Buying Geo Akamatsu and 65% of Toshiba Fudosan (2008)

The floors it bought, and the time it borrowed

What the two acquisitions have in common, one may read, is that they obtained whole companies in order to reach places the group’s own way of doing things — buy the land, build the building — could not. Planning and running retail facilities is work that requires accumulated experience, and the Toshiba group’s offices and commercial properties are not the kind of assets that circulate on the market. That the first use of the fundraising power gained at listing was operating companies rather than development land shows the judgment of the time: that growth in housing sales alone would not hold.

The timing, though, could not be chosen. A few months after ¥80bn of payments was fixed, the financial crisis arrived and profits fell sharply. Even so, the leased assets went on generating monthly rent and gave the company time to wait for the market to recover. It may have been too early to measure whether the acquisitions worked by the profit and loss immediately after they closed. The alliance with Toshiba was dissolved after fourteen years, and both purchased companies ended up under the Nomura Real Estate name. How far to let a company brought in from outside stand on its own, and at what point to dissolve it — these two deals also left an answer about how much distance to keep after an acquisition.