Saizen REIT's properties: Would I buy?

Saizen REIT reported on 8 Oct that they have managed to sell another property in its YK Shintoku's portfolio.  Villa Kaigancho was sold for JPY 250,710,000 (S$3.9 million) which was at a 3.9% discount to valuation. 

The proceeds would go to repaying partially YK Shintoku's CMBS. After this repayment, the remaining balance of the YK Shintoku CMBS is estimated to be approximately JPY 6.3 billon (S$99.1 million). See announcement here.

Saizen REIT has been announcing a slew of sales in recent weeks and I mentioned that this is a good sign as it signals the return of buying interest.  

Saizen REIT owns freehold residential real estate in Japan.  

I have also mentioned before that although the real estate values in Japan have been declining, rental rates have declined at a much slower pace. Buying residential real estate in Japan now and being a landlord is a very lucrative proposition.  

So, would I buy Saizen REIT's residential real estate in Japan, assuming that I have the spare cash and if I were allowed to do so under Japanese laws?  Without a doubt, I would.

Take for instance Villa Kaigancho located in Hakodate, comprising 50 residential units, 1 commercial unit and 24 car park lots. The buyer paid JPY 250,710,000 (S$3.9 million) for an annual revenue of JPY 41.4 million (98% occupied).  That is a gross yield of 16.5% per annum!  Remember, the property is freehold! 

In Singapore, if we invested S$3.9 million in a condominium, we would be lucky to get a 6% gross yield per annum!  Sadly, I do not have that kind of money.

Related posts:
Saizen REIT: Divestment of properties.

Golden Agriculture: CPO at a new high.

I am certain that price of CPO would go higher in time given all the economics which I have blogged about before.  Today, CPO price went to a new high of RM2,919, up RM159 or 5.76%.  I have been bullish on Golden Agriculture for the longest time given its inexpensive valuation and highly leveraged position to the price of CPO. I have made a few rounds of profits trading the shares of Golden Agriculture for more than a year now.

On 30 Sep, I mentioned that "56c is only one bid shy of 55.5c which is where we find the rising 200dMA which coincides with the uptrend support line.  This is, therefore, likely to be a rather strong support.  So, buying at 56c for anyone who would like to have a stake in Golden Agriculture seems fairly safe.  Personally, I am waiting for the dust to settle."  For those who went long at 56c, congratulations as Golden Agriculture broke out on extremely high volume today to touch a high of 61.5c before closing at 60.5c.

Unfortunately, Golden Agriculture's problems with the Roundtable on Sustainable Palm Oil (RSPO) and how it lost customers such as Burger King Holdings, Nestle and Unilever, who have said they will stop buying from Sinar Mas (which controls Golden Agriculture) because of environmental concerns, have cast a pall on an otherwise clearly undervalued proposition.

There is just too much uncertainty for my liking.  I rather err on the side of caution. By not having a substantial long position in Golden Agriculture anymore, I might not gain from any positive price movement but at least I would not lose money either.

Related posts:
Golden Agriculture: 56c support.
Golden Agriculture: Unable to break out.