Sumitomo Realty Faces Elliott Management Pressure to Stakeholder Value

Sumitomo Realty & Development Co. the Japanese developer under pressure from Elliott Management to enhance its value, is in talks to sell a portfolio of Tokyo office properties for at least ¥100 billion ($700 million).

Document reviewed by Bloomberg indicated that the firm would divest 19 midsized office buildings in Tokyo. According to the people, the company has requested estimates of the value of the properties from the real estate investment firms and agencies it is using, who added that selling the offices separately is also one option.

There are also considerations to sell eight rental apartment buildings in the Tokyo.

• Sumitomo Realty & Development in talks to sell Tokyo office portfolio for ¥100 billion ($700 million), boosting shareholder value.
• Elliott Management pressures Sumitomo Realty to improve shareholder returns through capital gain-focused strategy, moving away from long-term rental income.
• Tokyo real estate market sees potential shifts as Sumitomo Realty considers divesting 19 office buildings and 8 rental apartment properties.

Also Read: Sobha Realty to Launch Multibillion-Dirham Projects in UAE & US

On Thursday, the shares of Sumitomo Realty rose as high as 6 percent and ended the day up 2.4 percent at ¥5,838 in Tokyo.

While a spokesman for Sumitomo Realty said he was not aware of a list of potential property sales in Japan.

Elliott said earlier the week that after entering a stake in Sumitomo Realty that it should do something more to improve shareholder value and its corporate governance. This transaction process is a shift away from a business model of developing properties in-house and holding those properties over the long term for steady rental income, and a move towards a strategy that is focused on capital gain.