Saizen REIT

[bluechipstamp]

As operations are expected to be stable, we estimate post-rights DPU to be in the range of 2.0-2.5 cts (yield 12.5-15.6% yield), based on a payout ratio of 90%. Assuming all warrants are exercised, the stock still yields 8% (est. fully diluted DPU 1.3 cts).

This looks a tad optimistic, or I've made a wrong assumption. I suspect the analyst didn't factor in the reduction in property income from YK Shintoku CMBS default.

When this loan is defaulted, CMBS lender will seize the YK Shintoku properties, which generates 20-25% of Saizen's income.

FY09 Distributable Income = S$20.37m (or 2.1c per unit, assuming 100% payout).

If we factor in a 20% reduction due to loss of income from Shintoku, DPU drops to 1.72c.
If we factor in the warrants dilution, DPU drops further to 1.14c.
And we haven't factored in a potential higher cost of capital due to the default.

At 1.14c, yield is 7.1% (based on 16c). I believe there're better REITs to bet on at this yield.

[winston]

I don't think people are investing for it's yield. They are trying to buy a distress asset. Hopefully, in a few years, the current discount to book, will narrow.

[bluechipstamp]

I don't think people are investing for it's yield. They are trying to buy a distress asset. Hopefully, in a few years, the current discount to book, will narrow.

At the current discount to book, Saizen yields only (optimistically) 7% after dilution.
For Saizen to get closer to its book value, it would mean that the yield will have to get way lower than that, wouldn't it? Who would be the new investors who are going to accept such a low yield?

[winston]

Hi Bluechipstamp,

Thxs for your kind comments.

Yes, I need to recheck the RNAV post rights & warrants. Hopefully, it's still trading at a huge discount.

With deep discount to RNAV, it make more sense to sell the assets and thereafter to distribute the proceeds.

However, I dont think that this will happen here at Saizen for a few years. But you never know..

Take care,
Winston

[winston]

Vested.

NEW SOURCE OF FINANCING
LOAN FROM MIZUHO BANK, LTD

The Board of Directors of Japan Residential Assets Manager Limited, the manager
(“Manager”) of Saizen Real Estate Investment Trust (“Saizen REIT”), wishes to announce
that Yugen Kaisha JOF (“YK JOF”), a TK operator of Saizen REIT, has entered into an
agreement (the “Loan Agreement”) for a JPY 1.0 billion (S$15.7 million1) loan (the “Loan”)
from a Japanese bank, Mizuho Bank, Ltd on 30 September 2009. The Loan has been fully
disbursed.

http://www.sgx.com/wps/portal/marketpla ... BIS9nQSEh/

[winston]

If they are selling at a deep discount to RNAV, wouldn't a vulture buy them and then sell the parts away ?

====================================

DIVESTMENT OF RIVER CITY KIMACHI

The Board of Directors of Japan Residential Assets Manager Limited, the manager ("Manager") of Saizen Real Estate Investment Trust ("Saizen REIT"), wishes to announce the divestment of River City Kimachi (the “Divestment”) as part of an on-going deleveraging plan which is being conducted to facilitate refinancing efforts in respect of the loan of YK Shintoku (the “YK Shintoku Loan”), which will mature on 2 November 2009.

The YK Shintoku Loan was originally provided to YK Shintoku in 2005 by Credit Suisse Principal Investments Limited (Tokyo Branch). The YK Shintoku Loan was subsequently securitised and transferred to an issuer of commercial mortgage backed securities.

http://www.sgx.com/wps/portal/marketpla ... BIS9nQSEh/

[winston]

UPDATE 1-Singapore-listed Saizen REIT defaults on CMBS loan

* Maturity default on 7.253 bln yen loan
* Default does not affect firm's ability to operate
* Default to more than double interest rate on loan (Adds detail on loan)

SINGAPORE, Nov 3 (Reuters) - Singapore-listed property trust Saizen REIT said on Tuesday it had defaulted on 7.253 billion yen ($80.25 million) commercial mortgage-backed securities loan.

The company said in a statement the "maturity default" was not expected to affect Saizen REIT's ability to operate as a going concern nor impair its ability to get further financing.

A maturity default occurs when the borrower fails to pay the lender the balloon payment, or principal balance, at maturity.

"The main impact of this maturity default is an increase in the interest rate from 3.07 percent to a default rate of 7.07 percent per annum," Saizen said in a statement.

The loan, known as "YK Sintoku", is a non-recourse and not cross-collateralised against other properties in Saizen REIT's portfolio. It was originally provided by Credit Suisse Principal Investments Ltd, a unit of Credit Suisse , in 2005 and was later securitised and transferred to an issuer of the commercial-mortgage backed securities, the statement said.

Saizen, which went to market in November 2007, is the only Singapore-listed real estate investment trust with purely Japanese regional residential properties.

Source: Reuters

[winston]

Saizen Real Estate Investment Trust reported that property operations of Saizen REIT had remained stable in 1Q FY2010, with a net property income of JPY 735.7 million (S$11.4 million1) in 1Q FY2010 as compared to JPY 708.6 million (S$11.0 million1) in the previous quarter.

Saizen REIT expects to start accumulating cash for distribution in the last quarter (April 2010 to June 2010) of the current financial year ending 30 June 2010, and to resume distribution for the current financial year.

Source: Phillips

[winston]

Vested.

DATE OF RELEASE OF THE QUARTERLY FINANCIAL RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2009

The Board of Directors of Japan Residential Assets Manager Limited, the Manager of Saizen Real Estate Investment Trust (“Saizen REIT”), is pleased to announce that Saizen REIT’s quarterly financial results for the period ended 31 December 2009 will be released before market opens on Thursday, 11 February 2010.

[winston]

Vested. Just noticed that CS has increased their stake from 4.99% to 5.21%