Saizen REIT: Divestment of Kinyacho Grande.

Saizen REIT divested another property, Kinyacho Grande, which is located in Hiroshima, from the property portfolio of YK Shintoku. It was built in January 2004 and comprises 50 residential units and 8 parking lots.

The property was sold to an independent private investor for a cash consideration of JPY 390,000,000 (S$6.0 million).  This was at a 6.9% discount to the property's valuation of JPY 419m.

The original balance of the YK Shintoku Loan was JPY 7.953 billion (S$122.4 million). The application of (i) net sale proceeds totaling JPY 2.2 billion (S$33.8 million) from the divestments of 18 properties of YK Shintoku and (ii) operational cash flow of YK Shintoku of JPY 0.4 billion (S$6.2 million) towards loan repayment had reduced the balance of the YK Shintoku Loan to JPY 5.4 billion (S$83.1 million) as at the date hereof. Following loan repayment from sale proceeds of the Current Divestment, the remaining balance of the YK Shintoku Loan is estimated to be approximately JPY 5.1 billion (S$78.5 million).

Taking into account applicable cash reserves of JPY 0.4 billion (S$6.2 million) maintained by YK Shintoku under the loan agreement, the net outstanding loan of YK Shintoku amounts to approximately JPY 4.7 billion (S$72.3 million).

Lots of buying up of Saizen REIT units lately. This morning, it touched 17c/unit with 408 lots bought up at that price. Is the market warming up to the REIT once more?

Cache Logistics Trust: Why not buy at 94.5c?

More than one person asked why not I buy units in Cache Logistics Trust at 94.5c since I like its fundamentals. Well, it is just like asking why not I buy an Audi A3 at the current price since I like it. It is not really a question of affordability. As usual, it is a question of value for money.

At 94.5c, I would be buying at 5.5c above NAV. That is a 6.18% premium. Regular readers would know that I loathe to pay above NAV for a REIT. It is just like many loathe to pay COV for HDB flats but in those instances, sometimes, they do not have a choice or they really like a particular flat. After all, it could be one of a kind thing. (Ask LP at Bully the Bear. He would tell you his experience.) With a REIT, however, I am willing to wait for the right price.

So, what is the right price for this REIT for me? Well, 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. Didn't I say 92.5c could see me buying some too? Yes, even at  92.5c.

What are the chances of its price going lower? Well, looking at the weekly chart, I would say there is a fair chance of it happening, given more time. In fact, we could be seeing the formation of a down trending channel.

A look at the MACD and we see a lower high. The previous low has already been surpassed and a lower low is a given. Look at the OBV and we see obvious signs of distribution over the longer term. However, the higher lows on the MFI and RSI show that some support is forming as price declined. So, downside could be limited.

Accumulating on weakness should be a fairly safe thing to do but for anyone who is willing to stomach the possibility of a 2c to 3c paper loss and would like to buy in at 94.5c, it's your call. Don't let my ideas affect you.

Related post:
Cache Logistics Trust: A retest of 91.5c low?