Ferret's Stock to Watch: GALILEO JAPAN TRUST
08:22, Wednesday, July 04, 2007
Sydney - Wednesday - July 4: (RWE Aust Business News)
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If you like a bit of colour, surrounding your trust fund with a
name to match it, you should have a look at Galileo Japan Funds
Management which is the responsible entity for the the Galileo Japan
Trust (ASX:GJT).
The Trust units are still in a trading halt at 97c and should be
out of the woods by Thursday.
The company made the request before announcing a major move that
could influence the market over its prospects.
Galileo Japan Funds Management yesterday told the Stock Exchange
that the Trust is acquiring three retail investments in Japan at Osaka,
Fukuoka and Shiga for about 23.7 billion yen (about $227 million).
Just think, you have a piece of property you never dreamed of
owning in Japan.
Before launching into the details, what also caught the Ferret's
eye was a capital raising to pay for the acquisitions.
It includes new units which carry an 8.47 per cent yield on 95c
units.
The Trust also announced an upgrade in its forecast distribution
per unit for the year ending June 30, 2008, to 8c which is 5.3 per cent
higher than the 7.6c per unit forecast in the original IPO PDS (December
2006) and 11.1 per cent higher than the annualised distribution per unit
for the year ending June 30, 2007.
The acquisition will be funded through a combination of new
equity, borrowings and the release by tenants of security deposits.
Equity will be raised through the issue of new fully paid GJT
units via a 3-for-7 non-renounceable entitlement offer and public offer
which has been fully underwritten by JP Morgan Australia and UBS AG,
Australia Branch.
SHARE PRICE MOVEMENTS
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Units of Galileo Japan Trust last changed hands at 97c before
the trading halt. Rolling high for the year is $1.11 and low 96c. The
last recorded dividend is 3.95c to yield 4.07 per cent which should
change on the new developments. Unit structure will also change which
was shown as 283.89 million units with a market cap of $275.3 million.
The public offer relates only to new units not subscribed for by
eligible unitholders under the entitlement offer.
The application price is 95c per unit with the number of new
units to be 121,667,571.
New units will be issued on the proviso of a product disclosure
statement which was lodged with the Australian Securities and Investments
Commission yesterday and is available at
www.galileofunds.com.au/Japan.
The new units will rank for distribution from July 1.
They will receive an attractive FY2008 cash distribution yield of
8.42 per cent based on an issue price of 95c, about 260 basis points
above the listed property trust sector average.
Significantly, the acquisition and entitlement offer will reduce
the Trust's gearing level to approximately 51.1 per cent, resulting in a
much stronger balance sheet and significant funding capacity to pursue
accretive acquisitions, with the potential to further enhance unitholder
returns.
The transaction results in a 40 per cent increase in the size of
GJT's portfolio to 4.7 billion yen ($810 million) and a similar increase
in market capitalisation, which is estimated to be around $385 million
post allotment of new units.
BACKGROUND
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Galileo Japan Funds Management Limited (GJFML) is a specialist
property funds management company established in 2006.
GJFML is managed by a team with significant exposure and
experience in the property and funds management industries, both
domestically and internationally.
It is the responsible entity of Galileo Japan Trust which was
listed on the Australian Stock Exchange in December 2006.
There are around 50 individual LPTs on the ASX with the majority
investing primarily in Australian real estate, however in recent years
there has been increased focus on international property assets.
International property now accounts for around 40 per cent of
assets held by LPTs.
Historically, the sector has provided investors with high
yields, capital growth and relatively low levels of volatility (source:
www.asx.com.au/propertytrusts).
GJT will own an indirect beneficial interest in an initial
portfolio of 21 quality assets including office, retail/leisure, mixed
use, residential, industrial and hotel properties.
On the ground local market expertise is provided by GJT's
relationship partners Nippon Kanzai and Secured Capital Japan, both of
which are active players in the Japanese real estate market and have a
combined market capitalisation of around $1 billion.
GJFML, as responsible entity, will hold the assets of GJT as
trustee, or through a custodian, and manage GJT in accordance with its
duties to unitholders under the Corporations Act, the GJT Constitution,
the GJT Compliance Plan, ASX Listing Rules and generally be responsible
for the management of GJT.
The primary management responsibilities of GJFML as responsible
entity in relation to GJT include the following:
* Overseeing capital raisings in Australia and overall capital
strategy and management for GJT;
* Determining the financial risk management policy for GJT;
investigating investment opportunities for GJT;
* Determining and implementing GJT's investments; managing
investor relations and communications;
* Overseeing Australian accounting, treasury and tax management
services; and
* Reporting, and making distributions to unitholders; and
overseeing ASX and other regulatory compliance.
The GJFML board is made up of five directors, all of whom have
been in office from the commencement date of GJT.
Of the five directors, the board considers the following three
directors to be external and independent directors:
Jack Ritch, non-executive chairman, Frank Zipfinger,
non-executive director and Philip Redmond, non-executive director.
The two executive directors currently in office are Neil
Werrett, managing director and chief executive officer, and Peter
Murphy, executive director and chief operating officer
ENDS
Copyright © 2007 RWE Australian Business News. All rights reserved.
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