resp to mod'd post comp bjt vs vpg gjt, bec

I wrote this as a response to a post from prohunter, and then saw his post was moderated away. I hope this one does not get moderated away.

VPG and GJT don't appear to have had their financing arranged sensibly, and have found themselves somewhat in beggar status. Their unit prices reflect this to a large extent. I admit I do like BEC, as they are a developer they have been able to offload inventories and correct their situation to a large extent, and may be about to get out of beggar status.

Beggar status IMO means that they do not control their destiny, and cannot avoid nasty D for E dilutions or administration if the bankers (and Scarborough creditors - VPG) do not play ball. Also the debt can be repriced due to covenants not being met. VPG has the cost of their debt increasing while their interest cover ratio was only 2x at the end of the last half. They have little room to move. In the UK - the best new finance covenants I have seen are 1.25 times ICR and 62.5% LVR, however pricing for debt has increased, even with the management agreeing to a 5 for 1 equity raising (referrring to the workspacegroup UK).

BJT have been very smart in how they have arranged their affairs - they are not at any banker's or counterparty's mercy. These strategic differences along with the Japanese market and lending practices being different to Aus and Europe makes BJT a different kettle of fish. BJT can protect their underlying cashflow (ICR over 3 times).

I believe that BJT's pricing will soon reflect that of property trusts that have protected their cashflow to unit holders as against those that have not. It is extremely unlikely that BJT will be cornered and need to do a nasty underwritten debt for equity deal.

Also it truly is hard to believe that the portfolio will be down 18%, and if it is, the freeze will subside very quickly, as there has been no bubble and barely any froth in the property markets in Japan IMO.

Good luck with your other positions Prohunter. However you may agree that there are reasons why the other share-prices are where they are. I'm not suggesting that VPG and GJT are not possibly worthwhile investments or punts, as they will be seen to be bargains if they get through without unitholders being slammed or wiped out. Keep some cash available on the side with VPG and GJT IMO. BJT is truly different. DYOR - don't just believe me.