Saizen REIT

[opmi]

Why waste a listed shell?

[starcraft_76]

Saizen received written proposal....

Hope there are good news.

[tanjm]

Let's just say, charitably speaking, that the listing status is worth 5 mio. There are 287 mio shares in existence. So at most worth 1-2 cents per share. Then what happens if the suitor proposes to issue shares in lieu of cash? 8-)

[lonewolf]

Looks like the RTO is officially dead.

The board of directors of Japan Residential Assets Manager Limited (“Board”), the manager of Saizen REIT (the “Manager”), would like to update the unitholders of Saizen REIT (the “Unitholders”) that it is not possible to complete the Proposed RTO Transaction by the longstop date of the Implementation Agreement, being 31 March 2017.

Further to discussions between the Manager and Sime Darby Property Singapore Limited, the Proposed RTO Transaction will therefore NOT proceed.

The Manager will commence liquidation proceedings for Saizen REIT upon the mutual termination of the Implementation Agreement, and will make relevant announcements to keep Unitholders updated as appropriate on next steps.  

SOURCE: http://infopub.sgx.com/FileOpen/20170310...eID=442848

[opmi]

Looks like the RTO is officially dead.

The board of directors of Japan Residential Assets Manager Limited (“Board”), the manager of Saizen REIT (the “Manager”), would like to update the unitholders of Saizen REIT (the “Unitholders”) that it is not possible to complete the Proposed RTO Transaction by the longstop date of the Implementation Agreement, being 31 March 2017.

Further to discussions between the Manager and Sime Darby Property Singapore Limited, the Proposed RTO Transaction will therefore NOT proceed.

The Manager will commence liquidation proceedings for Saizen REIT upon the mutual termination of the Implementation Agreement, and will make relevant announcements to keep Unitholders updated as appropriate on next steps.  

SOURCE: http://infopub.sgx.com/FileOpen/20170310...eID=442848

Good sign for Sime Darby breakup

[slowandsteady]

Just entered into a classic arbitrage trade today. Fair value upon liquidation is 4.1c per share, currently still trading at 3.5c which is around 15% discount.

Valuation as at 28 Feb 2017:

http://infopub.sgx.com/FileOpen/20170315...eID=443348

1. Cash & cash equivalents: 8,464
2. Other receivables: 201 (no discount as it is due from Sime Darby, which in latest announcement confirmed payment)
3. Prepayments: 18 (discount to zero)

minus

4. Total liabilities: 109

Termination agreement on 31 March 2017 with Sime Darby:

http://infopub.sgx.com/FileOpen/20170331...eID=445744

5. Cash payment for unitholders: 3,000
6. Cash payment for operating costs: 200
7. Transactional expenses accrued: This confirms item 2 will be paid

also minus (this is an assumption)

8. Operating cost for liquidation: 333

Since the company is essentially pure cash, I assume the longest required for liquidation is 3 months, of which the manager's cost recovery for month of February was 111 so multiplied by 3.

Total cash payout of liquidation: 11,756k SGD

Total units: 287,024,902

Liquidation value per share: 4.1c per share

Note: Vested again, been buying since market opened today, so may be biased.

[lanoitar]

I did a liquidation arbitrage on BrightOrient (also a cash shell) back in 2012. The stock traded until Dec 2012, and I got my money only in Oct 2013 (10.5 months wait). Further, Saizen has guided prev'ly that the cash return upon liquidation is up to 2.37c (should the RTO proceed). Adding the additional $3m from Sime Darby to this, we'll get about 3.4c.

I suspect you may have over-est'ed your IRR

[slowandsteady]

On liquidation value:

The guidance of 2.37c was from last year, when the RTO was still in the works, and thus included costs for completing the RTO, before the remaining cash was returned to unit holders. The scenario now is Sime Darby returning the costs incurred, and paying an extra compensation on top of that.

From the current cash value of 4.1c per share to 3.5c last traded, it is a huge $1,722,000 assumed for the liquidation expenses. For comparison, the Bright Orient liquidation you mentioned spent around $350,000 for liquidation. If you add in the $333,000 I already budgeted in for expenses, that's over $2 million to liquidate a shell that's over 98% cash - a scenario I would deem unlikely.

On timeline:

The Bright Orient liquidation involved RMB and moving money out of China/HK, which generally requires more time. Saizen REIT should thus be faster, at least I hope so.

Anyway the key thing for me is that my downside is protected. It's a very unsexy way to invest, but I've learnt that if you don't (or make it very unlikely to) lose money, then good things may happen to you. So I'm happy with this, worst case I get a low IRR, best case I get a decent IRR

[lanoitar]

The guidance of 2.37c was from last year, when the RTO was still in the works, and thus included costs for completing the RTO, before the remaining cash was returned to unit holders.

Yes, I'm aware of this. But I bold-ed the "up to" in my orig post for a reason.

The Bright Orient liquidation involved RMB and moving money out of China/HK, which generally requires more time. Saizen REIT should thus be faster, at least I hope so.

When Bright Orient became a cash shell, its money was in S$ kept with Padang Trust (http://padangtrust.com.sg/index.html).

[weijian]

Anyway the key thing for me is that my downside is protected. It's a very unsexy way to invest, but I've learnt that if you don't (or make it very unlikely to) lose money, then good things may happen to you. So I'm happy with this, worst case I get a low IRR, best case I get a decent IRR

I thought this is at least sexier than "buy and hold long term"...
The downside seems pretty much protected and the discrepancy is in the upside. Appreciate this real-time sharing (and the guts to do so and take the risk of looking stupid in future) and "real time" learning as events unfold, beats any other form, any time.