Converting Rental Apartments to Hotel Specifications: Launch of New Brand 'KYŌ RESIDENCE' Turning the 'Supply Shortage' in the Era of 42.68M Inbound Tourists into Profit Opportunities

JA Mitsui Leasing Buildings Co., Ltd. (Headquarters: Chuo-ku, Tokyo; President: Masaki Kudo; hereinafter 'JA Mitsui Leasing Buildings') and Concept K Inc. (Headquarters: Shibuya-ku, Tokyo; President: Kohei Taki; hereinafter 'Concept K') will pre-open 'KYŌ RESIDENCE Shinjuku Yoyogi' in July 2026. This is the first property under 'KYŌ RESIDENCE,' a high-quality serviced apartment brand planned and developed by Concept K for inbound tourists and overseas business professionals.

This project presents a new investment model that fully renovates existing rental apartments to address the structural supply shortage in the '1 to 3 months mid-to-long term stay' market in central Tokyo. This release introduces the rationale behind the investment design and its market potential.

This project is the first release leading up to a grand opening in September 2026, with plans to unveil additional premium units in the future.

▼ KYŌ RESIDENCE Official Website
WEB: https://kyo-residence.jp/

KYŌ RESIDENCE Shinjuku Yoyogi

■ Focus | Structural Supply Shortage in Central Tokyo's 'Long-Term Stay Market'
The number of inbound foreign visitors recorded an all-time high of over 42.68 million in 2025. The upward trend continues, reaching an estimated 3.62 million in a single month in March 2026 (JNTO estimate), and the shift in stay formats from 'goods consumption' to 'experience consumption (experience/stay type)' is evident. Driven primarily by Westerners staying for weeks or months, and 'bleisure' (business + leisure) travelers combining business trips with vacations, the demand for serviced apartments offering greater privacy and living freedom than standard hotels is rapidly increasing.

According to data from the foreigner-oriented platform operated by E-HOUSING, a shareholder of Concept K, reservation inquiries for serviced apartments listed over one year reached approximately 8,200. Of these, about 72% are for 'within 90 days' and 87% for 'within 180 days,' indicating short-to-mid term stay needs. By country of demand, the US and Canada are the most common, followed by France, Germany, and other Western countries. However, roughly one-third of inquiries are lost to hotels due to a lack of vacancy information and complex screening processes, creating significant lost opportunities due to a shortage of high-quality mid-term stay products.

■ Features of the Investment Design | High-Yield Model via 'Maximization of Disposable Space'
The core of this project is to reconstruct traditional rental apartment designs (which emphasize storage and plumbing) to match the 'behavioral patterns of short-to-mid term stayers.' By eliminating dead space (excessive storage, hallways, tatami rooms) and consolidating it into the main living space (LDK), an 'overwhelming sense of spaciousness' is created within a limited area. Through redefining space, changing the target demographic, and altering the rental method, a value-add model has been constructed that achieves profitability with a rent per tsubo roughly twice the conventional market rate.

Furthermore, by sequentially advancing construction and conversion to serviced apartments (SA) while existing tenants remain, yields can be gradually improved while securing rental income. In the future, flexible exit strategies can be drawn, such as rebuilding after full SA (fixed-term lease) conversion or converting to a hotel depending on zoning regulations.

■ Concept K's Strength | In-House Integrated System by '4 Companies as ONE TEAM'
Behind the high investment performance is an in-house structure vertically integrated by the four shareholder companies, ensuring investment planning, finance, design, and leasing functions are not outsourced. By eliminating information asymmetry, middle-man cost margins, and speed loss caused by relying on third parties, the team realizes consistent decision-making from an investor's perspective and strict product quality control.

[Functions / Company in Charge / Strengths & Track Record]
- Investment Planning/Produce: Marketing Realty LLC. Track record in value-add for multiple assets targeting institutional investors. Development of next-generation assets fusing unique marketing and real estate investment logic.
- Finance/AM: W & Company LLC. Possesses strong industry networks and project finance capabilities, with extensive experience with institutional investors.
- Branding, Design/Construction Management/Operations: BARE NOTE STUDIO Inc. Operates 25 locations of 'illi Stays,' boutique hotels optimized for group stays. Has the know-how to maximize spatial value, achieve ADR/OCC far exceeding industry standards, and gain high satisfaction despite unmanned operations.
- Marketing Strategy/Leasing: E-HOUSING Inc. Operates a powerful rental platform for foreigners. Utilizing a unique algorithm, it has acquired over 10,000 cumulative inquiries through SNS content without advertising costs (over 200 million content views). Direct customer acquisition power generating about 1,500 SA inquiries monthly.