Saizen REIT: Divestment of properties.

Saizen REIT has managed to divest another four properties in its YK Shintoku portfolio.  A friend asked me if this is a good thing and my answer was an unequivocal "yes".  Why?

1. The plan to divest some properties of YK Shintoku to reduce the borrowing amount is with approval from the CMBS lenders. This shows that the lenders have no wish to foreclose YK Shintoku and would rather have their money back. In the meantime, they enjoy a rich 7.07% interest payment on the loan amount.

2. Saizen REIT's management is currently in negotiations with financial institutions to refinance YK Shintoku's loan and by divesting some properties, its absolute loan quantum is smaller and this makes it more palatable to potential lenders.  Like I mentioned before, a successful re-financing of YK Shintoku's loan would most likely result in a much lower interest rate which would lead to a positive re-rating of the REIT.

3. The properties divested are at smallish discounts to their most recent valuations.  The discounts are at 0.2%, 3.7%, 5.3% and 6.1% for the four different properties. This demonstrates the return of buying interest in the Japanese real estate sector as investors seek out better returns for their money.  This bodes well for Saizen REIT as the apartment buildings that they own are below replacement value.  This means that investors are unlikely to build new and would rather seek to buy in the resale market.

Following the loan repayment using sale proceeds from the divestments, the remaining balance of YK Shintoku's loan is estimated to be approximately JPY 6.6 billon (S$103.6 million). The loan was JPY 7.1billion (S$111.5 million) before.

See announcement here.

Related post:
Saizen REIT: Emphasis of matter.

Gold can double from here over the next 5 years.

"Despite all the hype about its multi-year rally, gold is actually lagging many other commodities in that it hasn't yet eclipsed its 1980 high on an inflation-adjusted basis, Holmes says, noting the same is true of silver."


Posted Sep 28, 2010 12:00pm EDT by Aaron Task

Gold hits another record high of US$1,308.00, the eighth time it has hit a new high in the last two weeks!  Read article here.

Related posts:
Buy more silver on weakness. 
Real value of gold.

SPH: Closing above $4.20.

SPH experienced a nice white candle day with price closing at $4.21.  This is the first time it has closed above the $4.20 resistance level in more than two years. That this took place on the back of volume expansion (volume was three times more than the previous session) gives hope that we could possibly see higher prices in the near future.

The higher highs in the OBV shows continual accumulation.  The MFI has formed a higher low and being at a very low level now, it has much room to rise before becoming overbought. The MACD has turned up and seems poised for a bullish crossover with the signal line.

Immediate support is now at $4.16 as provided by the 20dMA.  Immediate target is $4.30.

Related post:
SPH: $4.20 is still resistance.

K-REIT: In retreat.

The overbought buying momentum in K-REIT was corrected today as the RSI slipped out of overbought territory.  OBV shows that the trend of accumulation is intact and the MFI still shows rather strong demand.  So?  I won't be overly concerned with the selling down.

Immediate support is at $1.26 which is where we find the 20dMA.  Any further selling should find the next support level at $1.22, the top of a consolidation formation and this is also where we find the 50dMA approximating.  If $1.22 should give, which could, of course, happen, the next support is at $1.16.

Related post:
K-REIT: Moving into the next band?