The long-concealed market value of Tokyo¡¯s largest skyscrapers is being unveiled by activist investors.
In Japan, there¡¯s a huge gap ¡ª ?22 trillion ($143 billion) by one estimate ¡ª between how companies value their real estate assets on their books, versus what those same properties would fetch if sold in the current market. That comes from two factors: First, many of the country¡¯s firms have held onto properties for decades, each year writing down the cost of fixed assets due to annual depreciation, a common accounting practice. But at the same time, property prices have soared.
The result is that billions in value can be unlocked by pressuring companies to sell off these holdings, a tactic that activist funds are now employing. This was illustrated last week when Japan developer Mitsui Fudosan announced it would aim to sell off ?2 trillion in real estate assets over the next three years as part of a new business plan ¡ª just two months after news that New York-based activist hedge fund Elliott Management had built a stake in the company.
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