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Lets hope the insurance company providing cover for Salzen properties is robust enough to pay out on all claims.
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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)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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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."
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15-03-2011, 09:01 AM
(This post was last modified: 15-03-2011, 09:02 AM by lonewolf.)
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.
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15-03-2011, 10:02 AM
(This post was last modified: 15-03-2011, 10:07 AM by corydorus.)
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
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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.