Japan's real estate crowdfunding platform Yamawake Estate has spent two months at the center of an accounting dispute that just cost its parent a subsidiary and put a Tokyo-listed group's own financial statements in doubt.
REVOLUTION CO.,LTD. (TSE: 8894) said on September 1 that it received, late at night on August 31, an internal investigation committee's report into buyback transactions at Yamawake Estate, the property-fund unit sitting two tiers below REVOLUTION through WeCapital Co., Ltd.. The report landed only hours after REVOLUTION had disclosed, at 6pm that same day, that the committee had not yet delivered it, and the company immediately submitted the findings to its auditor, Aria, as audit evidence; Aria's own review and REVOLUTION's discussions with the firm must now conclude before the company's next quarterly earnings release on September 14.
The dispute traces to June 15, when Aria declined to give a conclusion on REVOLUTION's interim consolidated financial statements for the six months to April 2026, flagging that some of Yamawake Estate's property-fund sales carried buyback arrangements under which outside suppliers later repurchased properties from the funds at prices well above what they had originally sold them for. Under Japan's revenue-recognition rules, deals structured that way can require treatment as financing rather than ordinary property sales, which would strip out the reported sales revenue and book interest income instead.
The committee, chaired by an outside certified public accountant, reviewed all 251 funds Yamawake Estate organized between October 2023 and March 2026, plus some later deals, sorting each by whether the buyer and seller matched and whether a buyback or exit deal already existed at the fund's inception.
| Category | Funds | Share of total |
|---|---|---|
| A→A: same buyer and seller, or buyback agreed at inception | 44 | 17.5% |
| A→B: different buyer and seller, but exit deal signed at inception | 30 | 12.0% |
| No buyback issue identified | 177 | 70.5% |
| Total funds reviewed | 251 | 100% |
Working through those categories, the committee concluded that 28 of the 251 funds should be booked as financing transactions rather than property sales. Its own math, which the company stresses is a preliminary reference figure pending Aria's audit, shows the reclassification would erase ¥5.29bn of sales booked in the year to October 2024, replacing it with about ¥847mn of interest income, and would similarly wipe out ¥2.91bn of first-half sales for the year to October 2025 in favor of roughly ¥657mn of interest income.
To reach its conclusions, the committee's outside forensic vendor, KLDiscovery Ontrack, preserved 284,354 items via a backup of staff Google Shared Drive data plus communication logs from personal LINE and ZoomPhone accounts, narrowing the total by keyword search to 1,710 items for manual review, after finding that most of the employees who had negotiated the original deals with counterparties had already left the company.
On the same day the report landed, REVOLUTION sold all of its shares in WeCapital, and with it Yamawake Estate, to a former company director, removing both from its consolidated group. The buyer is due to become Yamawake Estate's representative within a month and is contractually bound to keep cooperating with REVOLUTION's accounts, audits and investigation work until the year to October 2027 is closed out.
REVOLUTION now has until September 14 to either satisfy Aria and secure an unqualified review opinion on its third-quarter statements, or begin correcting the half-year report it filed with the Kanto Local Finance Bureau on June 15 and its past annual securities reports.