Prospect EP. Share Discussion Threads

[stuart14] 13/10/2008 13:41

It does make me laugh. Publications like Moneyweek are all too quick to proclaim how they saw the crash coming and if you'd listened to them you'd have been better off, but they very quickly forget all their tips that go wrong. They tipped this numerous times at over 79p. Don't hold but feel for those who do.

[joan of arc] 13/10/2008 10:26

Is this going bust?

[sigmund freud] 10/10/2008 20:25

I leave all the clever stuff to the clever people. I said this was looking like 20p end July a few months ago. OK- I got the date wrong, but 15p in October isn't far off. Where will we be at year end? No end in sight for this downtrend.

[jonwig] 10/10/2008 10:44

Thanks ISA - I didn't check.
There's some chance of contagion between REITs, and the current extent of the gearing here needs clarification.

I've no objection to buying back in (a covered short!) but I suspect there's no great rush.

[isa23] 10/10/2008 10:28

New City was 2.4% of pejr as of 30 June.

[courant] 10/10/2008 08:40

Hmmm. This isn't good news. A key part of the investment case for PEJR was that essentially J-REITs are sound from a cash-flow point of view (as the Moody's comment still suggests) and re-financing should not have been so difficult, especially given japanese banks have been clobbered less. It will be very interesting to see how this New City situation pans out. I'm still holding just because the underlying assets now seem so ridiculously underpriced, but watching very carefully.

Courant

[jonwig] 10/10/2008 08:37

Good luck, JoA.

My exposure to Japan now is a monthly savings plan in an IT. That way I don't have to bother about timing, so long as there's an eventual recovery!

[joan of arc] 10/10/2008 08:28

Jonwig, I hope you did sell out at (almost) the bottom then at least I will be happy. At least you can sleep better at night for your decision.
I guess my main concerns are whether the underlying assets are still sound. The way I see it, probably too simplistically, is that as long as PEJR's underlying REITs stay solvent and are minimally geared then ultimately they should still cary on floating and at some, hopefully not too distant, point come good again.

[jonwig] 10/10/2008 07:23

J o A.

From what I gathered, it's a money transfer problem, with management companies becoming insolvent and hence the REITs simply become creditors, so must themselves file for protection.

I'm actually quite annoyed that I must have taken my eye off the ball and missed this event (it was dated 29/09, and the share price chart shows the news filtering out gradually). Of course, the latest NAV will have included it.

The portfolio weightings will be in the latest H1 numbers, I think. Anyway, I didn't hang about but sold out yesterday. The gearing won't have gone completely, I imagine, and the Japanese REIT system just looks incredibly interconnected.
Perhaps I sold at the bottom, who can say?

[joan of arc] 09/10/2008 21:45

Jonwig, Perhaps you can help me here - I am totally confused re the implications for PEJR.

Is it bankrupt and so have we totally lost that portion of our investment (+ gearing)? What am I suppsed t make of the statement in the Moody's report today that states "Moody's considers that the fundamentals of the residential rental business are strong and that the company can maintain stable cash flow." ??

[joan of arc] 09/10/2008 21:39

How can we can find out the weightings of the portfolio. eg what % does New City represent?

[jonwig] 09/10/2008 16:05

Thanks for that, JONNO. The first, but the last??

Oct. 9 (Bloomberg) -- New City Residence Investment Corp. became Japan's first failure of a listed real-estate investment trust today, filing for bankruptcy protection with liabilities totaling 112.4 billion yen (1.1 billion).

The global financial crisis is eroding domestic real-estate markets, making it difficult for the trust to raise funds, Tokyo-based New City Residence said in a statement distributed at the Tokyo Stock Exchange.

New City Residence will be delisted on Nov. 10, the Tokyo Stock Exchange said.


It may be that this is connected with last month's failure of re-plus Inc, which has failed to pass on rents. see the 29/09/08 pdf here:



If so, we might be sitting in a house of cards!

[jonwig] 08/10/2008 16:57

"The Board of Prospect Epicure J-REIT Value Fund PLC ("the Fund") announces that the unaudited, undiluted net asset value per share on 02 October 08 was 25.67 pence."

I suppose it could have dropped further since then, but I suspect we're now trading at a discount.

[jonwig] 30/9/2008 18:40

Dunno, JoA - but I suppose value = discounted rental stream.

I think most of the larger residential J-REITs are involved in blocks of flats, which will not be owner-occupied and will last a lot longer. (NB. buildings will need to be pretty robust, as much of Japan is prone to earthquakes.)

I suppose they don't talk much about house prices at dinner (or tea) parties over there!!

[joan of arc] 30/9/2008 18:30

So if, unlike here, a house is a depreciating asset over what period should one amortise it?

[hectorp] 25/9/2008 12:15

I'd rather buy a REIT in this climate after it has reduced its yield and this one has done so. Other investments are RUS and CPT.

- Close watch , cash is still king.

[zastas] 25/9/2008 12:10

The operating expenses are rather high: £1.047 million out of a total interest and dividend income of £4.440 million. It would be better then if we could buy the REITS portfolio directly.

Edit: some heavy selling today at about 29.

[joan of arc] 25/9/2008 11:45

The general feeling from the report is that things will only get better. There is much reference to salvation being achieved by taking REITs private and that this will be the catalyst to improving underlying NAVs. However as part of that process we may well 'lose' a good portion of our assets at 'fire sale' prices and therefore not reap the full benefit of any subsequent NAV upgrades.

[isa23] 25/9/2008 09:13

which is why I've decided against it. Given what we read about the importance of income producing j-reits to aging population & their lower risk profile, they're unlikely to go bust, which I guess is the real fear at the moment.

[jonwig] 25/9/2008 09:07

ISA - I think selling now would be picking the low point to do it! [Just my opinion, FWIW.]

[isa23] 25/9/2008 09:03

As soon as I saw nothing about the divi in the results, I thought of selling (at least some shares). However, on a closer look, I changed my mind. The company may just reduce the divi temporarily, and anyway it's not a bad idea to reduce gearing in this climate. I also found the comments on underlying REITs insolvency risk quite assuring. All in all, not worth selling especially given that the bid offer spread is about 10%!

[jonwig] 25/9/2008 08:17

Interim Results:



Likely suspension of dividend thanks to reduction in gearing hence realised losses.
Confirmation that J-REITs unlikely to face insolvency.
Longer-term outlook positive.

[jonwig] 24/9/2008 16:19

ISA - I have a recollection (will try to find a link) that corporate actions in J-REITs require consent of both REIT and manager shareholders. Also that changing managers is not a 'clean' process.

It may be something to do with cross-shareholdings (which are the norm in Japan) or company law.

In any event, it would be unwise to apply Anglo-Saxon principles to the Inscrutable East.