Cross-Shareholdings/Business Portfolio
Cross-Shareholdings
Policy on Cross-Shareholdings
We will not have any cross-shareholdings that are not expected to support the Company's sustainable growth and medium to long term enhancement of corporate value. Every year, the Board of Directors will examine the validity of cross-shareholdings in terms of the quantitative
perspectives, such as whether dividends and rental income are commensurate with cost of capital, and the qualitative perspectives found in business relations.
On the other hand, we announced a target to reduce the ratio of cross-shareholdings to net assets from 16.6% at the end of March 2024 to 10% or less by Phase (through the FYE March 2028). Going forward, we will proceed with the sale of them to a certain extent in order to achieve its targets based on the results of the examination of the validity of cross-shareholdings at the Board of Directors meeting.
As of March 31, 2024, we own 25 listed stocks and seven unlisted stocks. We have divested all shares of eight stocks we had owned as part of our cross-shareholdings policy, also sold part of the shares of three listed stocks. since 2015 when the corporate governance code was enacted. The total amount of sales during this period was 11.7 billion yen.
Trend in cross-shareholdings of listed companies
|
FYE Mar.31, 2020 |
FYE Mar.31, 2021 |
FYE Mar.31, 2022 |
FYE Mar.31, 2023 |
FYE Mar.31, 2024 |
|||
|---|---|---|---|---|---|---|---|
|
Amount recorded on year-end balance sheet (million yen) |
12,629 |
11,910 |
9,775 |
9,607 |
12,449 |
||
|
Amount sold during the fiscal year |
784 |
6,530 |
2,468 |
1,087 |
297 |
||
|
Ratio of cross-held shares to net assets (%) |
19.7 |
17.0 |
13.9 |
13.6 |
16.6 |
||
|
Number of listed stocks cross-held |
Listed |
27 |
27 |
26 |
26 |
25 |
|
|
Unlisted |
8 |
8 |
8 |
7 |
7 |
||
Criteria for the exercise of voting rights attached to cross-shareholdings
With regard to the exercise of voting rights pertaining to cross-held shares, we make comprehensive judgements before voting for or against, from the perspective of whether or not the investee company is conducting management that leads to the maintenance and improvement of corporate value over the medium to long term in order to meet the expectations of shareholders and other stakeholders.
In the event of any situation at an investee company, such as a protracted slump in the performance, unstable management, or a scandal involving violation of laws and regulations, we carefully examine the purpose of each proposal and vote against any proposal that would harm our interests as a shareholder, whether it is proposed by the investee company or by its shareholder.
Policy and Status of Review Regarding Business Portfolio
Based on our distinct leasing business, encompassing diverse facilities including office buildings, datacenter buildings, WINS buildings (off-track betting parlors), commercial buildings, logistics warehouses, and other properties, we aim for sustainable growth from a medium- to long-term perspective. New investments are made with a focus on regional diversification and location in an effort to minimize the risk of loss in the event of economic fluctuations and disasters. Furthermore, we work to prevent profitability decline such as by reshuffling assets and investing to increase their value.
Under our current business strategies, we place a high priority on maximizing cash flows generated by our business in our efforts to enhance corporate value. We also recognize the importance of achieving returns that exceed capital costs on a profit basis, and the Board of Directors annually examines our business portfolio. Specifically, policies for continuous property ownership, rebuilding, and sales are individually examined at the Board of Directors' Meeting from both a quantitative point of view, such as comparison of capital cost and profitability and investment recovery period, and a qualitative point of view, such as compatibility with investment policy in the business plan and growth potential of the area where the property is located.
Based also on the result of the portfolio examination, we recognize that maximizing profit through revolving assets and improving capital efficiency are necessary to continue to achieve returns that exceed capital costs over the medium- to long-term. In the newly formulated Long-Term Business Plan, we aim to improve capital efficiency through the engagement in revolving-type investment business in addition to the real estate leasing business.