Frasers Property (formerly: Frasers Cpt (FCL))

成功细中取，富贵险中求.
大富靠险, 小富靠俭.

(18-02-2014, 04:06 PM)CityFarmer Wrote:

(18-02-2014, 03:43 PM)freedom Wrote: If you study how the riches go from poor to rich, you will notice that most of them involve a great amount of debt. The return of asset is really low in most of the assets in the world. The simple way to double your wealth in short period is to take a huge amount of debt to acquire the asset. With 80% funded by debt, the asset valuation increase 20%, you doubled your wealth already. With 20% funded by debt, the asset valuation has to increase 80%. That's difficult and takes very long time. Getting credit from financial institutions cheap is difficult. For most common people, mortgage is the only way. For anyone inspired to get rich quickly, borrow as much as possible and as cheap as possible and repay your loan as slow as possible.

Is there any reason for TCC to repay its debt early if the debt is not called? I don't see any.

True. Property investment without leverage, is meaningless. But the debt must be owned by where is due.

FCL owning the debt is more appropriate, rather the holding company, IMO

FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

(18-02-2014, 04:50 PM)freedom Wrote:

(18-02-2014, 04:06 PM)CityFarmer Wrote:

(18-02-2014, 03:43 PM)freedom Wrote: If you study how the riches go from poor to rich, you will notice that most of them involve a great amount of debt. The return of asset is really low in most of the assets in the world. The simple way to double your wealth in short period is to take a huge amount of debt to acquire the asset. With 80% funded by debt, the asset valuation increase 20%, you doubled your wealth already. With 20% funded by debt, the asset valuation has to increase 80%. That's difficult and takes very long time. Getting credit from financial institutions cheap is difficult. For most common people, mortgage is the only way. For anyone inspired to get rich quickly, borrow as much as possible and as cheap as possible and repay your loan as slow as possible.

Is there any reason for TCC to repay its debt early if the debt is not called? I don't see any.

True. Property investment without leverage, is meaningless. But the debt must be owned by where is due.

FCL owning the debt is more appropriate, rather the holding company, IMO

FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

(18-02-2014, 04:54 PM)CityFarmer Wrote:

(18-02-2014, 04:50 PM)freedom Wrote: FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

No, he does not. What he cares more about is to own more assets, not few assets. So how could selling down his own assets help? I think again, agree to disagree.

Remember the transaction of Keppel Land selling OFC lease to Keppel REIT. Why so? There is no reason to give up a good asset though it could still control much of it. It is not as good as owning it all. Another transaction is Keppel Land buying Keppel Tower and GE tower back from Kepple REIT. Keppel Land will not share the profit of owing a good asset with other shareholders.

(18-02-2014, 05:02 PM)freedom Wrote:

(18-02-2014, 04:54 PM)CityFarmer Wrote:

(18-02-2014, 04:50 PM)freedom Wrote: FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

No, he does not. What he cares more about is to own more assets, not few assets. So how could selling down his own assets help? I think again, agree to disagree.

Remember the transaction of Keppel Land selling OFC lease to Keppel REIT. Why so? There is no reason to give up a good asset though it could still control much of it. It is not as good as owning it all. Another transaction is Keppel Land buying Keppel Tower and GE tower back from Kepple REIT. Keppel Land will not share the profit of owing a good asset with other shareholders.

?Give up asset? I thought we are talking about debt, not asset?

May be I am in the wrong discussion... Time to bow out.

How to transfer debt without transferring asset? money from thin air? are we talking about one side balance sheet? Nowadays, maybe more people look at one side balance sheet.

(18-02-2014, 04:30 PM)CityFarmer Wrote: I checked with the bank account, the small dividend of 1.73 cents per share is credited. Looking forward for more dividend(s) ahead, the same as its parent i.e. F&N, with direction from its Thai grandparent

(vested)

oh great! i have forgetten about this small dividend but it's good to have a few hundred entering the bank account

(18-02-2014, 04:54 PM)CityFarmer Wrote:

(18-02-2014, 04:50 PM)freedom Wrote:

(18-02-2014, 04:06 PM)CityFarmer Wrote:

(18-02-2014, 03:43 PM)freedom Wrote: If you study how the riches go from poor to rich, you will notice that most of them involve a great amount of debt. The return of asset is really low in most of the assets in the world. The simple way to double your wealth in short period is to take a huge amount of debt to acquire the asset. With 80% funded by debt, the asset valuation increase 20%, you doubled your wealth already. With 20% funded by debt, the asset valuation has to increase 80%. That's difficult and takes very long time. Getting credit from financial institutions cheap is difficult. For most common people, mortgage is the only way. For anyone inspired to get rich quickly, borrow as much as possible and as cheap as possible and repay your loan as slow as possible.

Is there any reason for TCC to repay its debt early if the debt is not called? I don't see any.

True. Property investment without leverage, is meaningless. But the debt must be owned by where is due.

FCL owning the debt is more appropriate, rather the holding company, IMO

FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

Actually the banks do care. The credit profile is different from asset, income or different entities. The credit spread will change.

Towkay will care if he is liable for the debt or his companies. Just like you will care if your son ask you to be his guarantor for a ferrari loan. That is why my base case has lawyas been FNN and ThaiBev will eventually pick up the credit card debt, not the towkay

(18-02-2014, 05:22 PM)specuvestor Wrote:

(18-02-2014, 04:54 PM)CityFarmer Wrote:

(18-02-2014, 04:50 PM)freedom Wrote: FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

Actually the banks do care. The credit profile is different from asset, income or different entities. The credit spread will change.

Towkay will care if he is liable for the debt or his companies. Just like you will care if your son ask you to be his guarantor for a ferrari loan. That is why my base case has lawyas been FNN and ThaiBev will eventually pick up the credit card debt, not the towkay

So do you mean the banks will pull their credit though TCC is paying as contracted without any sign of incapability of repayment, which would cause TCC to alter its plan?

(18-02-2014, 05:46 PM)freedom Wrote:

(18-02-2014, 05:22 PM)specuvestor Wrote:

(18-02-2014, 04:54 PM)CityFarmer Wrote:

(18-02-2014, 04:50 PM)freedom Wrote: FCL shares are probably pledged anyway. So there is no much difference for the banks loaning the money. They are getting paid as contracted. It does not matter where the money is from. The important thing is the capability to repay the loan. Remember TDSR from MAS?

Does the bank care whether the mortgage is paid by rent income from the collateral or the salary the borrower earns?

I agree bank will not care much, but Mr. Towkay cares.

Actually the banks do care. The credit profile is different from asset, income or different entities. The credit spread will change.

Towkay will care if he is liable for the debt or his companies. Just like you will care if your son ask you to be his guarantor for a ferrari loan. That is why my base case has lawyas been FNN and ThaiBev will eventually pick up the credit card debt, not the towkay

So do you mean the banks will pull their credit though TCC is paying as contracted without any sign of incapability of repayment, which would cause TCC to alter its plan?

Actually funding cost taken at holding company level may not qualify for tax deduction. It does make sense in many instances to push down the debt to operating entity level, just to save some taxes.