Saizen REIT

(11-03-2011, 11:04 PM)Nick Wrote: Updates from Saizen about their portfolio exposure to the affected regions.

http://info.sgx.com/webcoranncatth.nsf/V...000476EC6/$file/20110311_Earthquake_in_Northeastern_Japan.pdf?openelement

hope for the best for the brudders holding this stock.. I was lucky enough to get out of Saizen a few days ago..

Lets hope the insurance company providing cover for Salzen properties is robust enough to pay out on all claims.

As Sendai is near the epicentre of the massive undersea earthquake and suffered the frontal assualt of the resulting devastating tsunami, it is highly likely that Saizen's 22 properties in Sendai would have suffered very considerable damages.

Going forward, it is reasonable to expect these properties will suffer an immediate loss of rental income, massive clean-up/repair/re-building costs, and a substantial mark-down in market/capital value. To what extent Saizen can recover these extraordinary losses/costs from casualty insurance will depend on whether Saizen has insured the properties with all the appropriate policies and the extent of the insurance coverge, as well as whether the insurers concerned are able and willing to meet all the claims for this historic catastrophe in Japan.

Meanwhile, Saizen shareholders can better appreciate the extent of the massive physical damages in Sendai by reviewing the following videos/images.....
http://www.bbc.co.uk/news/world-asia-pacific-12722960
http://www.bbc.co.uk/news/world-12724473
http://www.bbc.co.uk/news/world-asia-pacific-12722026
http://www.nasa.gov/multimedia/imagegall..._1892.html

Saizen REIT is trading at 13.0 cents now (down 16.1%)

Another set of updates: http://info.sgx.com/webcoranncatth.nsf/V...2005EEE17/$file/20110314_Update_on_impact_of_earthquake_in_Japan.pdf?openelement

(Not Vested)

Response from Saizen...

"Thank you for your email enquiry and your concern for us.

As you may imagine, we are swamped with enquiries from different parties, including investors. So please accept our apologies for the delay in replying.

Regarding your first question, as disclosed in our IPO prospectus, Saizen does not generally maintain earthquake insurance on its properties. We believe this is consistent with industry practice in Japan for residential rental buildings. In general, these types of risks (such as war risk, risks of acts of terrorism, risk of nuclear contamination and risks of earthquakes) may be uninsurable or the cost of insurance may be prohibitively high when compared to the risk.

We will know very soon the full extent of the damages to our buildings (as we make further announcements). Our properties are in city center of Sendai where damages are relatively minor as compared with what you might have seen on TV, which are mainly tsunami-related in districts closer to the coast.

Regarding your second question, we have no immediate plans to raise new funds because of the earthquake.

Please let us know if you have further questions."

(15-03-2011, 01:25 AM)yyt Wrote: Response from Saizen...

"Thank you for your email enquiry and your concern for us.

As you may imagine, we are swamped with enquiries from different parties, including investors. So please accept our apologies for the delay in replying.

Regarding your first question, as disclosed in our IPO prospectus, Saizen does not generally maintain earthquake insurance on its properties. We believe this is consistent with industry practice in Japan for residential rental buildings. In general, these types of risks (such as war risk, risks of acts of terrorism, risk of nuclear contamination and risks of earthquakes) may be uninsurable or the cost of insurance may be prohibitively high when compared to the risk.

We will know very soon the full extent of the damages to our buildings (as we make further announcements). Our properties are in city center of Sendai where damages are relatively minor as compared with what you might have seen on TV, which are mainly tsunami-related in districts closer to the coast.

Regarding your second question, we have no immediate plans to raise new funds because of the earthquake.

Please let us know if you have further questions."

Hope for the best.... this means there's no insurance!

If what Saizen says is true about the "war risk, risks of acts of terrorism, risk of nuclear contamination and risks of earthquakes may be uninsurable or the cost of insurance may be prohibitively high when compared to the risk.", then it would probably also applies to properties own by GLP, MLT, Parkway Life, Starhill Gbl and FCOT.

So depending on the extent of the damages and repairs required, we can expect some impact on REIT's DPU becos of the increased cost. Some will be affected more than others. FCOT dodged a bullet cos they recently divested their Japan assets.

Quote:Saizen does not generally maintain earthquake insurance on its properties.

Oops. Game over.

Quote:Our properties are in city center of Sendai where damages are relatively minor

Brave words indeed.

Even a 100% intact building in the centre of Sendai is worth approximately zero today until Sendai is rebuilt. Who wants to work or live in Sendai now? Good luck trying to find a tenant.

A sensible investor should impair all the buildings in the affected coastal cities to zero and revalue the REIT accordingly.

Earthquarke insurance is actually a mandatory requirement for housing loan in taiwan.
To save on such basic cost put investors at significant high risks for such investment in Japan who are constantly exposed to such disasters.

Does this explain why the Reit was more attractive previously ?


Cory

in Japan earthquake insurance probably will be very different from the one in other areas. There are so many earthquakes every year in Japan.

but I remember GLP mentioned they insured against earthquake. wonder how much they paid for the insurance and insured against what kind of eartquake.