LRE Lead Real Estate Company Ltd

Lead Real Estate Co., LTD. (Nasdaq: LRE), (“LRE” or the “Company”), a Japanese real estate developer of luxury residential properties, including single-family homes and condominiums across Tokyo, Kanagawa prefecture and Sapporo, and which develops and operates the ENT TERRACE brand of extended-stay hotels, today announced financial results demonstrating top line and bottom line year-over-year growth for the fiscal year ended June 30, 2024.

Total Revenue was JPY18.9 billion for the fiscal year ended June 30, 2024, from JPY17.4 billion for the fiscal year ended June 30, 2023.

The major revenue component, Real Estate Sales, increased to JPY18.5 billion from JPY17.1 billion, 8.1% year over year, in the fiscal year ended June 30, 2024.

Significant revenue developments in the fiscal year ended June 30, 2024, include:

• Units of land deliveries for condominiums more than doubled to 33 from 16. However, the Average Sale Price decreased by 21.2% year-over-year to JPY353 million because the number of units sold with low prices increased.
• Units of condominium building deliveries increased to four units delivered from one unit delivered. Average Sale Price decreased by 7.2% year-over-year to JPY33.3 million because the number of units of condominiums with low prices increased.
• Units of single-family home building deliveries increased to 41 units from 39 units. Average Sale Price decreased by 11.2% year-over-year to JPY30.3 million because the single-family homes were in areas with low market value.
• Units of land deliveries for single-family homes decreased to 71 from 88. The average Sale Price decreased by 21.1% year-over-year to JPY76.8 million because the sales were mainly in low-price areas.
• Other revenue increased by 46.3% to JPY463.6 million from JPY316.9 million. This was primarily driven by two hotels, which opened during the previous fiscal year and were in full operation for the most recent fiscal year.

The cost of revenue for real estate sales increased by 8.7% to JPY15.7 billion in the fiscal year ended June 30, 2024, from JPY14.4 billion.

Gross margin slightly decreased to 15.6% in the fiscal year ended June 30, 2024, compared to 15.8% in the fiscal year ended June 30, 2023, primarily driven by the increase in construction costs, such as labor costs and material costs.

Selling, general, and administrative expenses were to JPY2.05 billion from JPY1.81 billion in the fiscal year ended June 30, 2024.

As a result of the foregoing, operating income decreased by 4.3% year-over-year to JPY898.5 million in the fiscal year ended June 30, 2024, from JPY939.2 million in the prior fiscal year, and operating profit margin decreased to 5.0%, from 5.3% in the prior fiscal year.

Interest expenses increased to JPY18.2 million in the fiscal year ended June 30, 2024, from JPY16.7 million in the fiscal year ended June 30, 2023, reflecting a gradual increase in interest rates.

Other income was JPY73.7 million in the fiscal year ended June 30, 2024, compared to other income of JPY6.2 million in the fiscal year ended June 30, 2023, primarily due to the cancellation penalties.

As a result of the foregoing, our net income attributable to ordinary shareholders increased by 2.5% to JPY626.9 million, or JPY46.93 Earnings Per Share in the fiscal year ended June 30, 2024, from JPY611.918 million, or JPY48.96 Earnings Per Share, in the fiscal year ended June 30, 2023.

Cash and cash equivalents were JPY1.3 billion in the fiscal year ended June 30, 2024, compared to JPY786.3 million for the fiscal year ended June 30, 2023.

The number of total ordinary shares outstanding was 13,641,900 and 12,498,900 as of June 30, 2024, and 2023, respectively.

Going forward, the Company feels that its increasing focus on condominium development, rather than single-family home development, will help drive growth.

“It's great that we were able to grow Revenues and Profits in Fiscal Year 2024,” said Mr. Eiji Nagahara, Lead Real Estate Chief Executive Officer. “Looking ahead, we anticipate exciting developments in Fiscal 2025. It is only recently that developers have focused on the high-end residential market, bringing Tokyo closer to more mature cities like Hong Kong, New York, and London. Also, I believe that our hotel business has been a great success, so I hope to continue growing it. We encourage investors to stay tuned for announcements in the near future.”

For further information on LRE’s Fiscal Year 2024 results, please see the Company’s annual report on Form 20-F filed with the U.S. Securities and Exchange Commission at: https://www.sec.gov/Archives/edgar/data/1888980/000110465924113122/lre-20240630x20f.htm

About Lead Real Estate Co., Ltd

Lead Real Estate Co., Ltd is a Japanese developer of luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture, and Sapporo. In addition, the Company operates hotels in Tokyo and leases apartment building units to individual customers in Japan and Dallas, Texas.

The Company’s mission is to serve its customers by offering stylish, safe, and luxurious living. The Company’s vision is to adopt the Kaizen (continuous improvement) approach to seek to improve its operations, and to leverage its nationally recognized, award-winning luxury homes and strong market position in the luxury residential property market in Tokyo, Kanagawa prefecture, and Sapporo to create a global transaction platform allowing access to prime Japanese condominiums as well as overseas condominiums, including in the U.S. and Hong Kong.

For more information, please visit the Company’s website at https://www.lead-real.co.jp/en/.

About “ENT TERRACE”

“ENT TERRACE” Series is an extended-stay hotel brand operated by Lead Real Estate Co., Ltd.  In 2024, ENT TERRACE AKIHABARA received a 9.5 out of 10 customer rating on Booking.com and won the “Traveller Review Awards,” and all of our properties have been certified as Super Hosts on Airbnb. We will continue to develop our hotels with the aim of providing a space where guests can relax as if they were at home while ensuring privacy and easing the burden of long-term stays. 

Learn more at https://ent-terrace.com/en/ and follow us on Instagram, Facebook, and X. 

Forward-Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and other factors that may affect its future results in the Company's registration statement and in its other filings with the U.S. Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and the Company specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact Information:

For Media and Investor Relations: Daisuke TakahashiChief Financial OfficerLead Real Estate Co., Ltdd-takahashi@lead-real.co.jp +81 3-5784-5127

Skyline Corporate Communications Group, LLCScott Powell, President1177 Avenue of the Americas, 5th FloorNew York, New York 10036Office: (646) 893-5835Email: info@skylineccg.com

LEAD REAL ESTATE CO., LTD
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2024 AND 2023
(Japanese yen in thousands, except share data)
		June 30,
		2024			2023
ASSETS
Current assets:
Cash and cash equivalents		¥	1,300,684		¥	786,373
Accounts receivable, net			22,859			6,613
Real estate inventory			9,267,825			10,390,231
Contract assets			236,499			436,021
Prepaid and other current assets			493,819			299,343
Total current assets			11,321,686			11,918,581
Property and equipment, net			5,449,101			3,302,912
Intangible asset, net			54,138			71,730
Investments in marketable securities			20,844			7,867
Right-of-use assets, operating lease, net			154,613			204,029
Investments			46,394			44,525
Other assets			170,588			186,478
Total assets		¥	17,217,364		¥	15,736,122
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		¥	602,013		¥	732,722
Current portion of notes payable			6,815,181			5,706,786
Contract liabilities			130,259			260,530
Current portion of operating lease liabilities			67,938			68,771
Accrued expenses and other current liabilities			356,856			355,164
Total current liabilities			7,972,247			7,123,973
Notes payable, net of current portion			4,598,151			5,437,668
Deferred tax liabilities, net			85,018			33,988
Operating lease liabilities, net of current portion			91,471			137,399
Other liabilities			233,109			240,030
Total liabilities			12,979,996			12,973,058
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Common stock, 50,000,000 shares authorized, 15,628,000 shares issued and 13,641,900 shares outstanding as of June 30, 2024, and 14,485,000 shares issued and 12,498,900 shares outstanding as of June 30, 2023 with no stated par value			1,206,765			344,145
Retained earnings			3,159,815			2,557,854
Treasury stock, at cost, 1,986,100 shares as of June 30, 2024 and June 30, 2023			-154,121			-154,121
Non-controlling interest			-7,558			-6,769
Accumulated translation gain			32,467			21,955
Total shareholders' equity			4,237,368			2,763,064
Total liabilities and shareholders' equity		¥	17,217,364		¥	15,736,122

LEAD REAL ESTATE CO., LTD
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDED JUNE 30, 2024, 2023 AND 2022
(Japanese yen in thousands, except share and per share data)
		For the Fiscal Years Ended June 30,
		2024			2023			2022
Revenue:
Real estate sales		¥	18,487,074		¥	17,098,308		¥	14,478,498
Other revenue			463,609			316,940			208,516
Total revenue			18,950,683			17,415,248			14,687,014
Expenses:
Cost of sales - real estate			15,721,271			14,466,459			12,023,652
Cost of sales – other			279,806			191,544			72,220
Selling, general and administrative			2,051,040			1,817,970			1,704,042
Total expenses			18,052,117			16,475,973			13,799,914
Operating income			898,566			939,275			887,100
Other income (expense):
Interest expenses			-18,286			-16,731			-23,333
Other, net			73,759			6,268			-25,596
Total other income (expense), net			55,473			-10,463			-48,929
Income before income taxes			954,039			928,812			838,171
Income taxes			327,869			317,418			286,919
Net income			626,170			611,394			551,252
Net loss attributable to the noncontrolling interests			-789			-524			-370
Net income attributable to common stockholders			626,959			611,918			551,622
Foreign currency translation gain			10,512			5,241			19,055
Total Comprehensive income		¥	637,471		¥	617,159		¥	570,677
Earnings per share:
Basic		¥	46.93		¥	48.96		¥	44.15
Diluted		¥	46.93		¥	48.96		¥	44.15
Weighted average shares outstanding:
Basic			13,360,834			12,498,900			12,495,486
Diluted			13,360,834			12,498,900			12,495,486