SRS - Closing status 20 June

Invested into Saizen Reit 5 lots in this week as part of usual and active SRS stock holdings re-balancing.  In its 3Q14 results, NPI +2.5%, profit +JPY 314 mil.  Quarter-on-quarter gross revenue remained stable while net property income decreased by 4.1% as compared to 2Q FY2014. Property operating expenses increased by 9.4%, due mainly to seasonal expenses.  Higher profit due mainly to (i) the increase in net income from property operations, and (ii) the non-recurrence of refinancing-related costs incurred in 3Q FY2013, namely swap breakage costs (JPY 135.5 million) and loan commission written-off (JPY 148.0 million). Average occupancy rate at 91.1%.  As Saizen REIT’s distributable income from operations is generated in JPY, its S$-denominated distributions have been hedged.  Interest rates for 90% of loans outstanding are fixed.  Nearest loan maturity is in February 2018.  Gearing at 38%.   Deloitte & Touche has in early June'14 completed the strategic review of options for enhancing its unitholder’s value.  The review concluded that as a matter of priority, focus will be placed on its capital structure, in particular, its cash management and levels of leverage. As funds are made available as the capital structure is optimised, it will continue to seek opportunities to expand its property portfolio in line with its principal investment strategies.  It may also consider a buy-back of its shares at times of Unit price weakness, as a useful signaling mechanism and provided that is deemed as an effective use of capital at that time.  Following capital structure optimisation, more ambitious growth strategies will be explored, subject to availability, compatibility, returns and execution considerations.

Added CM Pacific 5 lots in this week as part of usual and active SRS stock holdings re-balancing; total holding in it now at 10 lots.  For its 1Q2014 financial results, revenue +6% driven by the revenue growth from Yongtaiwen Expressway which accounted for 80% of its revenue.  Profit +14% driven by higher profit contribution from its toll road assets and the recognition of deferred income and effective interest income on compensation receivable from the relocation of certain toll stations along the Guihuang Highway. This was partly offset by higher finance costs and withholding tax and lower exchange gain.

SRS stock holdings walk since previous posting :-

+$11,256 Total Returns as of 13 June

-$214 Unrealised positions worsened

+$11,043 Total Returns as of 20 June

previous posting :- SRS - Closing status 13 June

Remarks :- Profits locked in to-date $16,673 / year 2014 $4,071