这一策略正成为投资者的新焦点，他们认为日本企业被低估，这是富士软件公司40亿美元收购案等私募股权交易的驱动力，也是Elliott、Palliser Capital和3D Investment Partners等激进投资者持股的原因。Real estate prices in Japan have soared in recent years, and companies that own real estate can make huge profits from the difference between book value and market value. Goldman Sachs expects unrealized gains of 25 trillion yen to be unlocked.
Recently, global hedge funds and private equity firms are setting their sights on Japanese companies to try to release undervalued real estate values of up to 25 trillion yen (about 165 billion US dollars). The hidden value of real estate on Japanese companies' balance sheets is becoming this year's transaction andmergers and acquisitionsThe theme of the event.
According to media reports on Thursday, when Japanese companies hold real estate such as office buildings, hotels, and country clubs for a long time, there is a special accounting calculation method. These real estate properties are recorded based on book value, that is, acquisition or development costs minus annual depreciation. However, real estate prices in Japan have soared in recent years, especially in metropolitan areas. This means that if these properties are sold, businesses can make huge profits from the difference between book value and market value.
This strategy is becoming a new focus for investors. They believe that Japanese companies are undervalued. This is the driving force behind private equity transactions such as the 4 billion dollar acquisition of Fuji Software, and the reason why aggressive investors such as Elliott, Palliser Capital, and 3D Investment Partners hold shares.
For example, the radical investment agency Elliott Investment Management invests in Tokyo Gas to get the utility to sell its real estate holdings and make better use of capital. The Fuji Software privatization deal attracted bids from a number of private equity firms, who are eyeing the information technology company's portfolio of office buildings in Tokyo. 3D Investment Partners also holds 18% of Sapporo Holdings, whose real estate business revenue in 2023 is comparable to beer sales.
Bruce Kirk, chief Japanese stock strategist at Goldman Sachs, said:
We've known the value of Japanese real estate for decades, but we never had the key to unlock that value, and now we have it. That's where it's exciting, and you're now starting to see investors paying attention to this.
Among the more than 250 Japanese companies whose main business is not real estate, there may be at least 25 trillion yen of unrealized gains. Some of the largest holdings come from the railway, construction, and utilities sectors.
Additionally, some companies are aware of investors' concerns and are shifting to asset-light strategies. Seibu Holdings has sold the ski resort and is in talks to sell its iconic asset, Tokyo Garden Terrace Kioicho, a deal of around 400 billion yen.
Kirk concluded:
We've reaped the poor fruits of using excess cash to return shareholders, and now we're moving to more complex value unlocking. The unrealized real estate earnings perspective is particularly interesting right now.
