As listed companies' unrealized gains grow enormous amid the real estate boom, companies holding substantial unrealized gains on rental real estate have seen their share prices remain low. This report examines the case of Mitsubishi Estate, whose adjusted P/B ratio is valued at 0.67x.
Against a backdrop of rising real estate prices, rents and prices for newly built condominiums and office buildings in urban areas have remained strong, while official land prices in Japan's three major metropolitan areas have risen sharply. As a result, unrealized gains on real estate held by listed companies continue to expand.
Mitsubishi Estate is estimated to have ¥5.5574 trillion in unrealized gains as of the end of March 2026. Its adjusted P/B ratio, calculated by adding to shareholders' equity the after-tax gain that would result from selling at market value the assets carrying unrealized gains, is estimated at 0.67x. Reflecting this, Mitsubishi Estate is being highlighted as a stock whose adjusted P/B ratio is substantially below 1x.
Amid the real estate boom, there have been periods when share prices languished near liquidation value despite expanding unrealized gains, particularly on rental real estate. It has been noted that the number of stocks with adjusted P/B ratios below 1x is increasing.
In the past, vulture funds sometimes demanded shareholder returns through the sale of assets with unrealized gains. Today, engagement funds have become the mainstream, and there have also been periods when interest in low-P/B stocks has revived.