Tokyo Gas Mulling Real Estate Options After Elliott Investment

(Bloomberg) -- Japan’s biggest utility gas provider said it will consider a variety of measures to unlock the value of its real estate assets, including potentially selling some that are not efficiently used, after an activist investor targeted the firm’s properties.

Some of Tokyo Gas Co.’s real estate assets do not have high capital efficiency, and the firm will consider ways to utilize them better, President Shinichi Sasayama said at a briefing in Toyko on Thursday. The company also believes its current mid-term return-on-equity target of 8% is not enough, and will raise it once the goal is met, Sasayama said. 

Elliott Investment Management, which reported a 5% stake in Tokyo Gas last week, wants the company to sell down its multi-billion dollar portfolio that has little apparent overlap with its core energy business. The activist fund has focused on the gap between the book value of properties and their potential price tag if sold on the open market.

Tokyo Gas holds properties in prime areas of the Japanese capital, such as the Shinjuku Park Tower, that Elliott estimates could be worth as much as 1.5 trillion yen ($9.9 billion). Sasayama refrained from commenting on how the company will utilize specific properties but said there are some that are contributing to the profits of the urban business segment.

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