Croesus Retail Trust

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Croesus trust eyeing two more malls

It sees growth opportunities in Japan with asset values falling significantly
Published on May 17, 2014 1:38 AM


Mr Yong does not see the Croesus Retail Trust being overly affected by the Japanese consumption tax hike.

By Rennie Whang

THE Japan-focused Croesus Retail Trust (CRT) is stepping up its growth strategy a year after its initial public offering (IPO).

In March, it acquired two new malls, bringing the total to six and expanding net lettable area by about 9 per cent, and the portfolio value by about 28.3 per cent to 67.8 billion yen (S$834 million).

Mr Jeremy Yong, non-executive director of the trustee manager, told The Straits Times that two more assets are on the cards.

CRT has first right of refusal to acquire a mall in Kyoto, and another in Saga, Kyushu. "We want to do it at an appropriate time. But if we can close something this year, we would love to," said Mr Yong, who is also group managing director of CRT sponsor Croesus Merchants.

CRT announced its third-quarter results on Thursday with distribution per unit of 1.76 cents, 8 per cent higher than forecast.

It came on the back of a net property income of 933.7 million yen, 12.3 per cent more than forecast, and a gross revenue of 1.39 billion yen. It is the third straight quarter that CRT has outperformed forecasts, Mr Yong said, adding: "We've come a long way since our May 10 listing."

He said CRT will not venture out of Japan for the medium term, "at least a few years from initial public offering", adding: "CRT is built for the long term. If there are compelling opportunities outside of Japan in the future, if it's in the interest of shareholders, we have a duty to consider it."

Opportunities in the next half a decade are in Japan, with many asset values having fallen significantly since the bubble years, Mr Yong said. "Under Abenomics, we are seeing wages and corporate spending slowly coming back up."

He added that Japan is a "difficult market to penetrate" but its network - five of six in its management team are Japanese, and Japan's Daiwa House Industry and Marubeni Corporation are its strategic partners - affords it a flow of privately negotiated deals, rather than having to rely on auctions.

While CRT's counter has fallen from its IPO high of $1.145, Mr Yong said he felt operations will continue to do well, which he hopes the market will recognise.

"Rental reversions are good, (with percentages) ranging from the mid-teens to high 20s and it should drive earnings up. If we continue to do accretive acquisitions, distribution will be up. If Japan moves in the direction which we feel it is moving, capital values and net asset values will go up."

Mr Yong said he did not see CRT being overly affected by the Japanese consumption tax hike which kicked in on April 1, given the trust's suburban mall exposure of 65 per cent and that its tenants mainly sell day-to-day items.

"There might be temporary disruptions to retail sales. But Singapore went through it, every country goes through it... National retail sales may come off a little in April and perhaps May, but it should pick up again."

CRT units closed up 1.5 cents to 95 cents yesterday.

wrennie@sph.com.sg
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(20-02-2014, 08:48 PM)arriyana Wrote: I think Croesus has one of the best yield available now, even though its leverage is pretty high even for industry standard.

I think its gearing level is around 50% now.
My Dividend Investing Blog
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Proposed Acquisition of One's Mall

http://infopub.sgx.com/Apps?A=COW_CorpAn...ep2014.pdf
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hello, may i know whats the difference between biz trust and REIT?

also they have:
1) trustee-manager (Croesus Partners)
2) Japan Asset Manager (Tozai AM)
3) property managers

why they have so many managers? what are their functions? does this mean their mgmt fees are higher than other SG REITs?

xie xie
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(29-10-2014, 04:53 PM)rickytj Wrote: hello, may i know whats the difference between biz trust and REIT?

The following article should help.

http://www.moneysense.gov.sg/~/media/Mon...0Trust.pdf
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(29-10-2014, 04:58 PM)CityFarmer Wrote:
(29-10-2014, 04:53 PM)rickytj Wrote: hello, may i know whats the difference between biz trust and REIT?

The following article should help.

http://www.moneysense.gov.sg/~/media/Mon...0Trust.pdf

thanks

could you answer my second question of the function of each manager and whether this can cause higher management fees vs other Sg REITs?

this company looks decent... good yields, very experience management, very good ROFR portfolio, malls look ok as well... the only concern besides its high debt is its track record which we have no info
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also another observation,

we may think the DPU of 8.98 cents is too high because it covers 417 days of financial year (since 10 May 2013, date of IPO until 30 Jun 2014, date of book closing)

but actually according to page 27-34 of AGM presentation, 2 of its 6 properties (Luz Omori and Nis Wave 1) only contributed 117 days of rental income during the financial year (the rest 4 properties indeed contributed 417 days). So if we annualized the rental income from its 6 properties, it turned out the total rent income would have been higher than the reported one, which means the distribution income (DPU) would have been higher than 8.98 too (unless offset by increasing number of units)...

so when calculating the yield, using 8.98 is actually still ok, and perhaps even understate the actual yield...

whats your view?
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http://infopub.sgx.com/FileOpen/Use_of_P...eID=376425

Rights issue completed successfully. The business trust owns a number of freehold retail assets on long term master lease. Dividend yield exceeds 9% which is substantial compared to the 2-4% yield for J-REITs. While gearing may seem high, property valuation is improving and cost of debt is low at 1%. Forex and natural disasters remains the big risk.

(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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The tax seems to be extremely high, based on the 2015 AR.
About 2 billion yen out of profit of 2.96 billion yen of profit before fair value change.
This seems to be caused by the large fair value gain. They will be better off using historical cost accounting. Are they forced to using fair value accounting for some reason?

I think the earthquake risk is significant, considering that experts estimate a 70% chance of a major earthquake near the Tokyo area within the next 4 years.
5 of their properties are in the greater Tokyo area.
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(04-11-2015, 09:56 AM)gzbkel Wrote: The tax seems to be extremely high, based on the 2015 AR.
About 2 billion yen out of profit of 2.96 billion yen of profit before fair value change.
This seems to be caused by the large fair value gain. They will be better off using historical cost accounting. Are they forced to using fair value accounting for some reason?

I think the earthquake risk is significant, considering that experts estimate a 70% chance of a major earthquake near the Tokyo area within the next 4 years.
5 of their properties are in the greater Tokyo area.

The current tax is just 370k yen. Deferred tax (non-cash) is 1.7 bil yen. This comes from the fair value property gains. Don't see how either property valuing method will affect its cash earnings.

(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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