Daiwa House to Raise Up to 137.9 Billion Yen Through Share SaleTomoko Yamazaki and Katsuyo Kuwako
Daiwa House Industry Co., Japan’s biggest homebuilder, plans to raise as much as 137.9 billion yen ($1.37 billion) in Asia’s biggest share sale this year by a property company.
The proceeds will go toward 650 billion yen the Osaka-based company plans to spend over the next three years on building or redevelopments, including warehouses, mergers and acquisitions, and capital spending, according to a statement through the Tokyo Stock Exchange.
Japan’s construction industry is recovering after the March 2011 earthquake aided by the government’s pledge to spend 3.8 trillion yen for rebuilding and disaster prevention on top of 19 trillion yen already budgeted. Daiwa House managed to achieve its three-year sales target of 2 trillion yen in the fiscal year ended March 31, a year earlier than it had planned, the company said in the statement.
“The company will be able to curb a rise in debt, given the proceeds from the public offering, ample cash flow and expected recoveries from property sales,” Hirohide Kinoshita, a Tokyo-based credit analyst at Rating & Investment Information Inc., said in a note after the announcement. “Because of strong appetite for business expansion, however, improvement in the balance between risk assets or debt and equity capital may stall.”
The sale will be the biggest additional offering in Asia by a company in the real estate industry this year, followed by Global Logistic Properties Ltd.’s $1.25 billion sale, according to data compiled by Bloomberg.
Daiwa House shares declined 1 percent to 1,965 yen at the close of trading in Tokyo before the announcement. The stock has gained 33 percent this year, outperforming the 29 percent advance by the 94-member Topix Construction Index.
Brokerages including Nomura Holdings Inc. and Morgan Stanley were appointed for the sales, Daiwa House said.