Palliser's Smith urges sales of holdings at Tokyo Tatemono, stock could jump

Tokyo Tatemono

22/10/2024 15:58

By Svea Herbst-Bayliss
       NEW YORK, Oct 22 (Reuters) - Palliser Capital is urging
Tokyo Tatemono  8804.T  to sell off certain holdings and enhance
governance, arguing these changes could help the Japanese real
estate company's share price climb by at least 65%.
    The company, which develops, sells and manages buildings,
currently trades at a "45% discount to its net asset value," 
Palliser's founder and Chief Investment Officer James Smith said
at the 13D Monitor Active Passive Investment Summit in New York.
    It is significantly undervalued and is trading at roughly
30% below its peers, Smith said. Palliser owns a 1.5% stake in
the company which has a market valuation of $3.4 billion.
    But if the company were to divest unnecessary strategic
shareholdings and other investment securities as well as non
core properties it could improve its outlook significantly,
Smith said.
    Tokyo Tatemono should "identify non-synergistic listed
equity investments that should be divested to unlock value," he
said. For example it should sell its stake in real esate company
Hulic, Smith said, adding the company should get going on these
types of measures.
    At the same time, the company should improve its governance
by shortening board terms to one from two years and selecting
outside directors and boosting the number of female directors.
    "These are some easy wins the company can move forward
with," Smith said.
    Palliser's efforts come at a time when foreign investors are
taking new stakes in Japan and pushing companies to improve
governance and boost value for shareholders. 
    Smith, who spent years working for Elliott Investment
Management and spent time in Asia, said previously one of the
most important points of investments in Japan is to be patient
and polite.
    Since February he has had five meetings with top executives
and investor relations staff.

 (Reporting by Svea Herbst-Bayliss
Editing by Chris Reese)
 ((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))