May 11th, 2005Babcock & Brown Japan Property Trust is the first...

May 11th, 2005

Babcock & Brown Japan Property Trust is the first Australian listed trust operating in the Japanese real estate market. The Trust has acquired an interest in a diversified portfolio of office and retail properties located in the central and greater Tokyo area for ¥47.3 billion or around A$570 million. The portfolio currently consists of eight office and four retail properties representing 52 and 48 percent respectively.



"After more than 15 years of decline, signs are emerging that property values in Japan have bottomed."



The investment policy of the Trust aims to enhance returns to unitholders through acquiring properties which are expected to provide sustainable earnings in the future. The Trust will seek to enhance property valuations through exploiting redevelopment opportunities, but also active and cost-effective asset management. Applying the full benefits of foreign tax credits, the Trust could yield around 9 percent.

After more than 15 years of decline, signs are emerging that property values in Japan have bottomed. As is depicted in the Index of Urban Land prices, land values in Japan's six largest cities have declined to the equivalent of 1981 levels.

We believe the case for investing in Japanese real estate is compelling. Property prices and rental yields are now rising after a prolonged down turn. The economy is also improving, and this is having a beneficial flow on effect for the real estate market. We believe the Babcock & Brown Japan Property Trust is an attractive investment option. The Trust is underpinned by a robust dividend yield and has good prospects for capital appreciation. Accordingly, we recommend for the first time, BJT as buy to all Members up to $1.16.

Disclosure: Interests associated with Fat Prophets declare a holding in BJT

Please note this is an abridged version of the full article that appears in this weeks Fat Prophets report.