First REIT: Buying more?

I like First REIT and it is a large investment in my portfolio. Although, fundamentally, I think 72.5c/unit is a fairly attractive price, technically, it looks rather weak. This is why I have not added to my long position in the REIT in the current environment.

Technically, the REIT tested resistance at 72.5c in the last session on the back of low volume. If it did manage to break immediate resistance, it would meet with resistance at 73.5c and 74c. If volume stays tepid, chances of resistance at 72.5c being overcome are rather low. Of the 450 lots which changed hands in the last session, 321 lots were sold down at 72c.

The downside proposition looks stronger. The rising 200dMA should provide stronger support at 70c which is a psychologically important round number. I would probably add to my position closer to this level. Having said this, I might be seeing the beginnings of positive divergences on the daily chart and we could see price rebounding quite smartly if they are valid.

Referring to the weekly chart, it is quite obvious that the uptrend is intact and this, to me, means that any short term weakness is an opportunity to accumulate on the cheap.

Related post:
First REIT: Is the bear just resting?

Cache Logistics Trust: Positive divergences.

I initiated a long position recently in this Trust on 15 March at 91.5c. That decision was made mostly on fundamentals. The technical consideration was that 91.5c was the lowest it ever hit since its IPO but it went on to touch 91c on the same day. I was even musing as to whether it would hit 88c next which, incidentally, is its NAV/unit.

Today, I decided to rely on the many positive divergences in the daily chart of CLT and I added to my long position with additional purchases at 92.5c. The counter closed at 94c today, forming a long wickless white candle in the process. Volume was higher than the session before too.

However, closing at 94c means that the downtrend is still intact. If there should be a follow through next week, we would see the downtrend broken and price could rise to test resistance at 96c as provided by the merged 100d and 50d MAs or even 97c which is where we find the 200dMA.

Related post:
Cache Logistics Trust: Initiated long position at 91.5c

AIMS AMP Capital Industrial REIT: More upside?

I bought more of this REIT at 20c two days ago and I bought more again yesterday at 19.5c. My overnight buy queue at 19c was not filled today although some 6 transactions, totaling merely 68 lots, sold down the REIT at 19c today. At 19c /unit, the distribution yield would be 10.53%.

Do I think the price is going higher or lower?

Fundamentally, there is nothing wrong with the REIT. Financially, it is very much stronger than its MI-REIT days. It has also reported on the status of its Japanese property in Tokyo and the situation is benign. Read blog post here. With an expected DPU of 2c per annum, the REIT looks very attractive at 20c per unit, the price it closed at today. In fact, on closing, 4,543 lots were bought up at 20c per unit.

Technically, the downtrend is quite obvious. However, forming a dragonfly doji is bullish. So is the higher low on the MACD histograms. Looking at the OBV, I see something interesting and that is how the OBV formed a higher low in the recent sell down compared to the low formed in late February when price was somewhat higher. This means that there is ongoing accumulation as price weakened recently.

I see immediate resistance at 20.5c which is where we find the steepest trendline resistance. A fair upside target in the event of a follow through is 21.5c which is where we find the next trendline resistance and the declining 100dMA.

Related post:
AIMS AMP Capital Industrial REIT: Bought more at 19.5c.

Saizen REIT: Insider continues to buy as price recovers.

Argyle Street Management Holdings Limited, a substantial shareholder of Saizen REIT, bought another 600 lots at 13c/unit on 17 March. This increased their holdings from 15.201% to 15.252%. See announcement here.

Saizen REIT recovered today by 1c or 7.7% to close at 14c. There is news that Japan could restore power to cooling systems at the nuclear power plant as early as tonight. If it pans out well, we could see the unit price of Saizen REIT closing the gap at 15c next week.

On the weekly chart, a white candle was formed. Technically, this is encouraging under normal circumstances but the circumstances now are not normal. Let's see how things turn out in the next few days.

Related post:
Saizen REIT: Hold or sell as insider buying continues?

Hutchison Port Holdings Trust: A weak debut.

Many were expecting HPH to open underwater and that was exactly what it did. I have not tried my hands at IPOs in years, taking to heart what Warren Buffet said about how IPOs are never undervalued and never good for investors. Of course, we could make money from IPOs in very bullish circumstances but Warren Buffet was referring to value and not price.

HPH touched a low of 94c before closing the session at 95c today.

Hutchison Port Holdings Trust not the cheapest container port play - CLSA. The house says based on the IPO range of US$0.91-US$1.08, “we are borderline buyers at US$0.91, (which would represent 28% upside to its target valuation at US$1.16)...at any pricing level higher than that we would rather buy China Merchants (0144.HK), rated Buy, as it has greater upside with added hinterland exposure.”  
Friday, 18 March 2011

© 2011 - The Edge Singapore

Hutchison Port traded below IPO in gray market, BTIG says. Units of the container-terminal owner were sold for 98 cents yesterday in deals brokered by BTIG Hong Kong, Managing Director Christian Kielland said by e-mail. The trust, which holds assets from Li Ka-shing’s Hutchison Whampoa, priced units in its IPO at US$1.01.
Friday, 18 March 2011

© 2011 - The Edge Singapore

Saizen REIT: All but one property have been visited.

"In the areas affected by the earthquake and tsunami, all 6 properties in Morioka and Koriyama, and 21 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.

"The remaining property yet to be viewed by the property manager due to transportation contraints is Royal Hills Katagiri, belonging to the TK operator YK Shingen."

Royal Hills Katagiri

Read announcement here.

Please read this:
Help Japan and donate generously.

CapitaMalls Asia: Green in a sea of red.

The positive divergence observed in the weekly chart many times before could be playing out. Today, price rose strongly on the back of higher volume as a long wickless white candle was formed. Price was $1.60 at the open and $1.69 at the close.

Positive divergence between declining price and the MFI is quite obvious on the daily chart now. Price would likely continue higher in the next session with immediate resistance provided by the declining 20dMA at $1.73.

If the bulls are very strong, we could see $1.83, a formerly strong support tested as resistance this time round. $1.83 is also where the declining 50dMA is approximating.

Related post:
CapitaMalls Asia: Japanese properties are safe.

Please read this:
Help Japan and donate generously.

SPH: Time to utilise my CPF OA?

As a rule, I am very careful with my CPF money and first utilised the money in my CPF OA during the global financial crisis some two years ago. I used the money almost exclusively for the purchase of shares in SPH which is my favourite blue chip for its high yield.

I have divested all the shares bought using the money in my CPF OA as the market ran up last year. So, for some time now, my CPF OA has been 100% cash waiting for another opportunity to buy shares of strong blue chip companies again. Of course, I am keeping an eye on SPH.

SPH's share price has been retreating and in the last three sessions, trading volume was rather high. Technically, it looks very weak as the MACD completed a bearish crossover with the signal line in negative territory and the 20dMA completed a bearish crossover with the 200dMA.

If we look at the weekly chart, the longer term 100wMA has turned up some time back and is rising nicely. With price action having broken the support provided by the 50wMA, I would look to the 100wMA for support. For now, I like $3.60 as that is where we find the 161.8% golden ratio as well as the rising 100wMA.

It seems that the time to use my CPF OA to buy some shares of SPH could be drawing near.

Please read this:
Help Japan and donate generously.

Sabana REIT: 92.5c is near.

Sabana REIT is beginning to look attractive. "Sabana REIT has an aggregate leverage of 26.5% which is comfortable... Its NAV per unit is 99c... The estimated annualised DPU for 2011 is 8.63c and for 2012 is 8.67c." Read my analysis: Sabana REIT: Fundamental Analysis.

On 10 December, I said that 92.5c would probably be a strong support. Price touched 92.5c, missed my buy order and off it rose. The REIT closed at 93c per unit today and it seems that 92.5c is within reach once more.

However, 92.5c/unit now is probably different from 92.5c/unit back in December as broader market sentiments are decidedly more bearish. Having said this, I would still enter on the long side with a small position just to put my foot in the door if price should weaken further.

Related post:
Sabana REIT: Possibly bottomed.

Please read this:
Help Japan and donate generously.

AIMS AMP Capital Industrial REIT: Bought more at 19.5c.

There was a single transaction today where 14,600 lots were sold down at 19.5c. This was at 4.01pm. That wiped out the buy queue at 19.5c. I went in and bought more units at 19.5c shortly after. It was a bargain and I could not resist it.

Substantial shareholder, Dragon Pacific Assets Limited, on 16 Mar increased its stake from 11.41% to 11.65%. This is an increase of 5,274 lots. Today, it increased its stake to 11.98%. This is an increase of more than 7,300 lots. Insider buying is taking place as price declines, it would seem.

Could we not see 19c or 18.5c per unit? In this current market, we could. Sentiments are still very negative and people do become irrational in times like this. I already have a buy queue at 19c.

Related posts:
AIMS AMP Capital Industrial REIT: Bought more at 20c.

Please read this:
Help Japan and donate generously.

Saizen REIT: Hold or sell as insider buying continues?

On 15 March, Argyle Street Management Limited, a substantial shareholder of Saizen REIT, increased its holdings from 15.036 % to 15.201% or an increase of 1,942,000 units. Average price per unit: 13.06c. This is their second open market purchase two days in a row. Announcement here.

On 16 March, Starich Resources Limited, bought 1,000,000 Saizen REIT warrants. Read announcement here.

The continual purchases by insiders reinforce my own perception that at 13c/unit, we are pretty close to the floor, if not the bottom. In the worst case scenario, a total loss of the 28 buildings in the affected areas should limit losses to NAV and DPU to 15%. In fact, losses to the DPU could be lower as almost half of the 28 buildings in question belong to YK Shintoku which is not making any contribution to income distribution.

However, we have to bear in mind that the REIT would have to incur repair costs to the affected buildings even though the damages are seen to be minor so far. Given the healthy cash holdings the REIT has now, I do not foresee any problem with its ability to pay for the repair work unless it should run into tens of millions of dollars. So, there is no need for the REIT to seek extra cash from unitholders.

The one thing that could go wrong now is the situation at the Fukushima nuclear power plant. If the reactors or the spent fuel should suffer a complete meltdown, we could possibly see the current 30km evacuation zone widen.  I read somewhere that the USA suggested an 80km evacuation zone and this would mean the 3 buildings in Koriyama would have to be abandoned since those are within 60km of the nuclear power plant.

There is hope that things would improve: "Engineers were focusing their efforts on restoring the power supply to a quake-damaged nuclear plant in an attempt to reactivate its cooling system and avert a meltdown." Read article here.

I have many people asking me whether to sell or to hold. I cannot provide advisory but my own preference is to hold because I think we are pretty much near the bottom. I like to sell at resistance and not at supports, if I can help it. Of course, there is no guarantee that I am right. So, if you feel like selling and if that would give you a peace of mind, why not?

Please read this:
Help Japan and donate generously.

Help Japan and donate generously.

Eating emergency rations in shelter.

In life, sometimes bad things happen. I had a couple of things that went wrong at work today and was feeling somewhat grouchy but they are so insignificant compared to really bad things that could happen in life. How many truly holy and selfless people do we know?

In the aftermath of the earthquake and tsunami that rocked Japan, I watch scenes of destruction and misery on the TV and YouTube. My heart aches and I want to contribute to the aid efforts. I was advised to wait for an official donation line that would benefit the victims in Japan directly. One such line is now available at the Singapore Red Cross:

A child at an evacuation centre.

How we can help?

The Singapore Red Cross is accepting monetary donations towards this disaster. Donors may do so with the following:

Cash Donation :

For walk-in donations, the SRC is open during the hours:
Mondays to Fridays 9.30am-9pm,
Saturdays, Sundays and Public Holidays 9.30am – 6pm.

Address: 15 Penang Lane, Singapore 238486.

Cheque Donation:

Cheques to be made payable to the “Singapore Red Cross Society” At the back of the cheque, please indicate:

i) Name
ii) IC/Passport No.
iii) Address and Contact Number
iv) “Japan Disaster 2011”

SMS Donation

Donors may donate via their mobile phones to 75772. For every sms, S$50 will be donated to the “Japan Disaster” fund.

*Please take note that all donations to this disaster are non tax-deductable.

I think the most convenient way to make a donation is by SMS. Since the donations are non tax-deductable, there is no difference whether they have my name and IC number or not.

Please help the victims in Japan. Many have lost their homes and loved ones. Let us help them to overcome the current difficulties and aid their efforts in rebuilding their lives.


Watch this video:


This is a sincere appeal and please accept my heartfelt thanks for your compassion and generosity.

You may visit the website of Singapore Red Cross here to verify the information given above.

Japan disaster: dead, missing toll tops 15,000. Read article here.
----------------------------------------------------------------------------------

Another avenue to make a donation:

I was just doing some internet banking and found that DBS is facilitating donations to the Red Cross Japan Disaster fund and I have made my donation via internet banking. It is really easy for anyone who does ibanking with DBS. In the consumer reference space, fill in your telephone number.

16 Mar 2011 07:55 PM  Singapore

Your transaction is completed. You may wish to print out a copy of this confirmation for your reference. Payee Name RED CROSS JAPAN DISASTER  Pay From POSB Savings ***-*****-* Latest Available Balance ******** Amount S$**** Consumer Reference No. ******** Date of Payment Immediate  Transaction Reference ***********

Step 1: Log in to your DBS/POSB bank account

 

Enter your DBS/POSB internet banking User ID and PIN, and click Submit. Make sure you have your iBanking Secure Device with you. Enter the Secure PIN and click Submit.

Step 2: Go to Bill Payment

Once you're logged in, go to Payment Services and click Bill Payment Select Red Cross Japan Disaster from the droplist

Step 3: Add Red Cross Japan Disaster as a bill payee on your DBS/POSB iBanking account

 

To set up Red Cross Japan Disaster as a bill payee, here's what you'll need to: Enter your telephone number as your Consumer Reference Number Select the bank account you wish to debit your donation from Then, click Submit.

Step 4: Confirm Red Cross Japan Disaster as a bill payee

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

"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.

CapitaMalls Asia: Japanese properties are safe.

Quite a few people I know have their eyes on CapitaMalls Asia and they are hoping that it would go closer to its NAV/share to buy some or more shares of the company. Its NAV/share is currently $1.50.

There is some concern amongst investors that the company's Japanese properties might have suffered from the quake. The company has released a statement today reassuring investors "the properties comply with strict seismic safety standards and have not suffered any material structural damage".

"CMA’s investments in Japan, which as at Dec. 31, 2010, accounted for approximately 2% of its total assets, are primarily held through its 26.29% stake in the CapitaRetail Japan Fund which owns seven retail properties in Tokyo, Osaka, Hokkaido and Kobe."

Technically, even though price touched a low of $1.57 today on high volume. The volume is relatively lower than 28 Feb when price touched a low of $1.69. This suggests that the weakness is from a lack of buyers and not from an abundance of sellers. I would also look out for positive divergence in the making on the daily chart. The positive divergence on the weekly chart between lower price and higher MFI is still quite obvious.

CapitaMalls Asia at all-time low; the Japanese properties it has investments in “were not materially affected by the earthquake and tsunami which occurred on 11 March 2011.” CMA says the properties comply with strict seismic safety standards and have not suffered any material structural damage, while operations at the properties have resumed.
Tuesday, 15 March 2011

© 2011 - The Edge Singapore

AIMS AMP Capital Industrial REIT: Bought more at 20c.

Back from hot yoga. I think the heat is somewhat challenging. I should try yoga without the "hot" next.  Anyway, time to catch up on my blogging.

Apart from Cache Logistics Trust, I bought some units of AIMS AMP Capital Industrial REIT today at 20c/unit.

Fundamentally, at 20c/unit and a DPU of 2c per annum, I am getting a 10% distribution yield. The manager also released some re-assuring news yesterday:

1. There appears to be no structural damage to the Asahi Ohmiya Warehouse located in Tokyo, Japan, which is located approximately 345 km from the epicenter of the earthquake which struck Japan on Friday 11 March 2011.

2. A sale and purchase agreement was struck on on 21 February 2011 for the sale of the property for a consideration of JPY1.49 billion. Completion of the sale of the Property was originally scheduled to take place today.

3. The Purchaser has no right to rescind the Sale and Purchase Agreement and the completion of the sale of the Property will be rescheduled to the first practicable date following completion of the investigation and any required repairs.
Read announcement here.

This, I believe, is good news as the sale of its Japanese property is something the REIT has been working towards. The apparently good condition of the property after the quake would also mean that the REIT would  not be incurring any hefty repair costs.

Technically, we could see price going lower as the selling down at 19.5c today was quite strong with 6,599 lots sold down at that price. 19c? Possible. Maybe even 18.5c. So, why don't I wait? Well, can we tell for sure if it would go that much lower? I can't. So, I buy some now. In fact, forming a doji today tells a story in which bulls were quite strong at the closing too.

I would also pay attention to the MACD and whether it could form a higher low as price forms a lower low. That would be a positive divergence and could indicate a short term trading opportunity. I have put in a buy queue at 19.5c for tomorrow.

Something on Cambridge Industrial Trust:

Cambridge Industrial Trust rated 'buy' by DMG. Stock trades at 10% FY2011 yield, attractive relative to its peer average of 7.3% and its pre-crisis yield of 6.7%. DDM-based target price of 61 cents. MAINTAIN BUY.
Tuesday, 15 March 2011

© 2011 - The Edge Singapore

Cache Logistics Trust: Initiated long position at 91.5c.

"I said in an earlier blog post that I am willing to pay a small premium above NAV which is acceptable for a lower risk investment. So, if a retest of the low of May 2010 at 91.5c were to happen, I could buy some units." This was what I said in my blog on 8 March, a few days before the terrible disaster hit Japan. Today, I bought some units of CLT at 91.5c.

With the acquisitions the manager announced yesterday, this REIT is looking more attractive as its gearing level remains under 30% while its DPU could bump up by a few percentage points. Could its unit price weaken further? It could as its downtrend is technically very much intact.

Well, 91.5c/unit was my target entry price and, I dare say, is a fairly good one with a smallish 3.98% premium to NAV/unit which is at 88c. I have gotten my foot in the door, so to speak.

I have a few more blog posts which I would like to put up this evening but it really depends on my condition later on. My second hot yoga session is in less than an hour!

Related post:
Cache Logistics Trust: Why not buy at 94.5c?
Cache Logistics Trust: Acquisitions.

Cache Logistics Trust rated 'buy' by OCBC. Initiate buy on CLT with a fair value of $1.03 largely on valuation grounds.
Tuesday, 15 March 2011

© 2011 - The Edge Singapore

Cache Logistics Trust: Acquisitions.

Cache Logistics Trust is making its maiden acquisitions.

"The two unrelated transactions were signed with APC Distributors Pte Ltd (“APC”) for the acquisition of 6 Changi North Way for a purchase price of S$30.9 million and with Kim Heng Tubulars Pte Ltd (“Kim Heng”) for the acquisition of 4 Penjuru Lane for S$8.9 million."


Some important numbers:

1. Both acquisitions are expected to be accretive to Cache’s distribution per unit. The combined NPI yield is expected to be 8.0% which compares favourably to the NPI yield of 7.7% for the existing portfolio of Cache as at 31 December 2010.

2. Both acquisitions will be fully-funded by debt. The aggregate leverage of Cache will increase from 23.7% (as at 31 December 2010) to 27.6% as a result of the acquisitions.

Read press release here.

I remain interested in initiating a long position in this trust.

Saizen REIT: Staying calm and rational.

Many would like to know what am I doing next with regards to Saizen REIT. I have replied to readers in this blog and in emails that I am holding my position and waiting for more announcements from the managers.

I would stay calm and think through the situation rationally, knowing the current financial strength of the REIT as well as the possible maximum loss of NAV and income it could suffer if all possibly affected buildings were destroyed. I hope I have done a good job so far. Indeed, I have been sharing my findings and thoughts here in my blog.

It has now been confirmed that, of the 14 buildings visited, all are still standing and have only suffered minor damages. There are also no casualties amongst the tenants. So, the loss of NAV and income which could be suffered is much reduced now. Consequently, any probable negative impact on income distribution to unitholders is reduced. There are 14 more buildings to be visited in Sendai and we will have to await the next report from the REIT's managers.

Technically, price action today formed a white hammer after a gap down to 13.5c with an intra-day low of 13c, a price last seen on 9 Nov 2009.

In my blog post this morning, I mentioned that the selling is overdone and that panic was in the air. I stand firm by my statement. In the following days, we could see the gap covered and we could see the former support at 15c providing resistance. Now, for anyone looking to reduce exposure, that would be a fairly good time to do so.

Do I think that major investors are abandoning the REIT? I do not think so. Saizen REIT has more than a billion units in issue. The total trading volume for today, although higher than usual, is only under 14 million units.

A total of 7,954 lots were bought up today with 4,010 lots bought up at 14c alone. This compared to a total of 5,723 lots sold down today. Total buying up numbers trumped selling down numbers. It is my guess that many investors recognise that the REIT is very undervalued and could be using this opportunity to accumulate at even lower prices. If the unit price were to weaken further, I would buy more.

Saizen REIT: Divestment of Wealth Meinohama.

Saizen REIT divested another property, Wealth Meinohama, which is located in Fukuoka, from the property portfolio of YK Shingen. It was built in December 1998 and comprises 12 residential units and 1 parking lot.

The property was sold to an independent private investor for a cash consideration of JPY 59,500,000 (S$0.9 million).  This was at a 3.1% premium to the property's valuation of JPY 57.7 million.

"The proceeds from the Current Divestment will be deployed towards Saizen REIT’s working capital until such time when they are required for other purposes, including the refinancing of the loan of YK Shintoku (if such refinancing is possible)."  Read announcement here.

Saizen REIT: More buildings confirmed standing.

This is the latest from the managers:

"The property managers have managed to view a further 5 properties in Sendai and 3 properties in Morioka. In total, all 6 properties in Morioka and Koriyama, and 8 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 are not in any imminent danger of collapse.

"To-date, we have not received any reports of tenant casualties, and none of the properties viewed appear to have been vacated.... All the 28 affected properties are located outside the evacuation zones surrounding the nuclear power plants at risk."

Of the 14 properties yet to be viewed, 9 belong to the portfolio of YK Shintoku which does not contribute to income distribution as its CMBS is in default.  Read announcement here.

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

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.

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

There is much concern that the two nuclear power plants could suffer a meltdown. "However, experts said Japan should not expect a repeat of Chernobyl. They said pictures of mist above the plant suggested only small amounts of radiation had been expelled as part of measures to ensure its stability, far from the radioactive clouds Chernobyl spewed out 25 years ago." Read full story here.

"Favourable winds will likely blow possible radioactive pollution from a blast at a Japanese nuclear power plant out over the Pacific Ocean, the French Nuclear Safety Authority said Saturday." Read full story here.

Personally, I like to look at the worst case scenario. What if meltdown should happen at the two nuclear power plants? Would Saizen REIT have to abandon the buildings in the cities of Sendai, Koriyama and Morioka even if they were not destroyed by the earthquake and tsunami?

Looking at the above map, the two nuclear plants in danger of a reactor meltdown are Fukushima 1 and Fukushima 2. Authorities have, so far, said that areas beyond 20km of the reactors are safe. This could, of course, change in time.

Sendai is about 100km away from the two plants while Koriyama is more than 60km west of the plants. I checked Saizen REIT's website and found that Morioka is north of Sendai and is therefore farther from the plants.

It would be indeed optimistic to expect zero damage to Saizen REIT's properties in the biggest earthquake to hit Japan in more than a century. This is undoubtedly a blow to Saizen REIT but the reduction in NAV and loss of rental income should be capped at about 15%. Now, knowing that the properties, if still whole, are safe from any repercussions of a nuclear meltdown at the two plants is a consolation.

In an earlier blog post, I suggested that the reduction in income distribution to unitholders could be less severe than first estimated as 13 of the 28 possibly affected properties are in the portfolio of YK Shintoku which is currently not making any contribution to income distribution. However, there would be costs involved in the restoration of the buildings affected, if restoration should be a viable option. This could impact income distribution although the extent of the impact is hard to estimate at the moment. We will have to wait for a more detailed report by the management this week.

Related posts:
Saizen REIT: Properties in Sendai and YK Shintoku.
Earth shattering news: Japan's earthquake and Saizen REIT.

Tea with AK71: A very old handkerchief.

In LP's cbox, a conversation took place on whether we should use handkerchiefs or tissue paper. Some went on to say that guys who use handkerchiefs are romantic. I have been using handkerchiefs forever! No one has ever said I was romantic. In fact, some people think that I am a dinosaur.

This is my favourite handkerchief, one that my mom bought for me when I was in secondary school. So, it must be at least 24 years old by now. Actually, I suspect it is a couple of years older.

I have decided to stop using it after its last wash because it has started tearing. Quite threadbare by now. How many packets of tissue paper have I saved because I was using this handkerchief for more than two decades? Just a rhetorical question. I don't have the answer. ;)

Saizen REIT: Properties in Sendai and YK Shintoku.

The quake that rocked Japan affected the city of Sendai the most. Saizen REIT has 22 properties in that city and we are still awaiting news on the extent of the damage. Here are photos of some of the properties in Sendai taken from Saizen REIT's website :

In a reply to a reader, I mentioned that of the 28 properties possibly affected (3 more each in Koriyama and Morioka), 13 properties are in the portfolio of YK Shintoku. I wonder how this would play out since YK Shintoku is still in default of its CMBS and not contributing to income distributions to unitholders.

If the 13 properties in question were totally destroyed, YK Shintoku's portfolio NAV would lower significantly. In such an instance, perhaps, it would not make much sense to continue trying to pay off the CMBS which is in default. It would make more sense to let YK Shintoku go into foreclosure. After all, Saizen REIT's other investments are ring fenced from YK Shintoku and are doing quite well without any contribution from YK Shintoku.

Of course, I am just raising a hypothetical scenario assuming that all 13 properties concerned were destroyed. A portfolio with a NAV higher than its outstanding loan is worth rescuing but a portfolio with a NAV lower than its outstanding loan should be considered for foreclosure. It is just good business sense, I believe.

Golden Agriculture: Testing the 200dMA.

Crude palm oil (CPO) price was down 2.75%, "touching their lowest level in four months as key crop data pointed to a surprise increase in stock levels." Source: Dow Jones Newswires.

Doing a one day contra on my most recent foray into Golden Agriculture was an example of how a little less greed could be a good thing. The counter's share price sank to retest support provided by the 200dMA at 64.5c in the last session on the back of higher volume. Could price go lower to test the lower Bollinger band at 62c? It could. If that were to happen, could it be time to buy? It is too early to say but it could be.

Pay attention to the MACD and see if it forms a higher low if price were to retreat further. A positive divergence would be a good signal that we could go in for another trade.

Related post:
Golden Agriculture: A one day gain of 7 to 9.4%.
Golden Agriculture: To sell or to hold?