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Saizen REIT: Update on properties in Sendai and insider buying.

Tuesday, March 15, 2011

"In the areas affected by the earthquake and tsunami, all 6 properties in Morioka and Koriyama, and 17 out of 22 properties in Sendai have been viewed by the property managers thus far, and preliminary reports have confirmed that these properties appear to have sustained only minor damage and to have remained intact.

"To-date, we have not received any reports of tenant casualties, and none of the properties viewed appear to have been vacated.... None of Saizen REIT’s properties are within the current evacuation zone surrounding the nuclear power plant at risk.

"Moody’s Investor Service has issued an announcement today which stated that it sees no immediate impact of the earthquake on Saizen REIT's Caa1 corporate family rating."
Read announcement here.

On 14 March, Argyle Street Management Limited, a substantial shareholder of Saizen REIT, increased its holdings from 14.920 % to 15.036 %  (from 175,048,912 to 176,648,912 units) through open market purchases. Announcement here.

Related post:
Saizen REIT: Staying calm and rational.

10 comments:

Kelvin said...

I'm tempted to load more up at 12 cents or lower. Would you?

AK71 said...

Hi Kelvin,

12c is 1c lower than the price of my initial purchase in the REIT. Imagine! It was financially weaker then and they were not even giving out any income distribution either.

I would be sorely tempted at 12c. I would see how things turn out then. You know why? There are so many tempting offers out there now but my resources are limited. :(

Kelvin said...

I see. So what are the counters are you looking at, besides CMA and CLT?

I think CLT would be resilient, so worth loading but too bad the quantum is a bit big, can't load up much.

As for CMA, I think it would only be attractive if it trades near or below its NAV. Otherwise, I find that the cooling measures in china really weighs too much on it.

AK71 said...

Hi Kelvin,

I am also looking to add to my investment in AIMS AMP Capital Industrial REIT. :)

Sebastian68 said...

Hi
I noted that Saizen started off close to $1 a few years back. Is there any reason why it has drifted to the current significant low? Don't quite understand this, since I don't see any stock split announcements from the sgx site on this stock.

AK71 said...

Hi Sebastian,

Credit froze soon after the REIT listed. The REIT had to issue rights and warrants to stay afloat. That diluted the NAV/share.

The fact that the REIT still has one CMBS in default and that lenders are very cautious could have affected its unit price.

Of course, sentiments towards the Japanese economy which has been in the doldrums for many years probably depressed the price as well.

Anonymous said...

Hi all,

I am here again,but i thk if i did not state this, you people will thk i am poking fun at you. But i know how you ppl feel, cause i have been through all this.

I know your heart is as meltdown as the nuclear reactor, but if you take no action now, you may see your mnoney, but why not capitalise on this moment....sell now and buy back later even more lots and of course , more div.
yield.

Nuclear sftermath last a long time, and so it this Saizen going into a long winter...

Look to ohter,shift your money to other counter ot risk stucj here.

then no more mektdown at least for you,right?no heart meltdown..

How abt Sabana, Cache...gd luck.

cheongwee

AK71 said...

Hi Cheong Wee,

I am not so sure that investing in CLT or Sabana would be safe from capital loss either.

In the worst case scenario, many companies with business links with Japan would be affected badly. How many of these companies are tenants of CLT and Sabana? The enormity of the entire disaster is mind-boggling.

That probably explains the broader market sell-off as everyone was spooked.

I am happy that you feel good about selling your stake and are confident in being able to buy at much lower prices later. Good luck to us all.

raelynn said...

if there's anything to learn from this event, it is that singapore cannot afford to have a nuclear station. can you imagine, evacuation zone was 20km (later 30km), that's almost like 3/4 of singapore (iirc, singapore's about 42km? or issit less than that??).

while authorities will cite that as long as maintenance is done rigorously and accurately, such mishaps are rare, we cannot be complacent that such a thing will never happen. not forgetting that indonesia is sitting on the isle of fire (and can you believe that they too are considering a nuclear plant aside from their current one which is used for research), singapore may be spared from earthquakes, but our neighboring countries are not.

about this counter, i'm in a dilemma of whether to buy to average down my costs for i had bought 10 lots at 0.165. on one hand, i'm thinking as AK you mentioned, most of their properties are not in the disaster zone, and even if there is radioactivity, assuming that japan has a zone of alienation like chernobyl, it will most likely be about 30km. life and work will still have to go on for the rest of japan. dynamics of economic activity will be redistributed.

but on the other hand, we see that radioactivity in the wind caused by the chernobyl accident has resulted in certain livestock and their byproducts from being imported into the UK (apparently scotland was affected by the radiation, their livestock accumulated contamination from grazing). of course, this is assuming that the radioactivity goes into the higher layers of the atmosphere in order to cause such damage.

AK71 said...

Hi Raelynn,

Thank you very much for this very well thought out comment. Appreciate it very much.

I agree with you on all points and that Singapore is too small to consider nuclear energy as an alternative.

In today's news, the EU is actually considering a nuclear free Europe and Germany has shut down 7 old nuclear power plants built before 1980.

There is a saying that the Training Safety Regulations (TSR) at the Singapore Armed Forces (SAF) is written in blood. It would seem that this is the case for nuclear power as well.

As for our investment in Saizen REIT, I am mentally prepared for the total loss of all 28 buildings in the affected area. However, news have been more positive than negative so far.

If we believe that the loss of all 28 buildings would cap losses of NAV and DPU at 15%, then, at 13c/unit, Saizen REIT is a value buy.

However, would the crisis come under control soon or would it escalate? I can't say. So, to have a greater margin of safety, perhaps, accumulating at a lower price such as 12c as suggested by Kelvin is more reassuring.

What we do depends on our individual risk appetite. Good luck to all of us. :)

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