Rental apartment operator Leopalace21 Corp. said Thursday it will ask 14,443 residents to move out as it plans to repair defects found in 1,324 of its apartments.

The company said a probe found faulty installation of a fire-resistant material in ceilings and the use of a substandard material for sound insulation in interior walls. The probe also discovered that the way external walls were constructed does not meet fire-protection requirements.

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

Of the 14,443 affected residents in Tokyo and 32 other prefectures, the company will ask 7,782 to leave as soon as possible.

As the company plans to shoulder all the moving expenses and repair the faulty buildings, it will book a special loss of ¥36 billion in the current fiscal year to March.

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

The Tokyo-based company 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.

As for the possibility of Miyama stepping down, "I will leave the decision to our three outside directors," he said.