The bank has no reason not to accept. They are paying off the loan from internal resources, with no bank loans.
So the question is how they will change the profile of their assets...
> The existing cash hoard and the cash from the upcoming divestments..
The fact that they made the announcement with a stipulated timeline shows that the plan is already in the final phase...
They should be discussing the divestment price of the properties with interested buyers now...
Most of the press recently has been either about (i) the population is aging and the country is in debt, (ii) the earthquake is terrible, (iii) the Japanese people are really stoic and orderly. Those that don't talk about the earthquake say that Japan has had a credit warning and warn of the horrors of the high net govt debt at US$5 trillion is pretty high, higher than GDP.
What I hope is useful to remember is that unlike the US where savings are low and more than half of the populace is in net debt, Japan is still a rich country. More than 90% of the debt is held by Japanese - the Chief Economist of Nomura notes that the debt problem is with the Japanese rather than their govt. So that's a 'family matter' in a way.
Japan is still one of the world's largest creditors, with net foreign assets of US$3 trillion, at 57% of GDP - and still more than China. During the Kobe earthquake in 1995, it was at 15% of GDP. In between, they have been running trade surpluses at about 3% selling cars, cameras, chemicals etc. So the estimates of reconstruction cost are not about to wipe that out.
Now the plan to clear off the shintoku loan is finally materializing... their next plan mentioned during the previous AGM's to acquire some estates in Tokyo. How will the earthquake/tsunami affect their plans?
saizen buying properties and land banking now in tokyo is DEFINATELY contarian play. Years from now all these bad issues be forgotten, I hope IPC does the same don't waste such an opportunity
They are only opportunities when you have the financial muscle to grab... where do you think the funds are coming from? Considering the difficulty in obtaining loans from banks for their Shintoku loan, placement/right're out due to its depressed share price what other options are there? Bonds?
Any idea what will their gearing be once the loan has been cleared ? Or their projected DPU ?
I am guessing funds will come through the warrants which will most likely be exercised once the REIT starts to iron out its problems and declare stable distributions.
This is certainly good news to unit-holders. This issue dragged down their DPU and unit price for the past 2 years ! What is the projected yield going forward ?
Saizen has declared DPU of 0.5cts for 2HFY11. Plans include acquiring property in Tokyo and increase gearing to 35%. According to the presentation,
Quote:Borrow to offset against deleveraging effect of loan amortisation
− current distributable cashflow applied towards loan amortisation amounts to about
0.46 cents per annum1
− distribution payout can be significantly improved if such amortisation can be offset
by new borrowings
Hope someone can explain how does further borrowing offset the loan amortization. Isn't it just replacing one loan with another ?
Note that this distribution doesn't have full effect of freeing YK shintoku from default at end may. Full distributable income when fully including shintoku is going to be significantly larger than 1 cent per annum.