No-Moat JR West Snatched the Property Business From Mitsubishi Heavy; Neutral to Shareholders

West Japan Railway, or JRW, is taking a 70% stake in Mitsubishi Heavy Industry’s real estate business for JPY 97 billion, net of the transaction fee. The deal will boost JRW’s total real estate holdings by 10% to JPY 480 billion, or 20% of consolidated assets as of the end of September 2016. The move is somewhat surprising, given that the newly acquired assets are largely residential properties located in the Greater Tokyo Metropolitan, or GTM, area, whereas JRW’s main asset base remains within the service territory of Western Japan.