Forterra Trust (formerly: Treasury China Trust)

(10-03-2014, 11:03 AM)HitandRun Wrote:

(10-03-2014, 10:04 AM)opmi Wrote: Why dont let UOS options expire in June 2015? Is it dumb for Nan Fung to increase potential takeover price to $2.98 (by additional 65% from $1.80)for just 3.05m shares (Options are right, but not the obligation)

So your point is that Nan Fung paid approx 8 million for the UOS and get them extended for a year or so for the sake of letting them expire worthless? You could be right you know. After all, all billionaires are eccentric people.

Agreed that NF wont let UOS expire worthless. UOS Exercise price is S$0.34816. So exercising it wont trigger an Offer at $2.98 after 14 July 2014.

How much did they paid for the extension specifically?

NF can make a low premium offer (like $2) after 14 July 2014 to cross 30%. After Offer close, exercise the UOS progressively (less than 1% of OS shares every 6 months) without trigger any offer. Even if triggering the Offer, will be the highest of [the last Offer price (e.g. $2), Mkt purchase price ($1.8) or UOS exercise price (S$0.34816)]

No $2.98 Offer in sight. Unless billionaires are REALLY eccentric people, like you said.

Opmi-san

I don't mind fellow investors holding differing opinions. However, in order to have a meaningful discussion, one should be au fait with the facts. It is painfully clear to me that you did not even read the first announcement on the sale to Nan Fung properly.

(10-03-2014, 04:00 PM)HitandRun Wrote: Opmi-san

I don't mind fellow investors holding differing opinions. However, in order to have a meaningful discussion, one should be au fait with the facts. It is painfully clear to me that you did not even read the first announcement on the sale to Nan Fung properly.

Just one part on the extension only. Not a big thing in grand scheme of things.

What other facts did I not get it right?? The exercise price??

Under the UPA, each of Mr Richard Barrett and Mr Rory Williams has also agreed to assign to
New Precise 2,675,000 and 375,000 existing unit options, respectively, which are currently held by
them under the Forterra Unit Option Scheme (the “UOS”) at an agreed price per unit option of
S$2.98 less the relevant exercise price of the relevant unit option of S$0.34816 (the "Unit Option
Assignment"). In conjunction with the above, the Unit Option Scheme Committee (comprising
four independent Directors of the Board, and who are not parties to the Sale Transaction or the
Settlement) has also approved (contingent upon the completion of the Sale Transaction) the said
assignment, the extension of the exercise periods of the unit options which are the subject of the
said assignment (i.e. to 30 June 2015), and the extension of the exercise periods of all other unit
options under the UOS currently in issue by a year.

(06-03-2014, 09:49 PM)Boon Wrote: This report was updated by Edison Research on 20-Feb-2014 before the release of FY2013 result on 28-Feb-2014

http://media.corporate-ir.net/media_file...Delays.pdf

(Vested)

I don't know whether investors have realized that even with HQ's contribution, the trust would hardly make any profit.

So what makes it a worthwhile investment? The NAV not backed up by any real profit?

(11-03-2014, 09:57 AM)freedom Wrote:

(06-03-2014, 09:49 PM)Boon Wrote: This report was updated by Edison Research on 20-Feb-2014 before the release of FY2013 result on 28-Feb-2014

http://media.corporate-ir.net/media_file...Delays.pdf

(Vested)

I don't know whether investors have realized that even with HQ's contribution, the trust would hardly make any profit.

So what makes it a worthwhile investment? The NAV not backed up by any real profit?

Hi Freedom,

What profit are you talking about? Accounting Profit or Cash Profit ?

For S-Reit : it must distribute at least 90% of income to enjoy tax transparency.
For Company : Dividends can be paid from distributable profits only (accounting profit)
For Business Trust (BT) : Dividends can be paid out of cash profits instead of accounting profits;

Forterra Trust has been constituted as a Business Trust.

In FY2013, Foterra had incurred negative Accounting Profit (Loss) but positive Cash Profit (Gain).

Amount from realised gains available for distribution to Unitholders at the end of the period (31-Dec-2013) = SGD 37.88 million ( = SGD 0.149 per unit)

As at 31 December 2013, the Trust had total cash holdings equivalent to SGD 112.94 million, of which 29.3% was held onshore in China in RMB.

The Board has determined that in light of the ongoing development program of The HQ and the planned refurbishment of Huai Hai Mall to commence in 2014, that there would not be a distribution declared for the six months ended 31 December 2013.

“The NAV not backed by any REAL Profit” – Was the profit realised from disposal of Central Plaza not REAL ?

Contrary to your view, with Full contributions from the completed HQ, I believe the Cash Profits would improve quite substantially.

(Vested)

Quote:“The NAV not backed by any REAL Profit” – Was the profit realised from disposal of Central Plaza not REAL ?

Was it really profit? I thought the trust incurred loss on its book value? It also depends on how often they can do such deal. How long has the BLP been on the market? two years?

At the end of the day, what matters is the cash flow generated from the asset or operation minus all the cost incurred. In the last 12 months, this trust generated negative profit. Your positive cash profit probably does not take financial cost into account? You can choose to ignore it, but financial cost is as real cost as any other cost.

If we are talking about balance sheet, it has to spend a great deal of its cash holding to finish the HQ. So you can say how much cash they have in their bank account today, however, they have to spend it very soon. Is it there or isn't it there?

During subprime crisis, everybody was hoping someone else will come and buy my CDOs at a higher price thus ignored the cash flow generating ability of the underlying mortgage. What happened eventually?

(11-03-2014, 12:54 PM)freedom Wrote: Was it really profit?

REAL solid capital gain - If it is not REAL profit, then what is it ?

(11-03-2014, 12:54 PM)freedom Wrote: I thought the trust incurred loss on its book value?

As at 31-December-2013, Net Asset = SGD 1,323 million (FY2012 = SGD 1,257 million) = +5%

(11-03-2014, 12:54 PM)freedom Wrote: It also depends on how often they can do such deal. How long has the BLP been on the market? two years?

it depends on what prices the Mangement is willing to dispose of the asset for.
NAV=SGD 4.68 per unit
if they are wlilling to let go of ALL assets at say 25% discount (SGD =3.51), I believe many REPE funds including ARA would buy. If the disposal is structured in simailar way to Central Plaza disposal - could save SGD 1.55 per share in Deffered Tax Liability.
That said - my take on BLP is it would be disposed at +/- 10% of its BV.

(11-03-2014, 12:54 PM)freedom Wrote: At the end of the day, what matters is the cash flow generated from the asset or operation minus all the cost incurred.

Agreed.
In real estate investment, gains are made in the forms of Capital Gain + Rental Income
Cash flows generated from Capital Gain are REAL too

(11-03-2014, 12:54 PM)freedom Wrote: In the last 12 months, this trust generated negative profit. Your positive cash profit probably does not take financial cost into account? You can choose to ignore it, but financial cost is as real cost as any other cost.

In the last 12 months the trust generated negative ACCOUNTING profit.
Of course, financial cost is REAL and has been take into consideration. The point I am highlighting is the Trust has generated Cash Profit and has money off shore (in Singapore) to make distribution to unit-holders if the Management chooses to do so

(11-03-2014, 12:54 PM)freedom Wrote: If we are talking about balance sheet, it has to spend a great deal of its cash holding to finish the HQ. So you can say how much cash they have in their bank account today, however, they have to spend it very soon. Is it there or isn't it there?

Financing for the HQ had been obtained long time ago. As at 31-Dec-2013, they need another SGD90 million to complete the HQ

(11-03-2014, 12:54 PM)freedom Wrote: During subprime crisis, everybody was hoping someone else will come and buy my CDOs at a higher price thus ignored the cash flow generating ability of the underlying mortgage. What happened eventually?

Property valuations are cash-flow based (DCF) . In the case of Forterra, MOS is plenty

(vested)

Maybe you can show me how you derived the property value using DCF for Forterra Trust? From my limited DCF calculation, either the valuation of properties within the portfolio is overstated or the assumption is overly optimistic. of course, when valuation, you can always choose to ignore all the cost no matter how real it is. So what's the income to be used? The gross income or the income after operating and finance cost? Is a property with 100 million gross income witout finance cost and operating cost worth the same as a property with 100 million gross income but with 50 million finance cost and another 50 million operating cost?

Capital gain is only real when it is transacted. Before that, it is only a number anyone can assume. Valuation is different, under proper and reasonable model, it is as real as any price in the market; however, capital gain is not.

Then again, maybe you can show how the trust generated a profit within the last 12 months?

Quote:The Sale Consideration of approximately US$266.73 million (equivalent to RMB1.67 billion) is a discount of RMB143.0 million (approximately 7.9%) to the Valuation.

If this is not considered as a loss on disposal, I don't know what it is. You can use accounting to mask it, it is as real a loss on disposal as any other transaction.

Hi

Anyone know if the convertible bond holders choose to convert into shares, will they lose the all accrued interest on the bond? Or will they lose just the interest for the remainder period? Currently it pays 6% in cash interest p.a. with the remainder (working to an annualised 16.75% p.a.) to be made up at the redemption deadline in Sep-14.

Or if someone could point to the debt documentation it would be very helpful.

Many thanks!

(11-03-2014, 04:07 PM)freedom Wrote: Maybe you can show me how you derived the property value using DCF for Forterra Trust? From my limited DCF calculation, either the valuation of properties within the portfolio is overstated or the assumption is overly optimistic. of course, when valuation, you can always choose to ignore all the cost no matter how real it is. So what's the income to be used? The gross income or the income after operating and finance cost? Is a property with 100 million gross income witout finance cost and operating cost worth the same as a property with 100 million gross income but with 50 million finance cost and another 50 million operating cost?

Capital gain is only real when it is transacted. Before that, it is only a number anyone can assume. Valuation is different, under proper and reasonable model, it is as real as any price in the market; however, capital gain is not.

Then again, maybe you can show how the trust generated a profit within the last 12 months?

Quote:The Sale Consideration of approximately US$266.73 million (equivalent to RMB1.67 billion) is a discount of RMB143.0 million (approximately 7.9%) to the Valuation.

If this is not considered as a loss on disposal, I don't know what it is. You can use accounting to mask it, it is as real a loss on disposal as any other transaction.

Frankly, I don't understand why anyone would bother risking their money betting on Forterra? If you need exposure to China malls or property, go for CMA, it's a safer buy anytime of the year & it's share price is cheaper than Forterra & CMA pays a decent dividend too & is not loss making.