(Bloomberg) — Elliott Investment Management has built a sizeable stake in Japanese real estate developer Sumitomo Realty & Development Co., according to people familiar with the matter.
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The activist investor has engaged with Tokyo-based Sumitomo Realty on measures to improve shareholder value, the people said, asking not to be identified because the matter is private.
Elliott has a number of investments in Japan that have focused on boosting returns through share buybacks, selling off older real estate holdings and unwinding equity stakes in other companies. The size of Elliott’s stake in Sumitomo Realty isn’t known and it’s not clear when the firm accumulated its stake.
A Sumitomo Realty representative confirmed that the company had met with Elliott to exchange views and that Elliott has largely agreed with their management policies. Sumitomo Realty will continue to engage with Elliott, as it does with other long-term shareholders, the representative said. An Elliott representative declined to comment.
Shares of Sumitomo Realty rose as much as 16% in Tokyo trading Monday, the most since August, after the Bloomberg report, valuing the company at 2.9 trillion yen ($19.3 billion). Other Japanese developers such as Mitsui Fudosan Co. and Mitsubishi Estate Co. also jumped.
Japan has become one of the biggest markets for activist investors, with the government and institutions such as the Tokyo Stock Exchange pushing companies to pay more attention to stock prices and shareholder returns. The country was the second-busiest market for activist investing last year, with about 150 campaigns — a near 50% jump from 2023, according to data compiled by Bloomberg.
Elliott — founded by billionaire Paul Singer — has been one of the most prominent funds active in Japan, and previously targeted companies such as Mitsui Fudosan, Tokyo Gas Co., and Dai Nippon Printing Co. Sumitomo Realty is the third-largest real estate developer by market value in Japan.
For both Mitsui Fudosan and Tokyo Gas, one key part of Elliott’s campaign was for the companies to sell off older real estate assets to profit from gains on unrealized market value of the properties. Sumitomo Realty has a portfolio of over 200 office buildings in Tokyo, including several well-known buildings in the Roppongi and Shinjuku central business districts, and is also a landlord of prominent luxury condos in the capital.
