Masao Fujioka President and CEO

To Our Shareholders and Investors

Upon having been newly appointed President and CEO at the Board of Directors meeting that followed the 80th Ordinary General Meeting of Shareholders that was held on March 25, 2010, I would like to take this opportunity to talk about the Shoei Group.

Although Japan’s economy is showing signs of recovery in some areas, such as increases in exports, the current environment continues to be shrouded in considerable uncertainty. In addition to employment conditions remaining particularly harsh, there are also concerns regarding the appreciation of the yen and fears about deflation. In the real estate industry, conditions became even more depressed.
The vacancy rates of office buildings in central Tokyo exceeded 8% for the first time in 5 years and 10 months and the competition for acquiring tenants became increasingly intense. Under these conditions, rent market prices are continuing to fall.

Operating in this harsh environment, the Shoei Group has responded quickly to ensure our organization operates in a protective manner under the keyword of “perseverance.” We have become more protective in our way of thinking and this is reflected in our newly formulated medium-term management plan which has a basic policy of boosting solid revenue based on rent income. The followings are the four main points of the plan.

	(1)	Realize steady revenues each year based on leasing income.
	(2)	Further strengthen the financial base through efforts to further reduce outstanding debt.
	(3)	Because the asset portfolio has already reached sufficient size, the focus of the next
		three years shall be on improving the quality of owned real estate.
	(4)	Form a hand-picked elite professional group.

In fiscal 2010, the first year of the medium-term management plan, Shoei shall take the following three concrete steps.

	●	Set definitely attainable earnings targets primarily based on rent income without
		anticipating gains on sales of assets.
	●	Except for those projects to which the Shoei Group is already committed, set a basic rule
		of not implementing new investments.
	●	Reduce outstanding debt as much as possible.

Based on these policies, the Shoei Group is forecasting net sales of \15,000 million, operating income of \5,000 million, ordinary income of \3,000 million, and net income of \1,900 million on a consolidated basis for fiscal 2010, ending December 31, 2010.

Working under a new management structure, all employees and directors alike shall strive to keep the Shoei Group on track for steady growth. I ask stakeholders for their continued and unchanging support as we carry out these goals.

March 2010
President and CEO　 Masao Fujioka