Croesus Retail Trust

[tanjm]

You can look at this from a "black box" point of view.

Most of the issue is to institutions. They have access to cheaper funding and have access to hedging products than your retail investor. It therefore stands to reason they are willing to pay more for any given risk opportunity. Therefore, the IPO is likely slightly overpriced from retailer point of view.

Having said that I'd prob pick up a little under ipo price. All of the leases are long term and aeon is a very well established surburban retailer selling reasonable priced stuff to middle income families in out of town centre locations.

[KopiKat]

Also bear in mind that CRT is at a high gearing and any further acquisition will require a right issue. That, I think is the greatest risk of holding on to CRT for a even a mid term period.

The interesting thing is, in recent times, the kind of fierce market sell-down during and post-GFC (perhaps till as late as last year) whenever a REIT announces Equity Fund Raising, doesn't seem (die lah... becoming complacent and lazy to check and support with solid figures) to be true anymore. I was paying close attention to the recent ones by AIMSAMPReit & FE-HTrust cos' of the impending one by A-HTrust (likely will announce with their upcoming results on 29th) - to play safe, I even reduced my holdings.

It'd appear that the current market love affair with yield related stocks (esp. REITs) is mitigating (even over-whelming) the previous fears. Perhaps it's different (famous last words?) this time? Currently, the majority of REITs are trading at a huge premium (many are >30%) to NAV. Any Equity Fund Raising, even at a large discount to prevailing market price, will still result in a positive effect on the NAV. Add in a good dose of Debt Financing, the funds raised and used to acquire new assets, will result in higher yield! Good time for Financial Engineering, eh? We ought to be seeing a big rush by REITs to do Equity Fund Raising to do massive acquisitions to raise their AUM and thus fess in the coming days if STI remains strong...

[tanjm]

Yes Yen is dropping, but as for Saizen REIT, a dual edged sword. The Japanese Gov's QE program may result in asset inflation.

I've been struggling with this for a while. How do u judge which edge is sharper?

You don't really. But if I were to compare to you a Frasier Commercial Trust at a 4.6% yield vs this one at 8% yield and you are a long term income oriented investor, does this "make up" for the uncertainty?

[Contrarian]

> long term income oriented investor, does this "make up" for the uncertainty

This is a BUSINESS TRUST brother. Unlike REITs, not bound by SGX rules to issue dividends.

Quality of property income and the quality of the manager is MOST CRUCIAL.

So many yield instruments now out, the yield is either very pathetic or the assets is questionable.

Will you buy an overpriced real estate property and then get the yield that is factored into 5-10 years of property income? Just my views.

[tanjm]

Did you leave out the question mark on purpose?

[Dividend Warrior]

The gearing is rather high.......

I will give this a miss.....

[MINX]

Even though the yield is 8%(forecasted), yen depreciation is almost a sure thing, the question is how much of the yield will get lopped off eventually? Any one hazard a guess? It seems most people here have no intention of holding this for even the medium term?

[AlphaQuant]

Even though the yield is 8%(forecasted), yen depreciation is almost a sure thing, the question is how much of the yield will get lopped off eventually? Any one hazard a guess? It seems most people here have no intention of holding this for even the medium term?

FX is not really that big an issue given that they have hedged the cashflow for the next 2 years. natural hedges can be put in place as well by borrowing in jpy so the FX component relies on the capability of the trustee-manager.

over the long term, it does feel like this is being setup for a lot of acquisitions - the fact that this is a trust (so they have the flexibility of gear and DPU payout) and that the manager's fees are all functions of asset +acquisition+disposal values.

ultimately given the amount of freedom the TM has (which is a plus and/or minus), how well this does in the long run depends on how capable/alignment of interests the TM is/has.

[MINX]

Even though the yield is 8%(forecasted), yen depreciation is almost a sure thing, the question is how much of the yield will get lopped off eventually? Any one hazard a guess? It seems most people here have no intention of holding this for even the medium term?

FX is not really that big an issue given that they have hedged the cashflow for the next 2 years. natural hedges can be put in place as well by borrowing in jpy so the FX component relies on the capability of the trustee-manager.

over the long term, it does feel like this is being setup for a lot of acquisitions - the fact that this is a trust (so they have the flexibility of gear and DPU payout) and that the manager's fees are all functions of asset +acquisition+disposal values.

ultimately given the amount of freedom the TM has (which is a plus and/or minus), how well this does in the long run depends on how capable/alignment of interests the TM is/has.

Thanks for sharing your views on this. As for the growth story, it seems that all of it's ROFR are all expiring in 2013, which is barely a few months after listing, which means not that great a growth pipeline, to make things worse, it's gearing is already high at 47.3%. Most of other Reits have ROFR which expire in at least 3 years or so, which give them more time to acquire the assets?

[felixleong]

Heard from brokers that demand is hot

I have attached an easy to read fact sheet in my blog, can feel free to take a look at

http://stockbrokerplayspoker.blogspot.sg...sheet.html