mulgabill, BJT's loan covenant headroom of 13% sounds good, lord...

mulgabill, BJT's loan covenant headroom of 13% sounds good, lord knows if it will be enough to weather all this, but its better than single digits.

Good that no debt has to refinanced in 2009, so long as things don't get worse in 2010 (in which case, the earlier sales will get better prices for their assets than the later ones to market).

i haven't looked at BJT revaluations, i don't know enough about real estate to know if they would be enough. if BJT are anything like most companies they probably understated (nobody likes to put bad news to the market if it can be avoided), but i really don't know.

i first started looking into J-REITs because i felt that while a real estate bubble had formed in usa/europe (and while it does not look like aust bubble pricked, it surely has to given how unaffordable it is compared to like countries), perhaps no such bubble formed in japan. they had their real estate bubble burst in late 1980's and been in recession for the next 15 years, any japanese real estate bubble would have only had a few years to inflate. but for me to continue with that line of thought is to believe markets are rational, which they currently don't look to be.

Like Annemc said, i would not put too much hope on govt rescues of REITs owned by gaijin (foreigners), japanese are a xenophobic nation at the best of times (they sure don't have a monopoly on that though, and times like now only grow the list of racist countries), i'm quite amazed foreigners were even allowed to own land in japan. flip side of this is, in feb2009, the world's banks have now got the huge infusions of cash from central banks that they did not have in feb2008, that money cannot lay dormant forever.

i have not watched japanese real estate sufficiently to quote specific instances of fire sales - only going by sentiment posted on HC threads. posters have not said 'fire sales', only there is the fear of such (the word 'frozen' has been used alot to describe the market for commercial property in japan - meaning sellers unable to get good price and buyers putting in nothing but massively lowball offers, so no deals done). all it takes is one J-REIT (my bet is RJT) to go bust and be liquidated, then a much lower market price has to be factored in by the valuers going forward. hence my comment about 'nasty spiral', the bugger develops a snowball momentum.

even if none of the J-REITs go bust then refinancing is likely to be accompanied by the condition that equity increase, that an LVR the bank was happy with in 2006 no longer applies. so, cap raising at these cruddy levels as well as asset sales required. BJT may not need to refinance in 2009, but other japanese landlords will....

i continue to dance around the REIT sector due to the huge discounts to NTA on offer. If the world economy picks up in the next year or two and the REIT you've bought into doesn't go bankrupt, then you stand to make a killing. but it could also just as easily be a value-trap - HC posters on so many companies' threads saying words like 'banks cannot foreclose on every single business' is IMO to overstate the value banks put on relationships compared to the massive fear permeating their ranks. relationship only becomes valuable to a bank when the client is bloody big, like GPT or WDC.

if you like BJT (and if it is still paying div), wait a little while for them to suspend div for a nicer price to buy in. not sure if BNB has any holding (fairly sure they would), if it does then that holding will likely be disposed of in 2009, that will also push youse down for a bit.

on the plus side, commercial property valution is mainly weighted to rent-income derived, so a brake is put on further downward revaluations so long as the tenants keep paying the same amount of rent. i love how HC posters on each of the J-REITs say their properties are class A, is it that the japanese only sold their best land to ASX-listed trusts?

sorry to bring along a downer here. i promise i will nick off now and not continue to rehash this and trash BJT holders' sentiment. at least this aint BNB, how's that?