japan benefits from succes of its neighbors., page-2

Hi Brian,

Thanks for sharing the information and your view with us.

I have long been advocating that the growth of China (and India too) is fueling the recovery of the other Asian countries, including Australia.

Last year, a friend and I went to an ASX presentation, featuring Stephen Keen (the famous Dr. Doom) who predicted a housing market crisis and a depression, and a stock market crash. After the presentation (which was actually quite impressive, technically), I told my friend that Mr Keen just didn't have common sense. Look at it in a simplistic way, Australia is more like tiny corner store next to a huge construction site (named China), supplying a lot of the goods needed by the construction site. Australia will be booming, unless with some suicidal acts. So far, my "corner store" theory seems to be more creditable than Mr Keen's depression chartings.

Japan is another "corner store" next to the construction site, supplying goodies useful for the construction site, but for a different stage. Australia is supplying the materials for the foundation, while Japan is selling goods for lifestyle (eg. cars, appliance, electronic stuff). The demand for the lifestyle goods will grow much faster than the GDP growth rate after a certain stage (eg. once the majority of population do have the income for lifestyle goods). That's why the Japan's export industry looks so bullish to me, even though the domestic consumption doesn't look too good. In fact, US just announced that they are going to focus on the expansion of export industries, realizing that the source of global growth is in Asia.

Back to AJA, things are not rosy, yet. It seems the property value is still trending downward. The following is a site with Japan Land Price reports.
http://tochi.mlit.go.jp/english/01_04.html

Also found the semi-annual report of another J-REIT (KENEDIX REALTY INVESTMENT CORPORATION), although it is a different company, and it is more focused in office buildings, I do think it is useful to gauge the REIT market. One interesting note is that Kenedix acquired a few properties during this period.
http://www.kdx-reit.com/eng/ir/index.html

I expect AJA's portfolio of properties will be down 2-3 percent, which equals to about 10% drop in Yen terms. However, with the tail wind of the exchange rate movement in June (aka. the drop of the Aussie $, thanks to the RSPT), the NTA should drop only a couple cents in AUD. I am anticipating the operational income to remain flat: a small drop of average rent off-set by a small gain in occupancy rate. However, the refinance of the loan will most likely add a small margin to the interest rates, and erodes the profitability of the assets. Hopefully the retained income can serve as a buffer, and the distribution can be sustained or close to the current level. Also note that the Feb 11 distribution is already hedged at 68Yen per AUD. So the 2nd half distribution next year may come in a little lower, depends on the new hedging terms.

Hope that I can accumulate some more next week if the share price stays at 30c to 31c level, when I got some dividend coming in.

Good luck and DYOR.

Cheers. Snowfree