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.