Forterra Trust (formerly: Treasury China Trust)

[Nick]

TCT is a business trust? OR is it a stapled REIT and business trust?
Could I say the main return of TCT is when it lists its properties as a REIT/

It is a business trust. There are 3 other peers listed in SGX - Ascendas India Trust, Perennial Retail China Trust and Indiabulls.

[Boon]

Boon, it seems that you missed the point.

It is not that the liquidator will go after the asset of TCT. There is hardly any way for the liquidator to do it.

It is about the convertible bonds having conditions about who ultimately owns THRE and the property management company. The reason of the sale to Richard Barrett is to prevent earlier redemption of the convertible bond.

plus, the liquidator can also go after the transaction of sale of TCT units by the TH subsidiaries to Richard Barrett and John Ronan. So there is possibility that TCT units may be forced sale in the market to repay TH's debt.

Hi Freedom

Thanks for your concern.

I am fully aware of the bond issues. The amount involved is about SGD 70 million. I do not view the early redemption of the bonds as being a minus. On the contrary, I view it as a plus - if TCT has to divest (not fired-sales) BLP and/or Central Plaza to pay for the bond redemption – doing some divestment at this stage is not a bad thing – it would be even better if some of the sales proceed could be distributed to unit holders.

On your last point, assume that “forced- sale” does happen. Again, I see more plus than minus in this - if the controlling interests in TCT of both RB and JR combined could be reduced below 25% - the less the better.

If TCT has to divest, why do you think any potential buyer would pay a fair price knowing that TCT is in need of money? Plus, the book value of those properties already on the high side. It may not be a fire sale, but it is difficult for TCT to obtain a fair value.

force sale of TCT units will drive price very low given its very low liquidity. not good for existing unit holders.

The brokers for the sale of Central Plaza and BLP are JLL and CBRE respectively. The sales have been conducted by sealed bids.

As to what price could Central Plaza and BLP be eventually sold for, it remains to be seen. One’s projection really depends on how well one understands the China/Shanghai property market. My guess is - it will be within the range of plus and minus 10% of book value.

If TCT units of Barrett and Ronan were to be force sold, I guess it would be through married-deals. There will always be Private Equity real estate funds eyeing for it, if there are profits to be made.

[Nick]

http://info.sgx.com/webcoranncatth.nsf/V...A0047CB30/$file/The_HQ_Update.pdf?openelement

TCT has provided updates on the HQ redevelopment project and expects to generate revenue of RMB 700 million per annum upon completion and will reinstate distributions then. Any thoughts ?

(Not Vested)

[propertyinvestor]

Boon, it seems that you missed the point.

It is not that the liquidator will go after the asset of TCT. There is hardly any way for the liquidator to do it.

It is about the convertible bonds having conditions about who ultimately owns THRE and the property management company. The reason of the sale to Richard Barrett is to prevent earlier redemption of the convertible bond.

plus, the liquidator can also go after the transaction of sale of TCT units by the TH subsidiaries to Richard Barrett and John Ronan. So there is possibility that TCT units may be forced sale in the market to repay TH's debt.

Do you think the holders of the convertible bonds are stupid to recall back the loan now? They would rather prefer to let the share price go above $2.12 and convert the loan. makes more commercial sense.

[Muck]

http://info.sgx.com/webcoranncatth.nsf/V...A0047CB30/$file/The_HQ_Update.pdf?openelement

TCT has provided updates on the HQ redevelopment project and expects to generate revenue of RMB 700 million per annum upon completion and will reinstate distributions then. Any thoughts ?

(Not Vested)

I won't read too much into it. HQ will be completing at a time when I believe (personal view) a collapse/ recession will take place. So the macro forces may affect their ability to generate the anticipated revenue. These are, of course, shorter term events.

(Vested)

[Boon]

IMO, revenue of RMB700 million is not an unachievable target for the following reasons.

1) Office rental for HQ3 of RMB8.35/sqm/day sounds reasonable. L’Avenue, next to it, is renting between RMB 8.5 to 9.8/sqm/day.
2) Retail rental of RMB13 to 14/sqm/day also looks reasonable
3) The Changning district government plans aim to turn these areas into a shopping strip.

For photo of L’Avenue with the HQ next to it, see

http://cn.bing.com/images/search?q=photo...e+shanghai

Below are extracts from Colliers 3Q2012 report on Shanghai retail and office market:

“In Hongqiao, there has been a major transition in recent months. Two new commercial zones are beginning to emerge: a high-end area around L’Avenue, The HQ’ and the upgraded Hongqiao Friendship Store; and a mid-market area on Tianshan Road, centered around the Huijin Department Store, Parkson Hongqiao store and the nearby Hongqiao Tiandu....................................

A significant amount of activity is forecast in the coming quarters for the Hongqiao area. District government plans call for the linking of Zunyi Road’s underground corridor with The HQ, L’Avenue and an upgrade of the Hongqiao Friendship Store. The three projects combined will form an emerging center for high-end shopping. A second, mid-market commercial hub is also forming nearby, centered around the Huijin Department Store, Parkson Hongqiao store and the nearby Hongqiao Tiandu”.

http://www.colliers.com/en-GB/China/~/me...-2012.ashx

“L’Avenue is a premium quality 28-storey office building at the intersection of Zunyi Road and Xianxia Road in the heart of Hongqiao. The building covers a total gross floor area of approximately 140,000 square meters, of which the office component accounts for a leasable area of 46,324 square meters. In September office asking rents for the building ranged from RMB 8.5 to 9.8 per square meter per day. By the end of September, the building had achieved the highest pre-commitment rate amongst the new supply that quarter with over 60 percent of the office area leased. Transactions included the leasing of 6,688 square meters to anchor tenant 3M and 2,151 square meters to JumpStart Company..”

http://www.colliers.com/en-GB/China/~/me...-2012.ashx

http://www.shanghaidaily.com/article/pri...?id=401542

(Not Vested - divested)

[Boon]

As projected by the Management of TCT, upon the HQ’s completion, its contribution of more than RMB700m per annum on a stabilized basis would push TCT’s total annualized gross revenue to the RMB 1.0 billion mark.

To get there from here, the ride is going to be bumpy but not insurmountable.

As at 1H2012, OCF just managed to cover interest expenses. With the retail portion of existing HQ under “reposition”, revenue and hence OCF would drop significantly for 2H2012 and FY2013. Without any sales of assets, debt or equity would be needed to fund the shortfall in interest payment – if it is not a big sum, it probably could be covered with better management of working capital.

As at 1H2012, total debt of TCT stands at SGD 932 million. To complete the HQ extension, loan of about SGD 115 million which had been approved would be drawn down, bringing total debt to about SGD 1.05 billion - with an annual interest expense of about SGD 47 million (assuming interest rate of 4.5% p.a.)

With yearly revenue of RMB 1.0 billion and assuming a cash conversion rate of 35%, OCF would rise to approximately SGD 68 million, which after interest payment would leave SGD 21 million available to Equity – which could be used for dividend payment, funding of new investment or repayment of debt.

Of course, the above is only possible on the assumption that TCT could roll over all its debts – most of which would be due between 2013 and 2016.

(not vested)

[KopiKat]

How to rename thread to reflect new company name?

Proposed Sale of Central Plaza, Shanghai, China

[Musicwhiz]

How to rename thread to reflect new company name?

Proposed Sale of Central Plaza, Shanghai, China

What is the new name? I can help with it if you let me know.

[CityFarmer]

I believe only moderators can do it...

How to rename thread to reflect new company name?

Proposed Sale of Central Plaza, Shanghai, China