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The following is from Saizen REIT's report this morning:
Property operations of Saizen REIT had remained stable in 2Q FY2010. Gross revenue decreased by 3.1% in 2Q FY2010 as compared to 2Q FY2009, due mainly to the divestment of five properties (four properties in 1Q FY2010 and one property in October 2009) as well as a slight decrease in rental rates of new contracts entered into after 2Q FY2009.
The increase in other trust expenses by JPY 6.1 million in 2Q FY2010 was mainly due to accruals for valuation fees. No valuation fees were accrued in 2Q FY2009. The loss on divestment of properties of JPY 10.1 million comprised net loss incurred on the divestment of one property in 2Q FY2010. The fair value loss on financial derivatives of JPY 401.7 million comprised mainly fair value losses on warrants of JPY 389.0 million, which arose due to the increase in market-traded price of the warrants.
Notwithstanding the the repayment of the loans of YK Kokkei and YK Shingen which resulted in interest savings, interest expenses increased mainly due to the increase in interest rate on the loan of YK Shintoku from 3.07% to 7.07% after its maturity default......
.....The loans of YK Kokkei and YK Shingen, amounting to JPY 5.4 billion (S$82.3 million), were fully repaid in 2Q FY2010. Pursuant to an agreement between YK Keizan and its lender on 25 January 2010, JPY 950.0 million (S$14.5 million) of its loan was partially repaid in January 2010, with the balance of JPY 586.3 million (S$8.9 million) to be repaid in April 2010. Save for the balance of this loan, which is expected to be be fully repaid with internal cash resources, Saizen REIT has no further loans maturing in FY2010.
Saizen REIT currently has an aggregate of approximately JPY 16.0 billion (S$243.9 million) of properties which are unencumbered. By the end of April 2010, it is expected that the properties of YK Keizan, which are valued at JPY 2.75 billion (S$41.9 million) will be unencumbered after the loan of YK Keizan is repaid.
The Management Team observed that the financing environment in Japan has stablised. With portfolios of unencumbered properties, relatively low overall leverage and the listing status of Saizen REIT, the Management Team is hopeful of making progress in securing new financing.
In respect of the maturity default of the JPY 7.253 billion (S$110.6 million) loan of YK Shintoku, the loan servicer is currently conducting a review of the properties in the YK Shintoku portfolio. The Asset Manager is working closely with the loan servicer on its review and proposed course of action.
Property operations are expected to remain stable in the remaining periods of FY2010. As previously announced, it is expected that Saizen REIT will start accumulating cash for distribution in the last quarter of FY2010, and will resume distribution for FY2010 which is ending on 30 June 2010.
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4 comments:
AK, not very good at reading financial reports. In Saizen's quarterly report, page 4, it states a net loss of 93.6Mil yen for the quarter. Can I say Saizen is still losing money from its operations?
Er... Hi,
I didn't get your name. ;)
Page 4 of the report is the Income Statement.
Operationally, Saizen REIT is not losing money. I think this is what you are concerned about. In fact, it made more money than the same period last year. This is remarkable if you realise that it has done this after selling away five properties.
Look at:
Net income from operations. It is up 5.3%.
What makes it looks bad is this:
Net fair value loss on financial derivatives
This has a loss of JPY401.7m for the period reported.
If you refer to my post above, you will see their explanation that this is for "mainly fair value losses on warrants of JPY 389.0 million, which arose due to the increase in market-traded price of the warrants."
This really has no material impact on Saizen REIT real profitability. If you take the sum of JPY 389.0 million out, what you get is actually a profit. I hope this explanation is helpful.
I think many do not realise that Saizen REIT is actually getting healthier financially over time. This is definitely still a buy for me.
Hi there,
I bought into this company just before the rights issue and my cost is at about current price, which makes the whole warrants trench i hold profits.
like you, i feel that saizen is rather undervalued. it is only a matter of time people will realize what has been obvious to us all along.
hope we make good $ out of it this year.
cheers sam
btw, u have any estimations to the expected annualized yield?
Hi Sam,
Yes, Saizen REIT's current price does not do it justice. It is very undervalued. I did a calculation based on the last annual report and I estimate the dpu to be 2c per annum once the REIT resumes payouts to unitholders middle of this year.
Please see:
http://singaporeanstocksinvestor.blogspot.com/2009/12/passive-income-with-high-yields.html
Good luck to us all. :)
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