Redeveloping the mill sites in-house: the turn to real estate (1973)

What is left to a company that has lost its business

The heart of this decision lies less in whether the diversification succeeded than in who got to decide first how the assets would be used. The 1972 stake-building did not point out value Katakura had failed to notice; it was closer to an outside party moving value the company had noticed but could not move itself. Sell the sites and you book a gain once; develop them and rent accrues every period — and in choosing the second, a company that had lost its founding trade answered the question of what kind of company it would now be through the use of its land. It is worth noting that the conversion from factory to retail took sixteen years, from a driving range in 1967 to Omiya Katakura Park in 1983: the raid did not turn the ship overnight.

At the same time, the decision left the same question standing for a long while. Even today, with rent at the centre of earnings, the value of the property held and the valuation of the shares remain apart, and outside investors have pointed at the gap again and again. A company that earns from operations and a company that owns assets are measured on different scales in the equity market. When a firm that has lost its founding business seeks a way out through land, that land eventually brings with it the question of whom it is being put to work for. Katakura’s choice in 1973 was also a decision to carry that question for half a century.