Forterra Trust (formerly: Treasury China Trust)

[Boon]

Boon San

Thank you Sir! Only thing I'm fed up with is the "chicken" fund manager / pension fund. Nan Fung is clearly interested in the property having named it Nan Fung City in Chinese. I will not argue with my profits but the guy laughing to the bank is NF.

Hi “HitandRun”

1) APG is a pension fund – I am not too sure if they have sold their stakes.
2) It looks obvious enough that NF is after the assets and not the platform.
3) Disappointedly, the second largest SSH whom we thought could take the lead in “toughing” it out with NF to prevent it from crossing the 50% mark happened to be the first facilitator to help NF crossed the line – making the “voluntary liquidation/assets divestment” route an impossible route. And the trade-off for that is the increase in Offer Price from 1.85 to 2.25
4) Well, each Shareholder (SSH, fund managers included) have different investment objectives and profiles – PAG seems happy to throw in the towers at 2.25
5) The outcome could have been better or it could have been worse.
6) Share price = 2.38 (highest) and 1.03 (lowest) ; without considering time value of money, I don’t think there are many losers at 2.25 , except those that had thrown in the towers earlier.
7) Managers of Reits/BT are allowed to charge fees from shareholders based on market appraised asset values. But when it comes to takeover, the rules seems to disregard asset values (NAV/RNAV) all together – Offerors need to justify their offer prices based on VWAP only – to me this is a “double standard”.
8) No doubt about that – NF is the biggest winner – current rules seem to favor the Offerors at the expenses of the Offerees.
9) For me, it is game over - with NF having crossed the 50% mark.
10) It has been a profitable investment venture and good learning experience. Can't complain !

(vested – to be divested)

[PekingDuck]

Boon San

Thank you Sir! Only thing I'm fed up with is the "chicken" fund manager / pension fund. Nan Fung is clearly interested in the property having named it Nan Fung City in Chinese. I will not argue with my profits but the guy laughing to the bank is NF.

Hi “HitandRun”

1) APG is a pension fund – I am not too sure if they have sold their stakes.
2) It looks obvious enough that NF is after the assets and not the platform.
3) Disappointedly, the second largest SSH whom we thought could take the lead in “toughing” it out with NF to prevent it from crossing the 50% mark happened to be the first facilitator to help NF crossed the line – making the “voluntary liquidation/assets divestment” route an impossible route. And the trade-off for that is the increase in Offer Price from 1.85 to 2.25
4) Well, each Shareholder (SSH, fund managers included) have different investment objectives and profiles – PAG seems happy to throw in the towers at 2.25
5) The outcome could have been better or it could have been worse.
6) Share price = 2.38 (highest) and 1.03 (lowest) ; without considering time value of money, I don’t think there are many losers at 2.25 , except those that had thrown in the towers earlier.
7) Managers of Reits/BT are allowed to charge fees from shareholders based on market appraised asset values. But when it comes to takeover, the rules seems to disregard asset values (NAV/RNAV) all together – Offerors need to justify their offer prices based on VWAP only – to me this is a “double standard”.
8) No doubt about that – NF is the biggest winner – current rules seem to favor the Offerors at the expenses of the Offerees.
9) For me, it is game over - with NF having crossed the 50% mark.
10) It has been a profitable investment venture and good learning experience. Can't complain !

(vested – to be divested)

Boon, agree. I expected PAG, by virtue of their reputation, to do what they claim to do and be more activist and demanding. They seem to have rolled over at the first opportunity, i think we could have pushed for more than $2.50. I wouldn't be surprised if there's some 'back-scratching' going on here. The Sing market clearly favours insiders.

One thing, do we now still expect to hear from the ID's on the revised offer (are they also going to roll over) or does the fact that the offer is over the 50% mark influence this? By rights, I believe we should still hear from them..

Panmures agree and believe it's game over. The alternative is to stay as a minority, with the rump of the share issue, poor liquidity, no-one covering the stock, open to total control and dominance by NF without any reference to shareholders. A bit like the last 12 months in fact..! It's a disappointment. My average here allows me to exit with 50%+ gains and like you say, a better understanding of business trusts and deep value situations in Asia, but it feels like a long 5 years...

PD

[opmi]

5 years ago FT was controlled by 2 chow kuan Irishmen who O€ but never P€. Be thankful NF cleaned up the sh@@.

[Boon]

Thanks GG，

In general, I share your observations on the Chinese commercial property trend – but opportunities are still abound in the huge Chinese markets, IMO.

To me, NF is simply interested in the assets and not the platform of FT - it has never appeared to me that they have any genuine interest to own and run a listed company – I don’t think they like the “constraints” of operating in the “public mode”.

Boon,

U have done well. the key question from here will be should one trust NF to keep delivering on their listed vehicle in view of the headwinds in Chinese property mkt.

We have to note that Chinese commercial real estate is transitioning from a low yielding, high capital returns model to one that is hopefully adequately yielding with reasonable capital returns.

I have no vested interests but certainly monitoring...

GG

Thanks for all the kind words - I will take credit for providing most of the free research – credits must also be given to other contributors.

As I have always insisted, one should be fully responsible for the consequences of one’s investment decision - the decision to invest, divest, hold on or throw in the towers ultimately lies with each individual investor – so congratulations to buddies who have made positive returns from this counter.

(vested)

[Boon]

Boon San

Thank you Sir! Only thing I'm fed up with is the "chicken" fund manager / pension fund. Nan Fung is clearly interested in the property having named it Nan Fung City in Chinese. I will not argue with my profits but the guy laughing to the bank is NF.

Hi “HitandRun”

1) APG is a pension fund – I am not too sure if they have sold their stakes.
2) It looks obvious enough that NF is after the assets and not the platform.
3) Disappointedly, the second largest SSH whom we thought could take the lead in “toughing” it out with NF to prevent it from crossing the 50% mark happened to be the first facilitator to help NF crossed the line – making the “voluntary liquidation/assets divestment” route an impossible route. And the trade-off for that is the increase in Offer Price from 1.85 to 2.25
4) Well, each Shareholder (SSH, fund managers included) have different investment objectives and profiles – PAG seems happy to throw in the towers at 2.25
5) The outcome could have been better or it could have been worse.
6) Share price = 2.38 (highest) and 1.03 (lowest) ; without considering time value of money, I don’t think there are many losers at 2.25 , except those that had thrown in the towers earlier.
7) Managers of Reits/BT are allowed to charge fees from shareholders based on market appraised asset values. But when it comes to takeover, the rules seems to disregard asset values (NAV/RNAV) all together – Offerors need to justify their offer prices based on VWAP only – to me this is a “double standard”.
8) No doubt about that – NF is the biggest winner – current rules seem to favor the Offerors at the expenses of the Offerees.
9) For me, it is game over - with NF having crossed the 50% mark.
10) It has been a profitable investment venture and good learning experience. Can't complain !

(vested – to be divested)

Boon, agree. I expected PAG, by virtue of their reputation, to do what they claim to do and be more activist and demanding. They seem to have rolled over at the first opportunity, i think we could have pushed for more than $2.50. I wouldn't be surprised if there's some 'back-scratching' going on here. The Sing market clearly favours insiders.

One thing, do we now still expect to hear from the ID's on the revised offer (are they also going to roll over) or does the fact that the offer is over the 50% mark influence this? By rights, I believe we should still hear from them..

Panmures agree and believe it's game over. The alternative is to stay as a minority, with the rump of the share issue, poor liquidity, no-one covering the stock, open to total control and dominance by NF without any reference to shareholders. A bit like the last 12 months in fact..! It's a disappointment. My average here allows me to exit with 50%+ gains and like you say, a better understanding of business trusts and deep value situations in Asia, but it feels like a long 5 years...

PD

Hi PD,

The Offeree Document would still be dispatched based on the revised offer price.

Regardless of the IDs opinion on the fairness of the offer – it is not going to change the Offer Price.

This is likely to be their recommendations:

“Shareholders who wish to take this opportunity to realize their investments in the Company in the near term and/or who are not prepared to accept the uncertainties facing the future prospects of the Company may wish to ACCEPT the Offer。

Shareholders who are confident and optimistic about their equity investments in the Company and the prospects of the Company under the control of the Offeror may wish to REJECT the Offer.

Shareholders who do not wish to accept the Offer should be aware that they will be subject to the general risks associated with share investments, including but not limited to fluctuations in the price and trading liquidity of the FT Shares. Shareholders should also note that in the 3-year period leading up to the Offer Announcement Date, the FT Shares have rarely traded above the Revised Offer Price of 2.25 and it is likely that the market price of the FT Shares as at the Latest Practicable Date is highly influenced by the Offer and may not be maintained at such levels after the close of the Offer……………………………..”.

In short, you are right - stay as a minority if FT remains listed, or stay out.
The choice is yours.

[weijian]

Recent acquisition strategies seem to run along the lines of (1) Start with low ball price X, (2) Revise to higher price Y and final offer.

This seems to nudge sellers towards price X as the anchor, rather than NAVs etc. Not sure whether it will still be as useful moving forward..

[CityFarmer]

Recent acquisition strategies seem to run along the lines of (1) Start with low ball price X, (2) Revise to higher price Y and final offer.

This seems to nudge sellers towards price X as the anchor, rather than NAVs etc. Not sure whether it will still be as useful moving forward..

It is a useful negotiation technique, by sellers. Started off with an preferred anchor price, before negotiation. I guess the technique is useful, and will continue be used.

Within a face-to-face negotiation, the buyers will counter-act with a different price, to set another anchor, to show the gap.

(not vested, and not interested but share a view)

[safetyfirst]

Recent acquisition strategies seem to run along the lines of (1) Start with low ball price X, (2) Revise to higher price Y and final offer.

This seems to nudge sellers towards price X as the anchor, rather than NAVs etc. Not sure whether it will still be as useful moving forward..

It is a useful negotiation technique, by sellers. Started off with an preferred anchor price, before negotiation. I guess the technique is useful, and will continue be used.

Within a face-to-face negotiation, the buyers will counter-act with a different price, to set another anchor, to show the gap.

(not vested, and not interested but share a view)

in fact , when you are buying a property in the future, resale especially, this is a good negotiation technique, pick it up, it may save you a couple of thousands

[constanty]

Boon, Peking duck, it has been a great and fruitful journey and I thank you for the quality and depth of posts and research, as a way to re-invest our hard earned capital gains I have posted on KECK SENG thread an update on the potential I see, the narrative is different than Forterra Trust, but the discount is similarly very striking and the potential rewards very solid.

Again, thanks from the bottom of my wallet . I am eternally grateful.

[Boon]

Boon, Peking duck, it has been a great and fruitful journey and I thank you for the quality and depth of posts and research, as a way to re-invest our hard earned capital gains I have posted on KECK SENG thread an update on the potential I see, the narrative is different than Forterra Trust, but the discount is similarly very striking and the potential rewards very solid.

Again, thanks from the bottom of my wallet . I am eternally grateful.

Thanks Constanty.

We only managed to extract 2.25 out of 3.90 (NAV) from Forterra Trust - do you think more could be unlocked from Keck Seng, considering that it is already a majority controlled company ? Ha-ha !

Just kidding ! Well, no two companies are exactly the same - will definitely look into it.