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Property firm Leopalace21 starts asking 14,000 residents to move out

The Leopalace21 head office is seen in Tokyo. (Kyodo)

TOKYO (Kyodo) -- Rental apartment operator Leopalace21 Corp. said Friday it has started the process of moving 14,443 residents out of their homes in order to repair defects found in 1,324 apartments in Tokyo and 32 prefectures.

The firm began by asking 7,782 residents in 641 apartments, in which fire-resistant materials in the ceilings were insufficient or incorrectly installed, to move out after the buildings were judged to be particularly unsafe to live in.

The company said Thursday that it has also discovered cases of external walls not meeting fire-protection requirements and the faulty use of substandard material for sound insulation in interior walls.

"I'm concerned that there might be other problems apart from the defects discovered this time," said Chie Matsuyama, 41, who lives in a Leopalace21 apartment in Tokyo's Minato Ward. "I don't want to sleep here but there's nowhere else I could go."

A 47-year-old company worker said he has not received any information from the rental apartment operator yet. "I want them to tell me whether my place is safe or not," he said.

"I have no time to move out" ahead of the busiest period at work, he added.

A 49-year-old man living in the city of Tondabayashi, Osaka Prefecture, said, "I knew that footsteps on the floor above were noisy, but I was surprised to hear this news. I'm afraid of (the possibility of) a fire."

On Friday, land minister Keiichi Ishii said the defects are "deeply regrettable," adding the ministry "will take measures to secure safety."

Residents are being contacted by phone or letter and are being offered temporary accommodation in other Leopalace21 properties.

Leopalace21 launched an investigation into possible defects in its nearly 40,000 apartments nationwide after 38 cases were found last May in apartments built between 1996 and 2009.

The 1,324 faulty apartments with substandard fire protection were built between 1996 and 2001. Reasons given for the defects include poor communication between the company's design department and procurement section and misleading instructions in the architectural documents, according to the company.

As the company plans to shoulder all the moving expenses and repair the faulty buildings, it booked a special loss of 42 billion yen ($382 million) in the April to December period.

Leopalace21 now expects a group net loss of 38 billion yen to 40 billion yen for this fiscal year, larger than a loss of 5 billion yen to 7 billion yen estimated earlier.

The company's announcement triggered a decline in its stock price on Friday. It reached the 100-yen daily price fall limit, representing a 19.4 percent drop, to end the day's session at 415 yen.

The Tokyo-based company has decided to cut the monthly salary of CEO Eisei Miyama by 30 percent and that of other executives by 20 percent for the six months from February.

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