Increase Keihanshin’s shareholder value
Strategic Capital and the Japan-Up fund are shareholders of Keihanshin Building Co., Ltd. (hereinafter referred to as “Keihanshin Building” or “Company”). In order to increase shareholder value, we expect Keihanshin Building to implement the following two points:
I. Improve Corporate Governance
(i). Improve the condition that allows former Sumitomo bank associates to make the Board of Directors and the Audit& Supervisory Board their own.
The majority of the Company’s Board of Directors and Audit & Supervisory Board are occupied by former Sumitomo Bank directors and employees which hinders management transparency. This type of opaque corporate governance is a factor that lowers shareholder value.
(ii). Sell cross-shareholdings
The Company holds a large amount of cross-shareholdings. There is a high possibility that current management is maintaining these positions to unconditionally support the management of those companies, and in turn protect their own position. As a shareholder, this is an issue that cannot be overlooked.
(iii). Abolish special shareholder incentives used for the purpose of creating obedient shareholders
The Company’s shareholder incentive program not only damages shareholder value but cannot even contribute to increase the shareholding ratio of retail investors that managements desire. The Company should abolish such program and stop wasting company assets.
II. Realize the potential value of real estate owned by the Company (e.g. by creating a REIT)
In order to realize its potential value, the Company should sell its leasing properties at fair value. Strategic Capital has already proposed the Company sell the properties to third parties at fair value, or restructure itself as a REIT management company.