News Archive : Japan Real Estate

Friday, November 11, 2005

Japan - Full Speed Ahead!

KWR Special Report
Nov.9, 2005

Japan - Full Speed Ahead!
By Scott B. MacDonald
http://kwrintl.com/library/2005/full-steam-ahead.htm

If Japan was a ship, the captain, Prime Minister Junichiro Koizumi, would be giving orders to go full speed ahead. Captain Koizumi has turned the ship around: he won a second mandate for reform in the September 2005 elections, the Nikkei is up for the year, the economy is in recovery and the global economic environment remains conducive to Japanese growth prospects. Shortly following the elections, the new Diet passed the Postal Reform bill into law. Real estate prices have stopped falling and in some places are actually rising. The banks are now repaying government bailout money extended during the 1990s and the brokerages appear to be set to enjoy a good year.

Koizumi has reasons to be proud. The economy expanded at a 3.3% annual pace in Q2, driven by business and consumer spending. This is the first recovery since 1991 that is being driven by consumer and capital spending. In the past, economic growth was led by exports and government funding, which were unable to sustain momentum. In a critical break with the past, both external and domestic parts of the economy appear to be working in tandem. This has major implications for Japan as well as the global economy. Although we do not expect that Japan will entirely pick up the slack caused by Europe’s slug-like economic performance, it will certainly help the rest of Asia, both in terms of an export destination and a source of foreign investment.

While the Koizumi “revolution” has brought significant change to Japan, there remains much more work to be done. Getting the postal reform bill passed is only a part of this. Koizumi also needs to move on other issues - reducing personnel costs for civil servants, consolidating government-affiliated financial institutions, improving the managerial efficiency of government assets and liabilities, and overhauling local government finances. Health care reform is also looming as a critical issue, especially as there is a pressing need for a better medical insurance program. And then there is the difficult issue of reducing public sector debt, expected to reach Yen 774 trillion ($6.7 trillion), or 151 percent of GDP by March 2006 (end of the fiscal year).

Because of the scope of reform still required for Japan, the question of who will succeed Prime Minister Junichiro Koizumi is so critical. The current head of government has done well by Japanese standards, having one of the longest stretches in office. One must look back to Yasuhiro Nakasone and Shigeru Yoshida to find anyone who has been in office as long. Although his leadership over the LDP has often been stormy, Koizumi has provided a high degree of political stability for the country. In turn, political stability created an environment conducive to painful structural reforms in the economy.

The late October 2005 cabinet shuffle has positioned three potential heirs - Shinzo Abe (chief cabinet secretary), Taro Aso (foreign minister), and Sadakazu Tanigaki (finance minister). Each is regarded as a Koizumi loyalist, with reformist credentials. They also are in highly visible positions. Abe must help maintain the government’s overall momentum on the reform front, which means holding the various LDP factions together. Aso has the delicate task of dealing with China, Korea and the U.S. over a score of tough issues, and Tanigaki has a lingering number of financial reform issues, though the sale of Japan Post goes to Heizo Takenaka, newly appointed minister of internal affairs and communications.

Consequently, Japan’s policy environment will be shaped by two forces - Koizumi’s push to finish up as much reform as possible before he steps down and the competition to succeed him. Fortunately, it is in the interest of all parties to be as successful as possible. It also beneficial for the Japanese economy, something investors are increasingly recognizing. Japan has become a compelling investment story as Koizumi has managed to place a new generation of LDP politicians in place who are reform-oriented and likely to benefit from sustainable economic recovery. Indeed, he will need them in his final push for reform and to ensure that his legacy will be lasting.

vgJapan needs a 'womenomics' touch to grow

Japan needs a 'womenomics' touch to grow
Peter Alford, Tokyo correspondent
The Australian 10nov05

GOLDMAN Sachs Japan's chief strategist Kathy Matsui says that if more Japanese women worked for a greater part of their lives, not only would economic growth improve significantly but those women would be more likely to marry and have children.

Matsui says women are Japan's "most under-utilised resource". She's been banging this drum for at least six years and as the country's demographic crisis gathers momentum her message only becomes more urgent.

Japan's population of 127 million, which probably stopped growing in a net sense earlier this year, is forecast to shrink by 6 per cent in the next 20 years. But the workforce has been contracting for at least three years already and in two decades the working-age population will have shrunk 10 per cent from current levels. By 2050, every three Japanese workers will be supporting two retirees.

Matsui points out in a new study, Womenomics: Japan's hidden asset, that increased female workforce participation offers the most promising opportunity to loosen this demographic bind.

Goldman Sachs says if Japanese women's workforce participation rose to the same level as the US - that is, from 55 per cent to 62 per cent - an additional 2.6 million people would be at work. Further, the direct contribution to economic output and to domestic consumption would raise Japan's trend GDP growth over the next 20 years from 1.3 per cent to 1.5 per cent. Lifting the male statutory retirement age by 10 years, a widely canvassed option, would add only another 0.1 per cent to trend growth.

Goldman Sachs has compiled a basket of 115 Japanese companies, many of them small-caps, that should over-perform as "womenomics" gathers strength. They are concentrated in services but cover an enormous range - from women-friendly finance, through childcare to property - illustrating the broad economic effect. Yet, it's widely assumed, and loudly argued by conservative politicians, that increased workforce participation by women means fewer marriages and further falls in birth and fertility rates.

Matsui rejects this and makes the point that those women who don't marry and those who don't return to work after child-bearing are often responding differently to the same problem: the severe disincentive to combine work and motherhood. These include scarcity of childcare and heavy social pressure still exerted on women to leave work once married. And former full-time workers who do return to work usually find only part-time or casual employment.

In other words, one strong disincentive to marry and procreate is the difficulty of being employed afterwards. Matsui describes the phenomenon as the M-curve in which Japanese women's workforce participation sags from a 70 per cent peak at age 30, to below 60 per cent in the next five years and never returns to comparable levels.

Last year, there were fewer than two million childcare places, mainly government-managed, available in the whole country. Only 34 per cent of children between three years and school age are in the system, compared to 70 per cent in the US. At-home childcare is prohibitively expensive for most families. A woman would spend 62 per cent of an average wage on four hours-a-day of childcare.

Matsui points out that developed countries with high female workforce participation, like the US, France and Australia, also have relatively higher birth rates. Those countries also have high immigration rates, and immigrant populations in the developed world are relatively younger and more fertile. But Japanese social conservatives are latching on to France's troubles to draw precisely the wrong conclusion: that immigration barriers should rise even higher.

Because of intense cultural and political resistance to mass immigration, Matsui discounts that option. But she proposes freer entry to domestic, nursing and aged-care workers.

Much has been made of the Government's recent decision to allow about 100 Filipino nurses into Japanese hospitals next year. Some 80,000 temporary "entertainment" visas will also be issued to Filipinos, almost all women. Many will end up working - illegally - as nannies and housekeepers for Japanese working women.

Seibu Goes With Cerberus, Nikko Principal; Nixes Tsutsumi Brothers' Bid

Friday, November 11, 2005
Seibu Nixes Tender Offer Proposal In Reorganization Plan

TOKYO (Nikkei)--Seibu Railway Co. announced a group reorganization plan Thursday under which it officially rejected a proposed tender offer by the founding family.

The proposal "is not feasible and we cannot adopt it," President Takashi Goto said.

Yuji Tsutsumi -- brother of former Kokudo Corp. Chairman Yoshiaki Tsutsumi -- and half-brother Seiji Tsutsumi had proposed a tender offer under which they had sought to purchase Seibu Railway's shares for 1,150 yen to 1,300 yen.

Goto notified Yuji Tsutsumi and Seiji Tsutsumi of Seibu Railway's decision in writing Thursday, citing factors including the absence of a specific operational plan.

Seibu Railway's group reorganization plan instead entails the establishment of a new holding company called Seibu Holdings Inc., which would include railway and hotel subsidiaries under its umbrella. The holding company will be capitalized at 50 billion yen, with Seibu Railway Chairman Naoki Hirano and Goto keeping their positions at the new firm.

The holding company will target an operating profit of 55 billion yen in fiscal 2007, up roughly 40 billion yen from fiscal 2004.

Kokudo and Seibu Railway will hold special shareholders meetings Nov. 28 and Dec. 21, respectively, to approve the group reorganization plan.

U.S. investment fund Cerberus Group is to take a roughly 30% stake, while Nikko Principal Investments Japan Ltd. will have a 15% share. Kokudo's holding company, the yet-to-be-created NW Corp., will take a 15% interest, with the remaining shares to be held by Seibu Railway shareholders. Cerberus and Nikko Principal agreed to their investments after assessing Seibu Railway's stock at 919 yen a share.

Yoshiaki Tsutsumi will not be a shareholder in Seibu Holdings. But his indirect holdings through NW Corp. will total around 5%, Goto said.

(The Nihon Keizai Shimbun Friday morning edition)

Thursday, November 10, 2005
Seibu To Get Y133bn Capital From Cerberus, Nikko Principal

TOKYO (Dow Jones)--Japanese railway and hotel business conglomerate Seibu Railway Co. group has reached an agreement on a financing deal with sponsors and will receive Y133.1 billion in fresh capital from U.S. investment fund Cerberus Group and Nikko Principal Investments Japan.

As a result, Cerberus will hold 30% of the voting rights in the newly launched Seibu group entity to be called Seibu Holdings Inc. Nikko Principal Investments Japan, a merchant banking unit of Nikko Cordial Corp. is expected to hold 15% voting rights in the new Seibu entity.

Cerberus will be investing Y94.1 billion in the Seibu group, while Nikko Principal will inject Y47.0 billion.

The group will reorganize its operations by dividing them into railway and hotel business subsidiaries - Seibu Railway Co. and Prince Hotels Inc.

Shares of the group's core company, Kokudo Corp., will be swapped for an equal number of shares in a new entity, NW Corp.

Mark Neporent, chief operating officer for Cerberus Asia Capital Management, told a news conference the restructuring plan is "the best way to maximize the enterprise value of the Seibu group."

Seibu Railway President Takashi Goto said, by implementing the reform measures, Seibu Holdings, the holding company, will aim to relist its shares "in three to four years."

Goto said that, as far as he knows, other companies interested in Seibu such as Goldman Sachs Group Inc. aren't planning a hostile bid for Seibu shares. Seibu received investment offers from some 20 investors.

Goto added that the former head of the group Yoshiaki Tsutsumi still has a 36% stake in Kokudo, but that will be converted to a stake of just over 15% in Seibu Holdings after the share swap.

Over the next three years the Seibu group plans capital spending totaling Y160 billion. Some Y72 billion will be invested in the railway and related operations and Y63 billion in the hotel and resort operations.

The group will target an operating profit of Y55 billion in the fiscal year ending March 2008, up from Y14.9 billion in the year ended last March. By tying up other companies, Seibu hopes to boost that operating profit to Y65 billion in the future.

Cerberus Defeats Tsutsumis in Battle for Control of Seibu

西武鉄道:堤家の買収拒否 1600億円増資、持ち株会社設立−−グループ再編案発表
2005/11/11, , 毎日新聞 朝刊, 8ページ, , 1188文字

 西武鉄道の後藤高志社長は10日、鉄道、ホテル事業の一体再生を目指すグループの再編策を正式発表するとともに、西武グループ創業家の堤清二、猶二の両氏から提案された西武鉄道の買収提案を拒否したことを明らかにした。今後、再編に合わせ、1600億円の増資を実施。その結果、グループの中核会社コクドの筆頭株主で、証券取引法違反罪で有罪の判決を受けた堤義明氏の出資比率は5%強(現行36%超)に低下し、コクドのオーナー、堤家がグループに及ぼす影響力は弱まる。【瀬尾忠義】
 西武鉄道とコクドは同日、清二、猶二の両氏に、買収提案を拒否する文書を送付した。後藤社長は拒否の理由について、(1)買収の資金源が明確ではない(2)買収後の経営体制があいまい(3)企業価値を向上させる具体策がない――などを挙げた。
 さらに後藤社長は「買収提案は創業家、堤家が一定の影響力を保つのが狙いだと思う」と指摘。「今回の不祥事は一族支配が最大の理由。買収提案は生まれ変わる西武グループにはそぐわない」などと強い口調で、堤家排除の姿勢を見せた。
 正式決定した再編策は、06年3月末をめどに、コクド持ち株会社「NWコーポレーション」と西武グループ持ち株会社「西武ホールディングス(HD)」を設立。西武HDの下に、「ホテル・レジャー事業会社」と、「鉄道・沿線事業会社」を置く。08年3月期に経常利益330億円の確保や、3〜4年後に西武鉄道の再上場を目指す。
 西武HDの株は、コクド持ち株会社、増資を引き受ける投資ファンドの米投資ファンドのサーベラスや日興プリンシパル・インベストメンツ、西武鉄道の一般株主が保有する。増資後の西武HD筆頭株主はサーベラスで議決権の30%を保有(出資額約940億円)、第2位は日興プリンシパルが同15%(同470億円)で、両社は西武HDに役員を送り込む。
 ◇創業家、反発必至 訴訟のリスクも
 西武鉄道グループの再編案がまとまったが、影響力をそがれる創業家が反発を強めるのは必至で、実行までには紆余曲折(うよきょくせつ)もありそうだ。
 再編案の実施には、まずグループ各社の臨時株主総会による承認が必要。だが、創業一族の一人である堤猶二氏は、中核会社、コクドの総会開催中止を求める仮処分申請を裁判所に行っており、近く示される司法判断次第で、再編スケジュールが狂う可能性がある。猶二氏はまた、「買収提案が認められなければ、現経営陣を相手に訴訟を起こす」と表明しており、10日の買収提案拒否により新たな訴訟の可能性が出てきた。
 一方、西武鉄道株主で村上世彰(よしあき)氏が率いるM&Aコンサルティング(村上ファンド)も訴訟を視野に入れており、西武経営陣は訴訟リスクを抱えながら再編に踏み出す。
■写真説明 サーベラスの役員らと握手をする西武鉄道の後藤高志社長(中央)=東京都内で10日、瀬尾忠義写す

西武鉄道、堤清二氏らのTOB提案拒否 事業計画を発表
2005/11/10, 21:19, 朝日新聞速報ニュース, , , 894文字

 西武鉄道グループは10日、米投資ファンドのサーベラスなどから約1600億円の増資を受け、来年3月までにグループ持ち株会社「西武ホールディングス(HD)」を設立する再編計画を発表した。またこの日、堤清二氏ら創業者一族による鉄道株の公開買い付け(TOB)などの提案を拒否したことも会見で明らかにした。現経営陣主導の再編を進め、HDの社長には後藤高志・西武鉄道社長が就任する。
 増資は、サーベラスが約940億円、国内証券系ファンドの日興プリンシパル・インベストメンツが約470億円を引き受ける。また西武建設が保有する鉄道株約270億円分を両社や取引先に譲渡。鉄道株の譲渡価格は1株あたり919円とする。
 西武HDの株式保有率は筆頭株主のサーベラスが30%、日興が15%になり、取締役に両社から計3人の役員を招く。HD傘下には鉄道・沿線事業会社とホテル・レジャー事業会社を置く。
 増資で得た資金などで05年度から3年間で約1600億円を投資し、鉄道の安全対策やプリンスホテルの改装に乗り出す。計画では、鉄道事業が自動列車停止装置の機能追加や立体交差など安全運行のために660億円。ホテル・レジャー事業は改装などに550億円を投資し、特に赤坂・高輪・軽井沢・箱根・苗場のプリンスホテルの改装を優先する。また、不採算のホテル・レジャー事業の合理化や経費削減で230億円を圧縮する。
 こうした経営再建で、08年3月期にはグループ営業利益が550億円(05年3月期で149億円)、経常利益330億円(同71億円の赤字)を目指す。
 グループ中核企業のコクド株の36%を保有する堤義明・前コクド会長が、コクド持ち株会社を通じて間接的に影響力を示すことができる西武HD株の割合は5.4%と低下するが、義明氏はグループ再編に同意したという。同グループは、堤清二氏と猶二氏らの株式公開買い付け(TOB)や増資提案について、資金調達や再編計画が不透明などとして、受け入れないとの回答を同日文書で送った。
 また、西武グループの主力行のみずほコーポレート、東京三菱、三井住友の3行は同日グループ再編への協力を表明した。

Tsutsumi Brothers, Investment Banks to Launch Rival Bid for Seibu Railway

Seibu founding family members aim to buy back scandalized firm
http://www.asahi.com/english/Herald-asahi/TKY200511010126.html

11/01/2005

The Asahi Shimbun

In an apparent bid to block the planned reorganization of the Seibu Railway Co. group, two brothers in the founding family said Monday they plan a public tender offer to buy out the scandal-ridden railway.

As a second option, Seiji and Yuji Tsutsumi-brothers of Yoshiaki Tsutsumi, the disgraced former chairman of Kokudo Corp.-said they are prepared to invest about 330 billion yen to obtain the largest share of a new group holding company.

The brothers informed the Seibu Railway and Kokudo boards of directors of the two plans. In a statement issued on Monday, the two companies said it is difficult to consider the proposals realistic.

The current management of Seibu Railway, whose group was built by the brothers' father Yasujiro Tsutsumi, is trying to reduce the founding family's influence by setting up a holding company by next March.

Seibu Railway was delisted from the Tokyo Stock Exchange in December for falsifying financial statements. Kokudo owns 61.6 percent of Seibu Railway shares.

The Seibu Railway group plans to raise up to 160 billion yen by selling shares to investors and other measures.

U.S. investment fund Cerberus Group, which would contribute about 90 billion yen, is expected to become the leading shareholder of the group holding company.

The Tsutsumi brothers proposed that they pay 330 billion yen for a 49 percent stake in the holding company.

In the takeover bid for Seibu Railway, Seiji and Yuji Tsutsumi plan to offer 1,150 yen to 1,300 yen per share.

They estimate that the group's capital increase plan is based on a Seibu Railway share value of about 700 yen.

The brothers are offering what they believe is a premium to attract individual investors.

The cost for 100 percent ownership under terms of the offer would be 500 billion yen to 560 billion yen.

The brothers are negotiating with investment banks and others to secure funds.

Connected with the two brothers' move are the lawsuits in which they and other relatives claim they had legally inherited 55 percent of Kokudo shares, which are currently held under the names of Yoshiaki Tsutsumi and other group executives.

Seibu group companies, including Kokudo, have a combined share of more than 70 percent of Seibu Railway.

Depending on the outcome of the lawsuits, however, the two brothers could emerge as major Kokudo shareholders.

Seiji Tsutsumi, half brother of Yoshiaki, is a former chairman of Seibu department stores. Yuji Tsutsumi is a hotel operator.

In starting their takeover bid, the two men are prepared to sue Seibu Railway and Kokudo if the two companies refuse an assessment of their assets.

Yuji Tsutsumi has also filed for an injunction to block an extraordinary shareholders meeting to establish the group holding company.(IHT/Asahi: November 1,2005)

Banks seek talks with Tsutsumi brothers
By FT.com / November 04, 2005 03:45 PM

Foreign investment banks that were turned down as potential investors in Seibu Railway are seeking talks with the brothers of Yoshiaki Tsutsumi, the convicted former patriarch of the company, who are trying to launch a rival buy-out offer of up to Y560bn (USDollars 4.8bn) for the embattled company.

Goldman Sachs, Morgan Stanley and other investment banks are understood to be preparing for discussions with Seiji and Yuji Tsutsumi, who are raising funds for a counter-offer for Seibu at between Y1,150 and Y1,300 per share, according to people close to the deal.

The move could delay next week's planned final agreement on a deal under which Cerberus, the US private equity fund, and Nikko Principal Investment would make a Y160bn investment in Seibu Railway. The investment would makeCerberus the biggest shareholder in Seibu Railway, with up to a third of the company.

The chairman of Nikko Principal Investment, a Japanese private equity fund, indicated that the Tsutsumi brothers' audacious bid to take control of the Seibu group was not viable. "We are not worried about their threat because what they are doing is trying to slow down the process," said Hirofumi Hirano. "We have to finish this (investment in Seibu) by March so if the brothers slow down the process,then the whole group willcollapse."

Mr Hirano said the Y160bn would be used to pay Seibu's debt, and for capital expenditures on its properties.

Seiji Tsutsumi, Yoshiaki's half-brother, and YujiTsutsumi, Yoshiaki's brother, rattled the markets this week when they announced their planned counter-offer. Yuji Tsutsumi said that the Cerberus-led deal would have valued each Seibu share at about Y700.

The brothers said they were trying the raise the necessary funds among domestic and international banks in a move to block Seibu's restructuring plan. Seibu Railway, which was delisted last December, has about 433m outstanding shares. Kokudo, Seibu's parent company, owns 80 per cent of Seibu Railway, and Yoshiaki Tsutsumi is the single biggest shareholder in Kokudo, with a 36 per cent stake.

A court ruling in June, however, recognised that Yuji Tsutsumi and other family members also have a stake in Kokudo, which they inherited from their father, Yasujiro Tsutsumi. Yuji, Seiji and two other family members claim they own a 55.4 per cent stake in Kokudo, which would enable them to control SeibuRailway.

The Kokudo extraordinary shareholders' meeting is expected to be held at the end of November. YujiTsutsumi has filed a lawsuit to stop the meeting.Additional reporting by Michiyo Nakamoto

DAVID IBISON, MICHIYO NAKAMOTO and MARIKO SANCHANTA
(C) Copyright The Financial Times Limited 2005. 'FT' and 'Financial Times' are trademarks of The Financial Times.

Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

November 10, 2005
Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

TOKYO (Nikkei)--Starwood Capital Group Global LLC is willing to fund the tender offer for Seibu Railway Co. proposed by Yuji and Seiji Tsutsumi, two members of the railway group's founding family, The Nihon Keizai Shimbun learned Wednesday.

The U.S. investment firm is poised to invest up to 5 billion dollars, or about 580 billion yen, enough to fund the entire acquisition, according to sources.

Ever since the Tsutsumi brothers announced last week their tender offer proposal -- an alternative to Seibu Railway management's restructuring plan that calls for shifting to a holding company structure -- they have been receiving inquiries from investment firms and nonfinancial companies from home and abroad. Goldman Sachs Group Inc. and Morgan Stanley have been reported as potential sponsors.

Starwood Capital Chairman and Chief Executive Officer Barry Sternlicht notified Yuji Tsutsumi of the decision to invest. Because the Connecticut-based firm has conducted assessments of the locations and operations of the Seibu Railway group's hotels, it said that it would be able to provide fund quickly if the parties can reach an agreement.

In 1995, Sternlicht acquired a real estate investment trust that specializes in hotels and renamed this Starwood Lodging Trust. Since then, the Starwood group has taken control of several major hotel chains, including Westin and Sheraton.

In August, the group acquired France's Taittinger SA, known for its champagne and the luxurious Hotel de Crillon in Paris, for 2.1 billion euros, or about 290 billion yen.

Starwood Capital bought the Westin Hotel Tokyo last December for about 50 billion yen, jointly with the Morgan Stanley. In addition, it announced a plan to spend 500 billion yen over three to five years starting this year to acquire other hotels and commercial facilities in Japan.

Meanwhile, the Tsutsumi brothers are in talks with Mori Trust Co. to form a partnership to rehabilitate the Seibu Railway group's struggling resort business after the brothers complete their acquisition of Seibu Railway.

Because Mori Trust operates resorts in areas where the Seibu Railway group's hotels and golf courses are concentrated, the major building developer envisions joint development projects.

(The Nihon Keizai Shimbun Thursday morning edition)

Stop Misleading Condo Names : Fair Trade Commission

マンション名称の業界自主ルール・公取委が承認
日経2005/11/9

 公正取引委員会は9日、不動産業界から申請があった不動産の表示についての自主規制案を承認したと発表した。マンションなどの物件名に「代々木公園」のような公園名を付けるのは、その施設から300メートルの範囲内にある場合に限る。断熱性などの性能を表示する基準も厳しくし、消費者に誤解を与える広告を防ぐ。

 自主規制案は「公正競争規約」で、公取委が景品表示法に基づいて認定した。規約を作成した不動産公正取引協議会連合会には不動産業者の95%以上が加入しており、加入業者は規約を守る義務を負う。2006年1月4日に施行する。

 物件の名前に使う施設名にはこれまで明確な使用の基準がなく、駅からかなり離れているのに駅名を物件名に付けて広告するような例があった。新しい規約では公園や庭園、旧跡などの名称を使う場合は300メートルの範囲にある場合に限り、駅名は最寄り駅の名称だけを使えるようにする。

http://www.jftc.go.jp/pressrelease/05.november/051109.pdf

Murakami's Hanshin Dilemma

週間ゲンダイ【この会社の人と事件】
2005年11月2日 掲載  

村上ファンド 阪神株の大誤算

2、3年保有どころか、あっさり手放す可能性も

 日本シリーズでロッテに4連敗を喫した阪神タイガース。「村上ファンドは疫病神」というファンの八つ当たりも聞かれるが、計算はずれの惨敗に悔しがっているのは村上世彰氏自身も同じだ。
 村上ファンドの現時点での運用資産は4000億円程度。そのうちの3割弱、1000億円強が阪神電鉄株に張り付いている。それだけ、阪神は確実に稼げるともくろんだのだろうが、この投資のやり方はかなり危うい。
「ヘッジファンドは分散投資が基本。ポートフォリオが阪神に傾きすぎ。株価が半額になればファンド全体の運用成績はガタガタになる」と大手ファンド関係者は言う。
 新聞記者らからも「投資の比率が阪神電鉄へ偏りすぎではないか」との質問が飛んでいる。村上氏の答えは次のようなものだ。
「阪神は別に大きくない。37億円で最初にファンドを始めたときに10億円投資するのと、今、1000億円投資するのとは同じ感覚」
 どうも、ファンド運用者に必要な慎重さに欠けているように見受けられる。
 村上氏にはさまざまな圧力もかかっている。10月中旬以降、「阪神から手を引け」という声が、表の世界からだけでなく裏の世界からも寄せられているそうだ。身の危険を感じた村上氏は、記者のぶら下がり取材についても「一切、やめていただきたい」と懇願している。家族の身辺にも気を使うようになっている。
 村上氏は梅田駅前のバスターミナルをはじめとする沿線の土地開発やタイガース上場による利益拡大策をもくろんでいた。しかし、「タイガース上場や沿線開発には複雑な利権が絡み合っている。一筋縄ではいかない」(関西財界の事情通)のだ。
「(電鉄株を)2〜3年は持つ」との強気の言葉はカラ元気だろう。深追いをせず、損失覚悟で売り抜ける可能性も高まっている。【大沼匠】

Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

November 10, 2005
Starwood Ready To Help Tsutsumi Bros Acquire Seibu Railway

TOKYO (Nikkei)--Starwood Capital Group Global LLC is willing to fund the tender offer for Seibu Railway Co. proposed by Yuji and Seiji Tsutsumi, two members of the railway group's founding family, The Nihon Keizai Shimbun learned Wednesday.

The U.S. investment firm is poised to invest up to 5 billion dollars, or about 580 billion yen, enough to fund the entire acquisition, according to sources.

Ever since the Tsutsumi brothers announced last week their tender offer proposal -- an alternative to Seibu Railway management's restructuring plan that calls for shifting to a holding company structure -- they have been receiving inquiries from investment firms and nonfinancial companies from home and abroad. Goldman Sachs Group Inc. and Morgan Stanley have been reported as potential sponsors.

Starwood Capital Chairman and Chief Executive Officer Barry Sternlicht notified Yuji Tsutsumi of the decision to invest. Because the Connecticut-based firm has conducted assessments of the locations and operations of the Seibu Railway group's hotels, it said that it would be able to provide fund quickly if the parties can reach an agreement.

In 1995, Sternlicht acquired a real estate investment trust that specializes in hotels and renamed this Starwood Lodging Trust. Since then, the Starwood group has taken control of several major hotel chains, including Westin and Sheraton.

In August, the group acquired France's Taittinger SA, known for its champagne and the luxurious Hotel de Crillon in Paris, for 2.1 billion euros, or about 290 billion yen.

Starwood Capital bought the Westin Hotel Tokyo last December for about 50 billion yen, jointly with the Morgan Stanley. In addition, it announced a plan to spend 500 billion yen over three to five years starting this year to acquire other hotels and commercial facilities in Japan.

Meanwhile, the Tsutsumi brothers are in talks with Mori Trust Co. to form a partnership to rehabilitate the Seibu Railway group's struggling resort business after the brothers complete their acquisition of Seibu Railway.

Because Mori Trust operates resorts in areas where the Seibu Railway group's hotels and golf courses are concentrated, the major building developer envisions joint development projects.

(The Nihon Keizai Shimbun Thursday morning edition)

Lone Star's Golf Course Operator To List On TSE Next Month

Friday, November 11, 2005

Lone Star's Golf Course Operator To List On TSE Next Month

TOKYO (Nikkei)--A golf course management firm owned by U.S. investment fund Lone Star Group is set for a Dec. 15 debut on the Tokyo Stock Exchange, having received clearance from the bourse Thursday.

In addition to a public offering of 60,000 shares in Pacific Golf Group International Holdings KK, Lone Star will sell 297,000 shares in the firm, or nearly 30% of its stake. Nomura Securities Co. will oversee the initial public offering.

Pacific Golf manages more than 90 domestic courses, making it one of the largest operators in Japan. Lone Star has restructured golf operations acquired from struggling corporate entities, such as the Chisan Co. group. Sales are projected at 62.7 billion yen for the year ending Dec. 31, up 69%, with pretax profit rising 43% to 4.2 billion yen.

(The Nihon Keizai Shimbun Friday morning edition)

Cerberus, Nikko To Acquire Stake In Seibu Group

Cerberus, Nikko To Acquire Stake In Seibu Group

By ANDREW MORSE
Staff Reporter of THE WALL STREET JOURNAL
November 10, 2005; Page C4

TOKYO -- Cerberus Group and Nikko Principal Investments Japan Ltd. are expected to announce today an investment of about $1.4 billion in the Seibu Railway Co., ending a saga of control of the Japanese rail-and-property conglomerate once run by the world's richest man, a person familiar with the deal said.

[Yoshiaki Tsutsumi]

Under terms of the deal, U.S. private-equity group Cerberus will pay about $900 million for about 30% of a new holding company, tentatively named Seibu Group Holding. Nikko Principal, a unit of Japanese brokerage firm Nikko Cordial, will invest about $500 million for a stake of as much as 20% in the new company. The combined holdings of the two investors won't exceed 50%, the person said.

The deal values Seibu Group Holding at just under $3 billion. Representatives for Seibu and Nikko declined to comment. Cerberus couldn't be reached for comment.

The Cerberus-Nikko investment will end nearly a year of wrangling over Seibu, which has attracted the interest of investors from Goldman Sachs Group Inc. to Morgan Stanley and pitted members of Japan's Tsutsumi family against each other.

Seibu, which is controlled by Yoshiaki Tsutsumi, has looked to outside investors for money to fund a restructuring of the firm, which was delisted in December 2004 after a scandal. Earlier this year, Goldman Sachs proposed buying the company in its entirety. And last week, two brothers of Mr. Tsutsumi announced they were considering a tender offer for Seibu that would value the company at $4.9 billion.

But Seibu management favored the Cerberus-Nikko investment because neither demanded a one-third holding, which would allow them to veto management decisions, the person familiar with the deal said.

The Cerberus-Nikko deal likely will leave Mr. Tsutsumi, who was named the richest man in the world six times by Forbes magazine during Japan's stock-and-property boom in the late 1980s and early 1990s, with about 5% of the new company. Mr. Tsutsumi owns 36% of the real-estate company at the center of the Seibu group.

The Seibu Group consists of four main companies, including luxury hotels and resorts, that have interlocking ownership structures. The company will be reorganized with two wholly owned operating units -- railways and hotels -- under the holding company, the person familiar with the plan said.

Write to Andrew Morse at andrew.morse@wsj.com <mailto:andrew.morse@wsj.com>1

U.S. Timberland Gets Pricey As Big Money Seeks Shelter

Woodland Haven
U.S. Timberland Gets Pricey As Big Money Seeks Shelter

Rush Reflects Glut of Capital,Low Payoff on Other Assets;
Sold: 5% of State of Maine
But Do Trees Grow to the Sky?
By E.S. BROWNING
Staff Reporter of THE WALL STREET JOURNAL
November 4, 2005; Page A1

As money managers seek homes for today's profusion of investment capital, some are straying far from the canyons of Wall Street. Specifically, into the woods.

Private partnerships, real-estate investment trusts and other financial investors are snapping up millions of acres of forest land -- not just in America but in New Zealand, Uruguay, Brazil and beyond. They are buying from giant paper companies such as International Paper Co., which are under pressure from restless shareholders to boost their profits by cashing in on forest land that for decades has just sat there.

The result is an enormous land transfer now under way. The paper companies long were the nation's largest private owners of large tracts of standing timber. "For 100 years, the industrial users owned this land. A 1980 map of landowners in Maine would be almost the same as the 1900 map," says William Ginn, an official of the Nature Conservancy, a nonprofit environmental group.

Now the national map changes almost monthly. It's a phenomenon that has financial ramifications as well as environmental ones, such as the possibility that financial investors who get in a bind might over-log or overdevelop the land.

Today, nearly $30 billion of American forest land is in the hands of financial investors, according to Hancock Timber Resource Group, a large timberland investment manager. That's six times what such investors' timberland holdings were in 1994, Hancock Timber estimates. And these investors have poured billions of dollars more into forests abroad.

In one notable sale, an investment partnership run by Grantham, Mayo, Van Otterloo & Co., a Boston money-management firm, last year bought more than 5% of the land in the state of Maine. Grantham Mayo oversees 2.6 million acres of timber investments world-wide.

Harvard University, meanwhile, earmarks 10% of its nearly $26 billion endowment for timber, a remarkable proportion for such a small and unconventional asset class as this. Although Harvard recently sold most of its U.S. forest holdings -- to another financial investor -- the university is looking for new land to buy. Yale also invests in forests, as do various pension funds, insurance companies and charitable trusts. John Malone, chief executive of Liberty Media Corp., owns 75,000 woodland acres with his wife.

The money pouring into timber reflects a global hunt for higher returns as investment cash floods the world from many sources: pension funds, central banks, hedge funds, oil-rich nations and corporations with surplus cash on their balance sheets. This has created a surge in demand for "hard assets" like real estate, timber and commodities -- in part because cash flooding into bonds has driven down returns on them.

NEW GROWTH

Industry insiders say $10 billion more U.S. timberland will come to market over the next year or two, and that investors are lined up to buy it. The result of this fervor is that prices have climbed, in some cases doubling in five years, despite weakness in prices of the lumber the forests produce.

The trend leads a few investors to fret that a bubble could be forming. "I think there is a risk that that is either happening or may be on the verge of coming to pass," says James Nicol, a partner in an investment firm called Forest Systems. Most people in the business insist timberland prices are far from bubble territory.

With bond yields puny and stocks flat year-to-date, timber offers a shot at stable returns in the high single digits, mostly from long-term growth in the value of the land and its trees. Low interest rates make it cheap for an investor to borrow cash to magnify a bet on timber.

As a hard asset, timber also has appeal as a haven from possible worsening inflation that might undermine financial assets. And it has diversification value: Its market performance historically is largely uncorrelated with those of stocks and bonds -- when they zig, timberland may do nothing or may even zag.

But if the low interest rates that encourage timber investing go up, calculations could shift. Competing fixed-income investments would look more attractive. Home construction might slow and crimp demand for the lumber and wood fiber the forests produce. The cost of borrowing for land acquisition would rise. All this could weigh on land prices.

For environmentalists, such shifts could exacerbate concerns that they already have about financial investors' big ownership of forests: real-estate development and the potential of over-logging. As long as paper companies are the owners, the woods -- although logged periodically -- generally aren't closed off to hikers or wildlife, and prime forest sites don't turn into vacation-home lots. But for financial investors, the returns can come not just from wood but often partly from selling off bits of the forest for development. And environmentalists worry that if investors should face pressure and need to raise cash, some might be tempted to step up development plans or harvest the trees too frequently.

Already, "what we are seeing here in Maine is that there definitely is a spike in development," says Cathy Johnson of the Natural Resources Council of Maine, a group affiliated with the National Wildlife Federation. She and other conservationists are fighting a plan by Plum Creek Timber Co., a real-estate investment trust, for housing, resorts and stores on 9,000 acres near Moosehead Lake in central Maine. "Maine's North Woods is the largest undeveloped block of land east of the Mississippi," Ms. Johnson says. "The future of this area is being determined."

After initially endorsing the plan, selectmen of the lakeside town of Greenville came under local pressure and reversed themselves at an emotional meeting in August, deciding to remain neutral. Some said the project would support the weak local economy, while others feared it would close off land and mar the natural beauty, which draws visitors.

Plum Creek is redoubling efforts to convince local people its plan is environmentally friendly and good for the economy and tourism, emphasizing that it calls for developing just 9,000 of 426,000 acres the company owns in the area. The rest would be logged or conserved. "We believe that there is a really large ratio of public benefit for a small percentage of development," says a spokeswoman.

Financial investors maintain they're good stewards of the land. Under their watch, the forests are largely in the hands of people like Bob Saul, who manages a billion-dollar portfolio of timber investment for Grantham Mayo. Working in an office above a Mexican restaurant in Amherst, Mass., adorned with maps and forest photos, Mr. Saul scouts for land, negotiates sales and oversees management of woodland already acquired.

A decade ago, jobs like his barely existed. Mr. Saul had a chain of furniture stores that failed in the 1990 recession. He began managing commercial property and studied forestry. When the contrarian-minded Grantham Mayo created an arm to manage timber investments in 1997, it hired him.

The going was tough. Mr. Saul was hawking target returns of 8% to 10%, after inflation, at a time when stocks were rising 20% or more a year. "We ran around doing endless pitches to anyone from pension funds to endowments to wealthy individuals," he recalls. "They just laughed." He and colleagues were able to scrape together just $51 million for the firm's first timber fund, in 1998, and even less for a second one in 1999.

But after stocks cracked in 2000, dealing investors painful losses, some began looking elsewhere. Many retreated to the seemingly solider asset of real estate, sending it into orbit. Others turned to oil, industrial commodities or precious metals, all of which also soared, for various reasons including the boom in China. And some investors found trees.

The University of Minnesota, before the market retreat, had its endowment spread over a broad range of stocks, bonds and alternatives such as venture capital. But the 2000-2002 bear market still knocked more than a quarter off the endowment's value, and the dismayed university officials ordered an overhaul. "Although we thought we were diversified at the time, many of the asset categories we had were highly correlated," tending to rise or fall together, says Chris Suedbeck, the university's assistant director of asset management.

The university also realized that "our expectations on returns were inflated" in the go-go years, Mr. Suedbeck says. By the start of 2003, after nearly three years of stock doldrums, the 8% to 10% that seemed possible with a long-term commitment to timber looked pretty good. Today, the university has $18 million of its $770 million endowment in timber.

Last year, as demand heated up, Grantham Mayo's eighth timber fund drew 73 investors who put in $660 million -- four times what one formed the year before drew. Investors in its funds typically tie up their money for 10 years, hoping the projected return will materialize through a combination of appreciation, sales of lumber and wood fiber, occasional sales of real-estate lots -- plus the benefit of "leveraging" the overall bet through borrowed money. Grantham Mayo now is putting together a fund that Mr. Saul says could approach $2 billion.

When Weyerhaeuser Co. decided to sell 270,000 acres in Georgia, Scott Jones, co-president of a Boston investment firm called Forest Capital Partners, was among the first potential bidders to visit. As he and local managers made their way down forest roads, he asked how many others were coming. The answer: two a day for the next two dozen days. "I didn't spend a lot of time on that deal," says Mr. Jones, who didn't bid.

Mr. Saul, in his office on a recent day, punched into his laptop the data on a tract that was for sale: the age of the trees, their species, the distance to sawmills and pulp mills. The sale would be a public one. "I hate these kinds of deals," he said. "Somebody always comes in crazy, and somebody will come in crazy on this deal," driving the price way up.

Instead of projecting 8% to 10% annual returns, Mr. Saul now tends to talk to investors about 6% to 9% returns, since the prices he has to pay for the land are higher. In the deal he was complaining about that day, he won, but at a price that leaves projected annual returns at just 7%. He hopes to boost that by using low-cost loans for part of the purchase.

Last year, Mr. Saul acquired all of International Paper's Maine timberland. It amounted to 5.1% of the state's total acreage, more than all of Rhode Island.

He was able to buy it at an acceptable price, $243 million, partly because it wasn't auctioned. Mr. Saul heard through a business contact that some of the paper company's U.S. land might be available. After some general conversations with someone there, "the lightbulb went off in my head that they were talking about selling Maine." In private meetings, the sides reached a deal on price, on International Paper's ability to buy wood from the land in the future and on employment of forestry managers.

Some investors boost returns by selling conservation easements, in which they give up development rights to preservation groups such as the Nature Conservancy. The deals ensure that the land won't turn into lots or shopping malls, yet typically leave the landowner free to harvest logs. Mr. Saul is negotiating a $50 million to $60 million easement sale on Maine property.

Selling such easements can win favor with environmentally conscious investors such as foundations as well as with conservation groups. "If we were to tick them off by selling off a lot of sensitive habitats to the highest bidder, we would lose their good will," says Mr. Saul. Although he has sold land for development in the past, he says, he did so only after informing the Nature Conservancy and persuading himself this particular land was in an area already being developed.

Mr. Malone of Liberty Media has been buying land for more than a decade, in part, he says, to support conservation. He figures he and his wife have paid roughly $30 million for about 75,000 acres in northern Maine. They also own 650,000 acres of ranch land in the West. But now he says Maine woodland that fetched $200 an acre five years ago is up to $450 or $500. "The prices for some things I want to buy are way beyond anything that I think economics justify," he says.

Harvard's endowment recently rattled the timber-investing world by selling its entire U.S. forest holding. "That has to give you pause," says Mr. Nicol, the investor who worries about the market getting overheated. The buyer was Hancock Timber, part of Toronto's Manulife Financial Corp. It says it expects to generate an inflation-adjusted annual return of 6% to 10% on the property.

The deal unfolded one snowy day in Boston in February when the overseer of Harvard's timber investments, Andrew Wiltshire, had lunch with Hancock Timber President Daniel Christensen. Over a plate of Arctic char, Mr. Wiltshire was surprised to hear his companion offer to buy Harvard's entire U.S. timber holding. After five months of talks, they announced a sale covering 930,000 acres, at an undisclosed price that competitors estimate at up to $1.7 billion.

Mr. Wiltshire says he sold to lock in a gain on a much-appreciated asset, and intends to look for other land elsewhere. He says Harvard retains most of its forests outside the U.S., including in his native New Zealand, where it is the second-largest holder of timberland.

Still, the sale was disclosed at almost the same time that International Paper announced plans to sell more of its U.S. forest holdings, and potentially its entire remaining 6.8 million acres. Meanwhile, another longtime timber investor, California Public Employees' Retirement System, has sold its U.S. holdings, notes Mark Wilde, a Deutsche Bank Securities analyst. He wrote a report called "What Does Harvard Know?" in which he posed the question: "Does this mark the top?"

Most timber investors say no, although few deny that paying today's elevated prices will limit investment returns somewhat. The rising U.S. timberland prices are pushing some buyers abroad. Says Grantham Mayo's Mr. Saul: "There aren't many wild frontiers. Eastern Europe is one. Russia is another. It is hard to find the undiscovered spot."

Write to E.S. Browning at jim.browning@wsj.com <mailto:jim.browning@wsj.com>3