Kobe Steel Ltd has sold a number of its real estate holdings to a company called Rokko Residence Co. Ltd, a wholly owned subsidiary of Goldman Sachs Realty Japan Ltd. The transaction is valued at over 8 billion yen. Kobe Steel has been making vigorously efforts to improve its financial performance by reducing its interest-bearing liabilities. Over the past
several years, the sale of fixed assets, such as company-owned property, has been one of the measures undertaken to procure funds. By selling the real estate holdings at one time, Kobe Steel is able to increase its fund procurement, while more efficiently reduce its fixed assets. The real estate consisting of company apartments and dormitories sold to Rokko Residence will be leased back to Kobe Steel. Although Kobe Steel will have to pay leasing fees, the transaction enables it to hedge the risk of future drops in real estate prices. The benefit of reducing it debt was also a large factor in the transaction.
