japan concerns, page-8

octain said:


"The reality is with the sale of shinjuku sanei AJA would have made an operating loss and wouldn't have been able to distribute any distrobutions."

I think he meant without.

Not quite true octain. Property trust receives rent from which it pays distibutions. This is the case even if the value of the properties is writen down and over all loss is declared. They still have the cash from rent to pay distro's.

Recently GPT declared big loss but paid 5.5c distribution.
As long as you have tennants, rents are paid and unless the banks close you down, you continue to operate normaly.

Now the banks would normaly close you down if there is unsufficient security, ie the current market value of your property is less than your loan.

Even that is not always so, in Thatcher times in GB banks were begin customers whose house values droped by 30 to50% to continue with their morgages, and with the repayments, precisely because if the banks took the possesion of the properties and sold them, they would not recover the money owed.
Same thing just happened in US causing numerous bank colapses as the US house owners walked away from their properties because they could not or did not want to pay the mortgage.