Babcock and Brown Japan Property Trust - 20 Jul 05
The Babcock and Brown Japan Property Trust (BJT) has been a strong performer during the relatively short period held in the Fat Prophets Portfolio. Since listing in early April, the shares have rallied significantly, and this week reached an all-time-high of $1.445. With the rally occurring in the absence of any material developments, we believe investors are beginning to appreciate the potential opportunity available in the Japanese property market.
"In what we consider to be a very astute move, BJT has taken advantage of negative sentiment through buying an attractive property portfolio at what may prove in time to be a bargain price."
BJT is the first locally listed fund with a strategy to invest exclusively in the Japanese real estate market. The absence of competing funds reflects more than a decade of declining real estate prices, and investor's reluctance to invest in Japanese property. The prolonged slump was the result of an irrational euphoria that permeated all of Japan's asset markets throughout the 1980's. It has taken nearly 15 years of asset price deflation before valuations have once again become attractive.
In what we consider to be a very astute move, BJT has taken advantage of negative sentiment through buying an attractive property portfolio at what may prove in time to be a bargain price. The portfolio is located in central and greater Tokyo, and consists of eight office properties (52 percent of the portfolio by initial cost) and four retail properties (48 percent of the portfolio by initial cost).
Following the recent run in the share price, we believe further gains may be limited in the short-term. BJT has increased by around 40 percent since debuting on the ASX and some consolidation is now likely in our opinion. However with the overall upward trend firmly in place, BJT will remain held in the Fat Prophets Portfolio.
Disclosure: Interests associated with Fat Prophets declare a holding in BJT
BJT Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
