Forterra Trust (formerly: Treasury China Trust)

[freedom]

NPI of 46 million, is it annualized already?

interest expense of 25 -30 mil, trust manager fee 12 mil, administritive expense 12 mil, still short of a few millions... still need money from somewhere else to fund the normal business operation.

[Nick]

Yup...that's why the Management is using the profits made from the disposal of a development project to fund the 2H 2010 and FY 2011 dividends.

The bulk of their expenses (interest expense, Management fees and admin expenses) are fixed cost. Interest expense are fixed during the duration of the loan tenure (estimated 3.91% in 2011), Management fees (0.52% of property value + 4% of NPI) and admin expense (mainly listing, audit, legal fees). The 0.52% of property value is worth $9.7 million alone.

These expense values are more or less fixed. Interest expense will increase as they draw down loans to fund development projects.

The only thing that (a bullish investor) will be expecting is a sharp increase in TCT NPI in 2012 onwards when the leases reverts back to market rates. The difference between the 2012/13 NPI and the fixed cost will be sufficient to fund the current DPU.

[Nick]

TCT proposed Q4 distribution of S$0.025 per unit and maintains its FY 11 forecast of 10 cents per unit distribution. Significant improvement to its distributable income backed by higher revenue and much lower operating cost and interest expense. The Management expects the trend to continue due to higher rates and contribution from its recently acquired assets.

The yield stands at 5.8%

http://info.sgx.com/webcoranncatth.nsf/V...3001192A6/$file/Chairmans_statement_and_results_Feb_2011_final.pdf?openelement

(Not Vested)

[Nick]

Treasury China Trust Secures Marks & Spencer Pre-commitment for a Flagship Store at City Center in Shanghai

http://info.sgx.com/webcoranncatth.nsf/V...9003B00C3/$file/Marks_Spencer_Precommitment_07_03_11.pdf?openelement

The mall will be fully developed by 2013.

(Not Vested)

[Nick]

Treasury Building secures Major Tenant. Property 100% occupied

http://info.sgx.com/webcoranncatth.nsf/V...E00806841/$file/Treasury_Building_100per_cent_Occupancy_09_03_11.pdf?openelement

(Not Vested)

Not sure why analyst are comparing Perennial China Retail Trust (property development trust) with CMA (a growth oriented mall developer) when an exact match exist in the form of TCT !

[Nick]

I did mention previously that TCT is a property developer trust and hence will be generating income from both rental and asset sales. Capital can be recycled back to acquire assets to undergo re-development. In other words, this is similar to CMA's asset recycling model though on a more specialized scale with larger projects.

http://info.sgx.com/webcoranncatth.nsf/V...40035BC45/$file/Central_Plaza_31_03_11.pdf?openelement

TCT has made its first asset divestment announcement. It intends to sell its stake in Central Plaza Mall at above its latest valuation of RMB 1.72 billion. If successful, it has identified a retail mall in Shanghai to be acquired.

CMA shareholders who are interested in the Chinese growth story may wish to look at this much higher yielding company ? Of course, as always, this is a business trust so things are never as it seems !

(Not Vested)

[Nick]

Since Perennial China Trust will be listing soon, it would be best to update this thread and allow prospective investors to Chinese property business trust to have a peer to compare with in order to make a judgement in the viability of the model and sustainability of the distribution.

http://info.sgx.com/webcoranncatth.nsf/V...100312E94/$file/Q1_2011_TCT_Results_Announcement.pdf?openelement [SGX Announcement]

http://info.sgx.com/webcoranncatth.nsf/V...1002AF138/$file/TCT_Q1_11_Results_Presentation.pdf?openelement [Presentation Slides]

TCT has repurchased 862,000 shares from open market which represents 0.3% of the total stock float. This makes it the second business trust in SGX history to repurchase its own units. Directors have been purchasing shares regularly (for the 5% yield ? ).

(Not Vested)

[Drizzt]

the size of repurchase is rather insignificant to be honest.

[Nick]

Very true. But it creates a sense of goodwill...that the Management doesn't just care about the Management fees. Of course, business trust could easily issue new units or convertible bonds (which it already did). Actually, I am quite surprised that they chose to list here without raising new capital (until months later through convertible bonds).

http://www.treasurychinatrust.com/Pics/TCT%20130511.pdf - SIAS issued a 16 page research report on TCT

[Nick]

Treasury China Trust awarded Best Real Estate Fund House by AsianInvestor - http://info.sgx.com/webcoranncatth.nsf/V...A0033B049/$file/TCT_Wins_AsianInvestor_Awards_May_2011.pdf?openelement

TCT purchased 0.106 million shares yesterday bringing the total amount of treasury shares repurchased in the past 2 months to 0.999 million shares or 0.38% of the share float. With the impending IPO of Perennial China Trust, there are bound to be more interest in TCT since both are of the same size and business model.

(Not Vested)