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Saizen REIT: Update on properties in Sendai, Koriyama and Morioka.

Monday, March 14, 2011

Panic selling of units of Saizen REIT from the opening bell this morning was evident as price gapped down and started the day at 13.5c. As of now, it seems to have found support at 13c, the price at which I started investing in the REIT in 2009.

The management of the REIT has issued an update on the situation in Japan:

"The property managers have managed to view 6 properties so far, as set out below. Preliminary reports have confirmed that these 6 properties have sustained only minor damage and do not appear in any imminent danger of collapse. However, the full extent of damage can only be ascertained after more detailed assessments.

"The property managers have managed to view 3 out of 22 properties in Sendai....It should be noted that 11 out these 22 properties (with annual rental income of approximately JPY 152.8 million (S$2.4 million)) belong to the YK Shintoku portfolio. Revenues from YK Shintoku’s properties currently do not contribute to distributions. (This was a point I made in an earlier blog post as well. See it here.)

"The property managers have managed to view all 3 properties in Koriyama.... The property managers have not managed to view any of the 3 properties in Morioka.... It should be noted that 1 out these 3 properties (with annual rental income of approximately JPY 30.6 million (S$0.5 million)) belongs to the YK Shintoku portfolio." See announcement here.

The selling this morning is overdone but it is to be expected, I suppose. If I did not have a thorough understanding of the REIT's current financial standing and how much it could suffer on the downside in the worst case scenario, I could have been one of the sellers too. Good luck to us all.

Related posts:
Saizen REIT: Properties in Sendai and YK Shintoku.
Saizen REIT: Sendai, Koriyama and Moriokas' positions in relation to the two distressed nuclear power plants.

21 comments:

Anonymous said...

Does it make sense to buy some SAIZEN now? or should wait for further report?

Confused!

mark said...

If the yen drops drastically, don't you think we need to potentially look at this as a lowering of valuations / yield?

AK71 said...

Hi Confused,

It depends on your risk appetite. Fundamentally, a low of 13c is excessive if we believe that losses to NAV and income distribution is capped at 15%. I cannot provide advisory. You have to decide for yourself. Good luck. :)

AK71 said...

Hi Mark,

The Yen is going up. In fact, the BOJ might have to step in to weaken the Yen if it keeps strengthening.

In a crisis, lots of money is being repatriated back to Japan. Japan remains one of the world's biggest economic powers with many MNCs and Japanese abroad. Japan is also one of the world's biggest lenders.

This was in a tweet this morning. Follow me on Twitter and get updated on my micro blogs: AK71SG. ;)

mark said...

I dont have twitter brudda. LOL. I dont know whats the diff between it and FB actually

mark said...

Number 3 nuclear has just exploded.

Anonymous said...

Hi AK,

I have just vested in saizen a few months ago. I agree with you the panic selling this morning is expected, and seems that some major shareholders are exiting this counter.

Want to find out your opinion on whether the management at Saizen is doing a good job in their updates on the situation in Japan to date. I feel that if they are able to provide timely and accurate updates, that should show a certain level of credibility on the management's part to concerned investors. Am I right to say that?

FMX

AK71 said...

Hi Mark,

Twitter is very simple. Just short messages which are too short to be blog posts. That's how I use it. :)

Facebook, I have not tried yet. I am slowly discovering these things. No hurry. ;)

AK71 said...

Hi Mark,

Reactor not breached in latest nuclear plant explosion, says Jap govt.

AK71 said...

Hi FMX,

I believe that Saizen REIT's managers have been very transparent and timely in their updates. There was one announcement last Friday and one today.

I am not sure that major shareholders are exiting the counter. Saizen REIT has a billion units or more in issue and in the first half of today, we see only approximately 12 million units traded.

Now, I am awaiting more reports on the rest of its possibly affected properties.

Wedding Gifts, Favours, Bells... said...

SAIZEN provide any distribution? No damage to buildings but will they be able to continue their business?

AK71 said...

Hi WGFB,

Saizen REIT's last income distribution was on 8 Mar 2011. DPU: 0.52c.

The REIT has 146 properties in Japan and only 28 properties are in the affected areas. The business is going on as usual elsewhere.

However, the properties which withstood the quake and tsunami would probably need some repair work.

We can only pray that life returns to normal for the people of Japan soon.

Anonymous said...

i certainly hoped that there is sufficient insurance coverage on this and not be a rights issue to raise $ for the repairs.

I also learned the importance of having standby cash for opportunities like this. I certainly wanted to bring down my avg cost with this 13-13.5c/share units. But war chest rather empty....

Twitter ? Me also no. too many distraction. However, a mobile version of this blog will be helpful as I do access it while on the move. Please.... ^-^

SnOOpy168

Anonymous said...

Japan reels as second blast rocks nuclear plant
Posted: 14 March 2011 1603 hrs

http://www.channelnewsasia.com/stories/afp_asiapacific/view/1116386/1/.html

SnOOpy168

AK71 said...

Hi SnOOpy168,

I will wait for more announcements and updates by the management. All that I know, I have already shared on my blog. No point losing sleep over this. :)

As for a mobile version of my blog, some readers are reading my blog on iPhone and iPad. Is that what you mean?

Zelphon said...

Hi AK,

Well, I have held onto my Saizen as well..

Not going to sell as I think the selling was overdone...

Saizen has a huge cash horde at the moment in anticipation to pay off YK shintoku loan..

In the event that YK shintoku loan not paid off, Saizen should still be able to distribute dividends...

My only hope is that the buildings are properly insured...

I do hope the crisis can be a blessing in disguise... The insurance money, coupled with the existing cash horde is able to pay off YK Shintoku loan completely..
But I guess that is just my wishful naive thinking...

Anyway, let's hope all the buildings are structurally intact and covered fully by insurance...

Anonymous said...

the mobile version is designed for small screen size and faster downloads.

It doesn't matter if it is iPad or iPhone, just that I prefer a faster download with less clutter onscreen when I am having a small screen (mine is 3.5" vs those 10" biggie)

Cheers

SnOOpy168

AK71 said...

Hi Zelphon,

Fundamentally, we can only hope for the best.

Technically, the panic selling we saw this morning was hardly a good time to reduce exposure, in my opinion. For anyone who is looking to reduce exposure, waiting for price to test supports turned resistance is preferred.

Financially, if the buildings belonging to YK Shintoku should be destroyed, I believe the best thing is for YK Shintoku to go into foreclosure. Then, all the money that is being hoarded (from the exercise of the warrants) is free for other investment opportunities.

Let's see what happens next. :)

AK71 said...

Hi SnOOpy168,

So des ne. Unfortunately, I do not know how that could be done. :(

So, until I become more tech savvy, please bear with my clunky blog. ;p

Derek said...

The update by Saizen is really vague. Anyway, we can only wait and how see thing pan out.

Set alert at 10cents. kekeke.

AK71 said...

Hi Derek,

Given the number of properties they have that could have been affected and the fact that they are scattered amongst 3 cities, they are not doing a bad job of reporting.

Things so far are appearing benign. Let us continue to hope for the best.

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