Leopalace21 - Company History

Miyama Yusuke was twenty-eight — an Iki-born graduate of Takushoku University — when he registered Miyama Co., Ltd. in Nakano, Tokyo, in August 1973 with ¥3 million of capital and a brokerage licence. Detached houses followed in 1981. The idea that made the company arrived in April 1985, with an urban apartment product called Leopalace21: standardized, loft-equipped units for single people, let with no key money. That same month he absorbed the group’s homebuilding arm so that design, construction and leasing sat inside one entity.

A year later the second half of the machine snapped into place. In April 1986 Miyama opened a leasing division and began taking the finished buildings on a master lease — the company contracted to build an apartment for a landowner, then rented the entire building back from him and sublet the units itself. To the landowner the pitch was a thirty-year guaranteed lease, sold as an answer to Japan’s inheritance tax; to the tenant it was a cheap, furnished, deposit-free room. Two unrelated groups of customers were bound into a single transaction, and every signature paid the company twice. A nationwide sales organization was built to work landowners, and the founder ran it personally, setting prices and quotas himself.

Two weaknesses were designed in from the start. The “thirty-year guarantee” was a lease like any other, so Article 32 of the Land and Building Lease Act left the company free to demand rent reductions from the landowner whenever occupancy slipped. And every increase in the construction division’s order quota pushed the sites toward faster, more standardized building — and toward substitute materials. Between June 1996 and September 2001, 771 buildings across sixteen prefectures were put up with urethane foam inside the party walls where the drawings specified glass or rock wool. Through the listing on the over-the-counter market in 1989, two name changes (Miyama to MDI in 1989, MDI to Leopalace Nijuichi in 2000), monthly furnished rentals in 1999 and the first securitization of its own apartments in 2001, the company grew to the scale of Daito Trust — and carried both time bombs into the Tokyo Stock Exchange.

In March 2004 the company listed on the First Section of the Tokyo Stock Exchange with more than 200,000 units under management and consolidated revenue above ¥400bn; foreign and institutional ownership passed 30% almost immediately. A silver-care division was added in 2005, and in June 2006 the name was regularized to Leopalace21. Revenue ran from ¥465.4bn in the year to March 2006 to a peak of ¥733.2bn in the year to March 2009, with managed units past 560,000.

Barely two years after the listing, in May 2006, an internal investigation found that fees collected from tenants had been parked in separately managed bank accounts and that the founder had used some $40.4M (¥5bn) of it personally — property investments and interest-bearing loans to companies run by acquaintances. Miyama Yusuke resigned as president on 1 June 2006. But he remained the largest shareholder, his successors turned over quickly, and his nephew Miyama Hideyo was already on the board. The reforms that followed — more outside directors, a compliance committee — stayed on the surface, and the founding family kept the company.

Then the model’s symmetry did its damage. After September 2008 landowners stopped ordering buildings, and construction and rental losses arrived together rather than offsetting each other. The year to March 2010 produced revenue of ¥620.4bn, an ordinary loss of ¥33.8bn and a net loss of ¥79.1bn; the following year added another ¥40.9bn, for roughly ¥120bn of losses in two years.

In February 2010 Miyama Hideyo, the founder’s nephew, became the fourth president at thirty-eight, having joined in 1990 and come up through corporate planning and leasing. He shrank the resort and Guam operations his uncle had started, cut construction back, and concentrated resources on the rental book. It worked: a ¥40.9bn net loss in the year to March 2011 became a ¥1.6bn profit the next year, ¥13.4bn in the year to March 2013, and operating profit of ¥14.8bn by March 2015. Operating profit then set records — ¥21.1bn and ¥22.9bn — and equity ratio reached 47.3% by March 2018. A three-year plan, Creative Evolution 2020, put leasing at the centre with minpaku and overseas as growth.

The recovery, though, was “less construction, same rental stock” — the order quotas on the construction division were never removed. In April 2018 TV Tokyo’s Gaia no Yoake broadcast a report on missing party walls in Leopalace-built apartments. An internal check in May confirmed the 771 buildings from 1996–2001. In December the defects were formally ruled to breach the Building Standards Act’s sound-insulation rules, and the count then ran away: 1,300 buildings in February 2019, 17,000 in May, and finally 13,252 confirmed out of 39,085 inspected — about one building in three.

The external investigation committee reported on 29 May 2019 that in more than nine-tenths of the affected buildings the party walls simply were not there, that building-confirmation applications had been falsified company-wide, and that the founder had ordered the walls omitted to speed construction while management looked away. Miyama Hideyo announced his resignation on 10 May and left on the 14th; Miyao Fumiya became the fifth president. Forty-five years of family rule ended. The year to March 2019 closed with ¥505.2bn of revenue, ¥72.1bn of extraordinary losses for repair provisions and a net loss of ¥68.7bn.

Miyao Fumiya — a 1990 joiner who had worked accounting, resorts, planning and IR — took over in May 2019 and later named the culture he had inherited: an excessive worship of profit running back to the founder’s one-man years. He stopped taking new construction orders outright from fiscal 2018 and pointed everything at repairing the buildings and running the existing 570,000 units. The bill for that arrived at once. The year to March 2020 lost ¥80.2bn — the largest in the company’s history, past even the post-Lehman year — and equity fell from ¥159.3bn to ¥1.6bn, a 99% erasure.

In September 2020 Chidori LLC, a vehicle of the American fund Fortress Investment Group, put in roughly $535.7M (¥57bn) through a third-party share allotment and a subordinated loan carrying 14.5% interest. It was expensive money, and it was decisive: Chidori became the largest shareholder at 25.69%, and with UH Partners 2 the Fortress side passed 41%. Equity had gone negative at ¥-8.1bn in March 2021, but the year to March 2022 returned a ¥11.9bn net profit and cleared the deficit in a single year. The closed capital structure the founder had run — family, house bank, employee shareholding — was replaced by the discipline of an outside financial owner.

Profit has held since: net income of ¥19.8bn, ¥42.1bn and ¥17.9bn in the years to March 2023, 2024 and 2025, with equity back to ¥81.7bn. Average occupancy rose from 80.78% to 85.56% over five years while headcount fell 48.6%, from 7,600 to 3,909, and the non-core overseas subsidiaries were sold or wound up. In May 2025 Miyao set out New Growth 2028: ¥468.0bn of revenue and ¥41.3bn of operating profit by March 2028, 87.56% occupancy, and a 30% payout ratio. The tax-shelter apartment model of 1985 now runs with the sales quota switched off — a rent-and-care stock business living off what the construction machine already built. Fortress still holds about 42%, and how it exits is the open question.