Japanese Companies' Real Estate Sales Hit Highest Level in 18 Years

[Financial News, Tokyo = Reporter Seo Hye-jin] Japanese companies have sharply increased real estate disposals, pushing related sales volume to its highest level in 18 years.
The Nikkei reported on the 7th that companies are speeding up the cleanup of non-core assets as pressure to improve ROE and demands for better asset efficiency converge.
According to the Urban Future Research Institute, domestic real estate sales by non-real estate and non-construction companies rose 9% from a year earlier to 1.2318 trillion yen, or about 1.19841 trillion won, last year, marking the highest level in 18 years. The sales trend is continuing this year as well.
Ajinomoto sold its headquarters building in Kyobashi, Tokyo, in February and plans to move its headquarters functions to a nearby mixed-use building. The goal is to improve ROE. Yamato Holdings also sold four properties, including its headquarters building in Ginza, Tokyo. IHI disposed of three properties in Koto City, Tokyo, securing about 56.8 billion yen, or about 552.6 billion won, in gains from the sale. The funds will be used for investment in growth areas such as aviation and defense. Shochiku and Sanyo Shokai are also moving to sell assets, including rental properties and part of their headquarters sites, showing that asset disposals are spreading among long-established companies.
Japanese companies are using proceeds from real estate sales for growth investment and share buybacks as they seek to improve ROE.
Pressure from activist investors is also intensifying. Elliott Investment Management disclosed that it had acquired a stake in Nippon Express Holdings and is calling for a review of its real estate spin-off and merger and acquisition strategy. In addition, the corporate governance reform proposals released by the Financial Services Agency (FSA) and the Tokyo Stock Exchange (TSE) include measures to continuously review how efficiently physical assets are being used, adding to both regulatory and investor pressure.
sjmary@fnnews.com Reporter