Daito Trust Construction - Company History

In June 1974 Tada Katsumi set up Daito Sangyo in Chikusa ward, Nagoya, with capital of $3,413 (¥1m). The business was not rental housing but contracting: putting warehouses, workshops and other commercial rental buildings on land owned by other people. Its customers were farmers holding fields inside designated urbanization zones — squeezed by the lack of an heir and by farmland being taxed as if it were building land, pushed to make the ground earn, and yet unable to commit because they did not know the rental trade. Roughly 7,000 hectares of such farmland was converted every year, and Daito aimed its salesmen at exactly that flow. Sister firms followed to cover the rest of the job — Daito Kosan (1975) to find tenants, Daito Sekkei (1976) to draw the plans — and the group pushed into Osaka in 1978, Yokohama in 1982 and Sendai in 1983, merging its six companies into one in 1985.

Two habits set it apart from the housebuilders. The first was cold calling. Daito refused to work the referral networks of agricultural co-ops and banks, because a landowner who arrived that way would put several builders in competition and negotiate the price down, and the co-op would want its fee; approached cold, the same landowner bought the building at list price, and the salesman took 2% of the order as commission. It also chose ground the giants did not want — Sekisui House was strong around stations, Daiwa House along the roadsides, so Daito took the suburban fields. The second habit was to sell away the fear. In March 1980 it founded Daito Kyosaikai: for a fee of 4% of monthly rent, an owner whose unit fell empty mid-lease was paid 90% of the rent anyway. Over 90% of owners joined, and vacancy on covered buildings ran in the 1% range.

In April 1988 the company renamed itself Daito Kentaku — 建託, “build” plus “entrust” — and made the arrangement explicit. It now proposed the building, took the construction contract, then leased the finished block back in bulk and handled letting, rent collection, maintenance and the vacancy guarantee under one signature. A landowner with every unit full paid 4% to the mutual-aid company and 5% to Daito in management fees and kept 91% of the rent; with units empty he kept 90%. Almost nothing changed for him either way. For Daito, a one-off contracting fee turned into a thin, permanent stream of management fees and membership dues, and gross margins of about 30% — high for a construction firm. Revenue of $9M (¥2bn) in the year to March 1982, from 98 staff in seven offices, had reached ¥44.7bn by March 1988.

Daito listed on the second section of the Nagoya exchange in March 1989, moved up to the first section in September 1991 and onto the Tokyo Stock Exchange first section in February 1992 — thirty months from one to the other. Head office followed the money to Tokyo in 1990. The business threw off cash by construction: customers paid before subcontractors did, and the company held neither land nor materials as inventory, so it carried no debt at all — short- and long-term borrowings were zero at September 1992, equity was 60% of the balance sheet, and the interest on its idle cash flowed straight into profit. Revenue reached ¥151.1bn in the year to March 1991, 96% of it construction, sold by roughly 1,100 salesmen out of 73 branches.

Then the tax code opened the market wider. The 1991 revision of the Productive Green Land Act and the land-tax package around it forced holders of urban farmland in the three big metropolitan areas to decide, and Daito’s customers surfaced en masse. Revenue jumped 34% to ¥277.9bn in the year to March 1993, an eleventh straight year of records. The mix flipped with it: apartments and condominiums went from 34% of completed work to 62% in a single year while warehouses and factories fell away, because only about a fifth of land inside urbanization zones could take an industrial building at all. The company that had begun with warehouses was now, in substance, a housebuilder.

The guarantee then showed its other face. Vacancies started climbing in spring 1993; by March 1994 the vacancy rate on covered buildings had gone from 2% to 5.2%, and Daito cut its forecast and posted the first revenue decline in its twenty years. Because it was the company, not the owner, that carried the empty units, it had to brake its own order book: the guarantee was cut from 90% to 80% in August 1994, salesman recruitment was stopped in October, the membership fee was raised from 4% to 6% in January 1995, and the sales force fell from about 1,600 to 1,100. The brakes came off through 1995, and the answer to the next cycle was to own the whole chain instead — Daito Finance (1993) for bridge loans to owners, Housecom (1994) for retail brokerage, Daito Building Management (1999), and the Gaspal companies (2001–02) for propane. Consolidated revenue was ¥332.2bn by March 2002.

The company moved into Shinagawa East One Tower — a rental complex it had built itself — in April 2003, and for the first time began handing the presidency around: Asada Moritaka from 2003, the founder back in the chair in 2006, Mitsunabe Isao from 2007, Kumakiri Naomi from 2012. Outside directors arrived in 2005, by which point foreign and institutional investors held more than 80% of the shares. In 2006 Daito began writing thirty-year master leases, with the rent itself guaranteed for the first ten years — a detail that decided almost nothing at the time and almost everything after 2018. Operating profit of ¥72.6bn in the year to March 2007 was larger than any of Japan’s general contractors earned.

In June 2011 the subsidiary Housecom listed on JASDAQ on its own — the first time a consolidated subsidiary of the group had been floated separately — and at the same month’s shareholders’ meeting Tada Katsumi left the board, taking a ¥3bn retirement payment; the 36.78m shares held by his asset-management vehicle were bought in and cancelled. The founder was gone, the register was institutional, and consolidated revenue passed ¥1 trillion that same year.

What carried it from one trillion to one and a half was a change in the tax law rather than anything Daito did. The January 2015 inheritance-tax reform cut the basic deduction by 40%, and building a rental block on inherited land became the standard way to lower the bill; orders rose across the country. Revenue reached ¥1,497.1bn in the year to March 2017 and ordinary profit ¥124.5bn. The group tidied itself to match, splitting the work in 2017 among three principal companies — Daito Trust Construction to build, Daito Trust Partners to manage, Daito Trust Leasing to let — with the vacancy guarantee first written in 1980 now standing behind roughly 1.03 million homes.

Because the rent inside a thirty-year lease was fixed only for ten, the buildings signed from 2008 onwards began coming up for review from 2018 — under Kobayashi Katsumitsu, a salesman who had joined in 1986 and become president in 2018. Owners started receiving letters: one in Suginami, Tokyo, was told three months after a tenant left that “as you will not agree to a rent reduction, we cannot guarantee the rent under the master lease.” An owner in Saitama, told nothing of how the new figure had been calculated, took the case to court-annexed mediation in May 2020 and had the rent set by an appraiser. The law was on the company’s side — under the Land and Building Lease Act it is the master lessee, the party paying the rent, that may demand a reduction, mid-contract — which was precisely the problem. In December 2020 the Sublease Law came into force, banning improper solicitation and misleading advertising and requiring the rent risk to be explained in writing.

The pressure ran downward as well as outward. A salesman who started no building in six months lost his bonus and saw his salary cut; in 2015 a former salesman in Matsumoto forged a contract to push an apartment through without the customer’s consent and was charged with attempted murder, and in 2017 the suicide of a new graduate was treated as death from overwork. Construction sales headcount fell for a second straight year, to 3,273 at the end of 2017. The engine that had aggregated the market — visit enough landowners, sell at list price — was the same mechanism now producing the complaints.

Takeuchi Kei, president since 2023, took the newly created post of CEO in April 2024 and began spending the cash somewhere other than the master lease: Invalance (investment-property sales, 2020), Rising Force (asset management, 2022), Shima (nursing care, 2023), STASIA Capital Management in the United States (2024), plus biomass energy and, in 2025, a 96% stake in Ascot. In February 2025 Housecom was bought in and delisted, ending fourteen years of parent-and-subsidiary listing and reversing the 2011 decision. Consolidated revenue reached ¥1,842.4bn in the year to March 2025 with record net profit of ¥93.9bn — about 820 times the revenue of 1982, on an operating margin of 6.5%. The open question is the one built into the model: rental stock put up in the 2015 tax boom turns ten around 2025, into a market with more empty homes every year.