The project site in Yaesu district of Tokyo’s Chuo ward (Image: Google)
Sumitomo Realty & Development has solidified its hold on a project it is building in front of Tokyo’s central railway station by acquiring the land underneath the mixed-use complex.
The property arm of Sumitomo Corporation closed on the purchase of the 1,886 square metre (20,301 square foot) site in Chuo ward’s Yaesu district on 7 November, according to a filing by the seller, materials manufacturer Nittobo. The transaction price was undisclosed, but Nittobo said it recorded a gain of JPY 34.1 billion ($220 million) on the sale.
Formerly the location of the 1980s-era Nittobo Building, the site now hosts the Yaesu 2-Chome South project, a planned 39-storey tower comprising 138,600 square metres of gross floor area with office, retail and hotel components.
After reviewing its non-current assets, Nittobo decided to sell the land “in order to improve asset efficiency through the effective use of management resources”, the company said in the filing.
New Landmarks to Rise
The future building is a companion piece to Sumitomo Realty’s larger Yaesu 2-Chome Central project, with the developments set to form a high-rise cluster along Sotobori-dori Avenue opposite Tokyo Station.
Sumitomo Realty & Development president Kojun Nishima
Yaesu 2-Chome Central — a tie-up with property heavyweights Mitsui Fudosan, Hulic, Kajima and Hankyu Hanshin — began construction last year on a 5 acre (2 hectare) site and will feature a 43-storey tower with 386,100 square metres of gross floor area across office, retail, education and residential elements, including serviced apartments on the uppermost floors.
The projects are targeting completion by 2029. In a management update released this week, Sumitomo Realty said it was investing JPY 2 trillion ($12.9 billion) in the redevelopment of central Tokyo over the next 10 years.
The firm also disclosed a total investment of JPY 1 trillion in four Mumbai commercial projects with nearly 1.5 million square metres of gross floor area under development in India’s commercial capital.
Sumitomo Realty scored Mumbai’s biggest-ever land deal in 2023 with the purchase of a 22 acre parcel from Bombay Dyeing and Manufacturing for INR 52 billion (then $626.3 million). The Japanese builder is developing the site into a high-rise mixed-use project with a gross floor area in excess of 1 million square metres.
Elliott Pressure
Led by president Kojun Nishima and chairman Kenichi Onodera, TSE-listed Sumitomo Realty made headlines in June when activist investor Elliott Management issued a set of demands to the firm, vowing to oppose members of the builder’s senior management at a shareholder meeting if corporate governance and value-enhancing initiatives weren’t addressed.
Manhattan-based Elliott, which has built up a 3.51 percent stake in the developer, outlined four key areas of concern — poor shareholder returns, excessive cross-shareholdings, declining capital efficiency and subpar governance — and urged Sumitomo Realty to implement “tangible reforms” like increasing its shareholder payout and setting a credible return target.
This week the builder’s board of directors authorised a buyback of up to JPY 30 billion in shares, as Sumitomo Realty reported a 8.1 percent year-on-year rise in attributable profit to JPY 118.3 billion for the fiscal first half and hiked its full-year forecast.
“With the increase in core business income and steady progress in selling the listed shares we hold, we anticipate that, in this fiscal year, a certain amount of cash flow will remain after securing sufficient funds for growth investments, such as investments in redevelopment projects in Tokyo, projects in India, human capital, and digital transformation initiatives,” the developer said. “Accordingly, the company has decided to use the anticipated remaining funds for share repurchases.”
AloJapan.com