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Saizen REIT: CEO bought more warrants.

Thursday, June 24, 2010

Saizen REIT's CEO, Chang Sean Pey, bought 197,000 warrants today from 7c to 7.5c a piece. Persistent insider buying remains a characteristic of Saizen REIT.  This REIT is probably one of the most undervalued ones currently available in the Singapore stock exchange.

Successfully refinancing YK Shintoku's CMBS in future remains the strongest possible catalyst that would give Saizen REIT's units a lift up in price. Refinancing to bring down the current punitive interest rate of 7.07% to a more reasonable level would greatly improve the EPS of the REIT and, therefore, the DPU.

If the recent successful refinancing of the loan provided by Societe Generale for GK Choan, which attracts an interest rate of 3.8275% throughout its three-year term, is anything to go by, we could see the interest rate for YK Shintoku's loan in the region of 4% once it is successfully refinanced.  This would save 3.07% on interest payment for Saizen REIT's largest loan in its portfolio.  That would represent savings of about JPY200m a year!

The skies are clearing up for Saizen REIT and, at the moment, I do not see any storm cloud for the REIT apart from YK Shintoku's CMBS which I feel confident would dissipate in the coming months.

Other than the JPY 7.1 billion (S$108.6 million) loan of YK Shintoku (which is currently in maturity default) and the JPY 0.45 billion (S$6.9 million) loan of GK Chosei, Saizen REIT has no further loans that are due to mature in the next two financial years. This will allow the Management Team to focus on the refinancing of the loan of YK Shintoku.

Related posts:
Saizen REIT: Refinancing of loan from Soc. Gen.
Replies from AK71: All things Saizen REIT.


J - said...

hi AK, do you notice and know what happen to the chart of saizen reit shown at SGX?
from what i notice, their share price around 2007 - 2008 end, the closing price of the chart is totally off from other charts on other website.

chartnexus is also showing diff price as from SGX during that period.

anyways, moody has rated saizen to "Stable".
any views on this? moody sometimes quite off on their ratings :x

AK71 said...

Hi J,

ChartNexus probably made adjustments for the rights issue. That's why. :)

I believe that the re-rating of Saizen REIT upwards is fair. Like I opined in the blog post above, Saizen REIT has only one last hurdle to cross and that is YK Shintoku's CMBS. Once that is successfully refinanced, Saizen REIT would be whole again.

It would take time for investors to recognise Saizen REIT's true worth. :)

AK71 said...

Exercising warrants.

Step 1:
Find out who your warrant agent is from

Step 2:
Call your warrant agent up. The phone number is listed on the website above.
You will need to get them to send you the exercise notice form. Give them your address, and they will mail it to you accordingly.

Step 3:
Apply for a cashier's order from your bank. The amount on the cashier's order is equal to the value of the warrants to be converted. Cashier's orders can be ordered using internet-banking for free. I went with DBS. However, the cashier's order from internet banking can only be collected at a few branches. Do check out with branches are available before applying.

A $5 surcharge is chargeable if it is applied at the bank itself and not through internet banking.

Step 4:
Fill up the exercise notice form when you receive it, which will include your name, address, securities account number, and the number of warrants to be converted.

Step 5:
Prepare an envelope, and put your completed exercise notice form, together with your cashier's order into the envelope. Although it is mentioned in the CDP website that your latest account statement is needed, in actual fact, it is not. You do not need to send it to the warrant agent. However, this is my information from calling up the warrant agent for Saizen Reit. It would be prudent to confirm with your warrant agent.

Step 6:
Affix a stamp and send your exercise notice!


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