Forterra Trust (formerly: Treasury China Trust)

[Nick]

The Company secured funding for the development of its Beijing Logistic Park

http://info.sgx.com/webcoranncatth.nsf/V...A0010412F/$file/BLP_Financing_-29-11-10.pdf?openelement

TCT is a property developer trust which aims to develop its own assets for rental income or for capital gains through divestment. It has forecast a quarterly dividend payout of $0.025 per quarter for FY 2010 and FY 2011.

(Not Vested)

[cyborg]

Based on the last done price of $1.5, this translates to a dividend payout 6.67% pa.

[Nick]

It must be noted that the distributions are being derived from its profit made from a property sale prior its listing. There is no guarantee (though pretty good chance) that the future rental revenue will be able to fund (and increase) the DPU in the future.

Personally, TCT strikes me as a business trust with pretty high quality assets. But the business model is new and the Management has yet to be tested, so I guess it is best to adopt a wait and see approach ?

There are plenty of research reports available in its website for those interested.

(Not vested).

[Nick]

Proposed Acquisitions of Cental Mall, Qingdao, China and Retail Mall, Shanghai, China

http://info.sgx.com/webcoranncatth.nsf/V...40028ADCC/$file/Central_Avenue_Mall_and_Retail_Mall_Proposed_Acquisition_Final.pdf?openelement

It will be interesting to see how this property developer trust (a new asset class) will fare in the coming years.

(Not Vested)

[Blackjack]

Nick, you seem pretty upbeat about the prospects of TCT.

In your view how does it compare up to CRCT?

[Nick]

I am not upbeat about its prospects. I just find it interesting and I like to keep a watch over it. It is a new company and time is needed to see how good the Management is.

TCT is a property developer trust while CRCT is a REIT. CRCT will purchase matured malls from CMA in the future while TCT will develop its own assets for rental income or divesting it at a profit. At the moment, TCT is under-taking 3 development projects which will be completed between 2H 2011 and end of 2012. This entails a higher risk and hence a higher reward.

Perhaps, it will be more apt to describe TCT as a cross between CRCT and CMA.

[Nick]

TCT announced that its private placement at 9.2% premium to its share price prior the trading halt was well subscribed.

It uploaded a presentation slides detailing its development plans for the 2 newly acquired assets. TCT seems to have found a niche in acquiring well placed assets and transforming them through asset enhancement schemes in order to boost rental rates.

http://info.sgx.com/webcoranncatth.nsf/V...40082C31C/$file/TCT_Private_Placement_9-12-10.pdf?openelement

TCT share price appreciated by 10.5% today after the trading halt was lifted. It is still trading significantly below its book value. Shareholders and prospective investors will be looking keenly at their asset development projects over the next 1-2 years. Personally, I will wait for some time before making a judgement on this trust.

(Not Vested)

[Nick]

APG Algemene Pensioen Group NV announced that it has become a substantial shareholder of Treasury China Trust by increasing its stake from 1.94% to 7.84%. I believe they are also a substantial shareholder of AIMS AMP REIT.

At $1.90, TCT is trading at 5.26% yield and at significant discount to its book value of $4. It is under-taking 3 development projects and plans to acquire two malls and undertake a series of asset enhancement schemes to boost its valuation.

Prospective shareholders may consider it to be an alternative to CRCT if they are seeking a proxy to China growing domestic consumption.

(Not Vested)

[Nick]

There has been plenty of talk about GLP's recent acquisition of a stake in ACL which owns logistic infrastructure and industrial land awaiting development in BCIA (Beijing Capital International Airport). It is being lauded as a strategic move in fast growing area where rental rates should blossom with the impressive cargo CAGR.

However, there has been little mention about Treasury China Trust very own logistic park (currently under development) within the same area. The logistic park will be operational in the middle of this year and should generate cash-flow to boost TCT's earnings this year.

BLP:

Located immediately adjacent to Beijing International Airport, Beijing International Logistics Park comprises a site area of approximately 91,000 sqm zoned for logistics development. The site is designed to accommodate approximately 67,000 sq m of international standard logistics warehouse facilities of single and double storey, approximately 5,000 sq m of office space and approximately 3,400 sq m of additional area for common area facilities and services. The property provides geographic and asset-type diversification to the portfolio. (http://www.treasurychinatrust.com/beijin...cspark.htm )

Beijing International Logistics Park is located within an industrial area known as Beijing Airport Logistics Zone in Shunyi District. It is approximately two km to the north of Beijing Capital International Airport and about 35 km to the northeast of Beijing city centre. Existing nearby occupiers within the Beijing Airport Logistics Park include TNT, Santa Fe, and Prologis. (Prospectus)

We can see the Shunyi district in GLP's latest presentation slides - http://info.sgx.com/webcoranncatth.nsf/V...penelement - on page 14. It looks remarkably close to BCIA. Perhaps, the market will re-rate this company when it takes pain to emphasize the quality of its assets in 1st tier cities.

(Not Vested but Interested)

[Nick]

Property Portfolio Value of RMB9.61 billion Increase of 4.61% over 31 December 2009

http://info.sgx.com/webcoranncatth.nsf/V...4007D8D0D/$file/Asset_Valuation_31_Dec_2010.pdf?openelement

Property valuation should undergo greater increase in 2011 upon completion of the Beijing Airport logistic park and more so in 2012 upon completion of the City Centre square extension. At the moment, the 2 projects under development only account for RMB 1.46 billion of the asset valuation. The remaining RMB 8.14 billion accounts for its 3 completed and income generating assets whose occupancy currently stands at 91%. Management has forecast a doubling of its revenue in 2012.

The valuation excludes the latest 2 mall acquisitions which has yet to be completed.

Unit price remains unchanged at $1.90 which represents more than 50% discount to its NAV.

(Not Vested)