A snippet in the AFR today suggest RJT will target the sale of their biggest property, valued at about 350m AUD. This was valued at March 07. The stories I read indicated that commercial properties near Tokyo achieved about 10% growth in 2006 and also in 2007 after many years being stagnant. However with the credit crunch, and the hurried nature in which RJT needs to sell, I doubt it can achieve the price it may of mid last year. So what can we expect? Will I think the property may have risen 3-5% from the March valuation date to around September, before the credit crunch really started to bite. Perhaps it was worth 360m then. You could probably shave off 10-15% since then? Plus another 5% due to RJT's hurried nature (essential it can dispose of this amount this year), we could get a 50m book val loss on the sale? NTA would fall 12c from 85 to 73 cents. However this achieves 300m of the targets 400-600m of sales. Gearing should fall from 60% to below 50%, less geared than GJT and BJT I think. Obviously the 300m proceeds should alleviate any concerns over short term debt, with breathing space to November 2009 with vast majority of debt outstanding to June 2010. Would the NTA of 73 then be accurate? Well a lot of the properties were valued at September 06, so the 12 months after this may have achieved 10% growth, to perhaps offset weakness since the credit crunch. So an NTA of 70c might be reasonable? At this stage it should be in a position to pay distributions again. Or try to sell some more properties for a buyback. With the disgraceful management though, and seeing many other securities trade at discounts to NTA, RJT could still be expected to trade at a large discount to this real NTA of around 70 cents. A 30% discount? A share price of 50 cents?
RJT Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
