetary easing. Real estate funds and other investors continue to have strong demand, mainly for office properties in urban areas. Meanwhile, condominium units for sale in suburban areas and wooden apartments for investment are now in a phase of price adjustment. The market is polarized by asset class.

 In this operating environment, during the first six months of the fiscal year under review, the Company made good progress in sales of income-generating office buildings, rental apartments and other revitalized properties in its mainstay Revitalization Business. For instance, a large-scale office building project that was sold in the period under review was an example of the success of the Company’s original solution capability and strategy for procuring vacant buildings. Amid soaring purchase prices following the hike in real estate prices, the Company operates a business model of acquiring empty buildings with poor competitiveness at relatively low cost, increase the value by major renovation work and raising their occupancy rate etc., and selling them to operating companies, funds and investors. The project was a key driver of financial results for the first half.

 In the Development Business, the Company sold a large condominium for unit sales, namely THE Palms Chofu Manorgarden, and moved ahead with the development and sale of condominiums, detached houses and commercial facilities. In the Hotel Business, which is subject to financial reporting from the fiscal year under review, the Company obtained new land lots for hotels in Asakusa, in Tsukiji and in Kamakura, and also acquired an operation business from a training facility with accommodation operator with the aim of expanding its business. The Company will steadily proceed with growing the TOSEI HOTEL COCONE brand.

 As a result of these initiatives, our operating results for the first six months ended May 31, 2019 were revenue of ¥34.4 billion (an increase of 5.9% compared with same period of the previous year), operating profit of ¥7.9 billion (an increase of 15.6%), and profit for the period of ¥5.2 billion (an increase of 17.7%). Achieved 68% of the full-year operating profit forecast, showing steady progress in terms of business results.

 The Group will continue to work together to raise corporate value through aiming for further growth. We look forward to your continued support.

July 2019

Seiichiro Yamaguchi

President and CEO

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