From BJT's ASX announcement dated 2nd April 2009 (page 4 of...

From BJT's ASX announcement dated 2nd April 2009
(page 4 of 6)

“Revised distribution guidance

The interim distribution paid to BJT unitholders for the six months ended 31
December 2008 was 4.0 cents per unit.

As foreshadowed in BJT’s interim results announcement on 12 February 2009,
distribution guidance for the 2009 financial year was to be reviewed and updated
as necessary depending not only on whether a transaction involving the BJT
management rights was undertaken but also on the outcome of discussions with
BJT’s foreign exchange hedging counterparty on potential options to address the
early termination option contained in certain hedging contracts and the results of
other capital management initiatives, including potential asset sales.

The BJT Board currently anticipates paying a distribution for the 2009 financial
year equal to the taxable income of the Trust. On this basis, it is currently
anticipated that the distribution for the current half year ending 30 June will be
c.10.7 cents per unit.

The final distribution is currently expected to be substantially satisfied by way of a pro-rata issue of new units to BJT unitholders and partially in cash. Taking into account the cash flows required for payments in respect of the internalisation transaction, BJT currently anticipates that it will have c.3.3 cents per unit of distributable cash for the current half year.

This position would be affected by the proceeds of any asset sales and the potential restructuring of the hedging contracts referred to above which contain an early termination option exercisable in August this year. Discussions on the latter are
ongoing and a conclusion is expected within the next 6-8 weeks.”

The last paragraph is arguably the most important. What is forshadowed has in fact come to pass. Proceeds from asset sales (Shinjuku) will be received at settlement in August but the sale is complete. It also states that this is one of two things that would affect the cash component of the distribution. So you see the information was all there. It now remains to be seen if the market has correctly priced the fact that the sale proceeds will open the way for an addition to the cash component.

If we assume that the $81 million is reduced to $41 million due to complete payout of the out-of-money hedge of $40 million, we know that BJT already has the cash for a 3.3 cent cash component, then it’s not much of a leap of faith the speculate (caveat emptor - pure speculation here) that BJT could conceivable add another say 1.7 cents to the cash component. This would use $8,647,434 of available cash (508,672,564 shares x 1.7 cents) still leaving $32.352,566 available in cash at bank to reduce leverage and increase NTA.

Not to beat down on GSJBW even further, but this directly addresses there concern about paying down debt. It is a property trust and come hell or high water it must distribute its taxable income. GSJBW should know this. they should have also known what the cash component already was and what the cash component could potentially be and what cash would also likely be left over and what it would be used for.