AJA - Astro Japan Property Group Stapled

[absolut-advance]

Well I recently Created a TSI Thread, http://www.sharetrader.co.nz/showthread.php?8323-TSI-Transfield-Services-Infrastructure-Fund-(TSI-Fund)

This is also running along the same investment Lines. This Cash flow based Style helps balance my other portfolios styles. I can add more companies in this investment style if there is any interest.
Also interested in Others with likewise potential if you know of any.

Note lower your buy price higher your yield, higher your buy price lower your yield. (16.98% at $2.65 ) oh yeah ;
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AJA - Astro Japan Property Group Stapled

WOW, Who the heck would want to Buy Japanese Property now?

AA maybe lol


Well heres a few things to consider:

The Dividend Yield is around 15- 16% at this price.

NTA of properties Generally has been falling historically so investors do demand higher than standard yields.

Rental income is strong.

I feel that Property values in japan will generally start to plateau due to new supply and demand dynamics over the Medium -> Long term with now being the fair value which all will fluctuate around. (next 3- 6 months general market sentiment is expected to be depressed)

This Yield is exceptional by any standards.

Damage via Earth Quake and Tsunami occurred to the north of the island, AJA released a announcement

: Expectation of no material portfolio damage.

(renting staff had continued business as usual)

Demand for assets will be higher, Supply Lower.

Released today , Major Share holder exiting, Bargain potential opportunities.

IM not holding as Yet But anything around $2.65- $2.80 will be potentially breakfast. (lowest close $2.80)

Depth Wise Sellers have control so im not jumping head first, but willing to soak up any volatility spike bargains.

Near Historic Lows.

DYOR.


http://img109.imageshack.us/img109/7219/ajaf.jpg


AA

[geezy]

Hi AA, interesting stock u have there.

Is it like a REIT? And how are dividends taxed over there for stocks like these. It will be very interesting to know as it would affect the yield.

[absolut-advance]

Hi AA, interesting stock u have there.

Is it like a REIT? And how are dividends taxed over there for stocks like these. It will be very interesting to know as it would affect the yield.

Hi Geezy,

hopefully we can pull some others from the far corners of the share trader closet, drag up the people resources we need to offer some answers to those questions, maybe some debate would be healthy even.

More peoples field of experience we can pull in the better, Members Like Lizard and Shasta as well as all others, every ones view point is important, i hope we can have their input too,

AA's not keen on being the tip of a pyramid, come information. (Although I could answer, I know others here have a far better Field of Experience in those areas)

Lets create some discussion,

Cheers

AA

[Lizard]

Be careful here. They are highly leveraged - and also don't seem to be insured for earthquake damage.

On the leverage side, they are not going to disappear overnight. The next property valuation and revisions to NAV won't be released until late July, so plenty of time for short-term trading. The recent capital raising and debt re-financing would have bought some more room on the only loan that had a leverage covenant, so they are safe there. However, issuing 15% more shares only reduced the overall leverage from 79% down to 78%...

Property valuations are unlikely to have bottomed, as they don't revalue all properties each 6 month period, so the market is likely to plateau a little before AJA's valuations do. Rental income could fall for a little longer, as rent reviews play out, though could be offset by some occupancy increases. Any downward pressure on rentals is likely to continue eroding the dividend. Note that they have to come up with another $6m per year to amortise the loan they've just refinanced too. Next distribution will only be 20cps, so your yield unlikely to be more than 15.1% at $2.65 and likely lower if the drop the following div again.

The next big hurdle for AJA may be from around March 2012 when they will be facing the May 2012 and August 2012 maturities on their two most highly leveraged loans - including the JPTA one where the loan is currently worth 26% more than the property value. It will be interesting to see what they do at this point, as I can't see them raising the $120m I think they'd need to cut the loans back to something reasonable. Not sure it would be good manners to default.

As I say, this probably gives a bit of time to trade AJA - but just keep a close eye.

On the positive side, it is possible the recent earthquake could lead to increased occupancy. Also, they are quite exposed on forex and I think should benefit to strengthening yen in terms of NAV per share. They don't appear to have suffered much damage in the earthquake, so the lack of insurance is only an immediate risk if Tokyo cops a nasty aftershock.

[Lizard]

Hi AA, interesting stock u have there.

Is it like a REIT? And how are dividends taxed over there for stocks like these. It will be very interesting to know as it would affect the yield.

No franking. How much tax you pay as a NZer will depend if you are being taxed under FIF regime and using FDR - if you are, you'll be treated as though you made 5% income on your investment and taxed accordingly. If not, you'll be taxed on the dividend amount as income (if any Australian withholding tax is applied, you can claim that back too). You could also be taxed as a trader (if you're not trading with enough to come under FIF) or you could be taxed under FIF and use the CV method (if you're making less than 5% for the year!), so there are a few answers...

[Snapper]

As a sore loser from Rubicon Japan Trust I'd be very careful about jumping on board. RJT was highly leveraged and its timing was impeccably bad. Combined with some serious mismanagement and exorbitant fees I managed to lose all my dosh in this one (despite 15 pages of glowing recommendation from First NZ Capital). Interesting too that it carried a very similar divvie to AJA, not that I ever got it. Sometimes there's a good reason for a big dividend yield.

Highly leveraged property?? - never again!

[absolut-advance]

Awesome Replies Thanks Lizard and Snapper lots of really good information and feedback there, I think its one of those things with all the high paying Divi stocks/Funds , can that Yield really be sustained and will the stocks price drop further.

I guess the uncertainty is the reason why the yield is high and the share price low in the first place, as stated in the above replies some caution needs to be taken and considerations considered carefully.

AA

[absolut-advance]

Yes you right Liz regarding the Yield I based it off the Previous distribution pre consolidation

i.e .45/2.65 x 100 = 16.98% , Like you say we are move likely to receive .20c + .20c = .40/2.65 x 100 = 15.1%

I guess if they sell assets its more likely to pay down Debt than go towards distributions.

The Way I was looking at it was if the Yield under pins the Price and limits the price falling, (a 15% Yield is fairly attractive) and support levels now have been well and truly tested via this Japanese Crisis, then distributions could be taken safely off the top for a few years anyway. High occupancy rates should pay the Dividends.

I wouldn't expect much if any capital gain though, if that occurs it would just be icing on the cake.

May wait to see where it settles before buying, it will give me more time to think on it, Sellers out weigh the Buyers in the Market Depth so dont want to jump in too fast, that substantial holder getting out may still have a few more to dump yet.


AA