Sumitomo Realty & Development

Research evidence excerpt

Sumitomo Realty & Development

Global Markets Research

29 June 2026Sumitomo Realty & Development

8830.T 8830 JP / EQUITY: JAPAN HOUSING & REAL ESTATE

RatingStock looks increasingly undervalued following

Remains Buyshare price decline since May

Target price JPY 6,260Strong in office leasing; sufficient contracts in place to make condo profits Remains

likely over full-year 27/3

Closing price JPY 3,572We reiterate Buy, share price decline has left the stock looking increasingly undervalued. 26 June 2026

There has been no mention in recent documents (for example, the convocation notice for the latest

Implied upside +75.3%general meeting of shareholders) of the activist investor listed as the third-largest shareholder in

Sumitomo Realty & Development as of end-March 2025, and we think the stock's fall was due in part

to concern that corporate governance would take a back seat in the absence of pressure from this

investor to reform management. We also surmise that real estate stocks in general are being

Relative performance chartweighed down by concerns over an increase in interest payments and decline in real estate liquidity

amid mounting speculation about higher interest rates in Japan and the US. Our own view, though, is

that the presence or absence of specific activist investors is unlikely to alter management's

commitment to improving corporate governance. While higher interest rates are naturally a concern,

the rise in office rents has been gathering pace at the office leasing business that accounts for

around 70% of the company’s profits, and we think this rise in rents will more than offset any increase

in interest payments. Even if the rise in interest payments temporarily outpaces the rise in rents, we