Asset sale “HIS”, “Dentsu”, “Seibu”
Assets are being sold by major companies. HIS, a major travel agency, announced that it will sell its headquarters in Minato-Ward, Tokyo (30/June). Dentsu Group, a major advertising company, announced that it is considering selling its headquarters building in Minato-Ward, Tokyo (29/June). Seibu Holdings also announced the sale of hotels in Japan and overseas, including The Prince Park Tower Tokyo, and the Shin-Yokohama Seibu Building in the medium-term management plan (2021-2023) announced (13/May). Due to the economic downturn caused by the spread of the new coronavirus infection, many companies are suffering from poor business performance, and as part of strengthening their financial position, they will continue to sell their assets to expand investment with an eye on the future of coronavirus. The number of companies is likely to increase.
Secure cash on hand
HIS will sell the head office on the 4th and 5th floors of Tokyo World Gate Kamiyacho Trust Tower to SMFL Mirai Partners (Chiyoda-Ward, Tokyo) of Sumitomo Mitsui Financial Group on July 30, and will rent it as it is from the same day (sell and leaseback). A lease payments is under negotiations, it will make a contract before the end of July. Due to the spread of the new coronavirus infection, the company had an operating deficit of JPY 31.129 billion in the fiscal year ended October 2020, and in the second quarter financial results for the fiscal year ending October 2021 announced on June 11. It has an operating deficit of JPY 31.083 billion. For this reason, it decided to sell the head office by a sale and leaseback method with the aim of raising funds and securing cash on hand.
Gain on sale is 89 billion yen
The Dentsu Group HQ is selling a building (48 floors and 5 floors G/F) , and the sale price is expected to be about 300 billion yen. The gain on sale is expected to be 89 billion yen, and if the sale is realized, there will be a positive effect of 87 billion yen in operating income and 59 billion yen in net income in FY12 / 2021. The company’s business performance has been declining due to the spread of infectious diseases of the new coronavirus, and in FY12 / 20, it was forced to have an operating deficit of JPY 140.625 billion. However, in the first quarter financial results for FY12 / 2021, operating income was JPY 28.811 billion, up 16.7% from the same period of the previous year, and a recovery trend is beginning to appear. The funds from the sale of assets will be used for the achievement of the medium-term management plan with 2024 as the final year and for the subsequent growth.
The medium-term management plan formulated by Seibu Holdings is aimed at growth after Corona, and the funds for the sale of assets will be combined with the profits from the business, such as the development of the West Exit of Tokorozawa Station, the renovation of Karuizawa Prince Hotel West, and the large-scale development of the city centre area. Sale is scheduled to confirm the prospect of the end of the year, Seibu wants maintaining a hotel management even after the sale. In addition to selling, they will consider about the Shin-Yokohama Square Building and other buildings. The company had an operating deficit of JPY 51.587 billion in FY03 / 2021, but expects an operating profit of JPY 9 billion in FY03 / 2022.