Replies to post #684 on Global Value Investing

[rjeezy007]

AHP

So, basically 120M out of 145M of their property assets are located in Taman Tun Dr. Ismail which the Wiki link shows as an affluent suburb of KL. I guess this is always a good thing.

In regards to the properties being old, I think you're right. The REIT was founded way back in 89. Each year, the trust does undertake capital expenditures but nothing really significant. However, if you look in Q1 2011's report, they did spend a good chunk on improvements (more so than in the past). Therefore, it seems like they're performing some upkeep. They used cash flow and took some funds out of their credit facility to fuel this payment along with the trust distribution.

If they can maintain their level of cash flow and spread out any capital expenditures over various quarters, they should have enough funds left over to cover credit facility repayments and maintain an adequate level of trust distributions.

At the moment, there is a net asset value per share of 1.522 (mostly the properties which are 145M or 1.45/sh) and the share price is 1.05 for a discrepancy of about 45%. This was even greater in 2007 before the recession as the share price was in the 0.60 range while the net asset value per share was 1.47. This resulted in over a 100% discrepancy.

Keeping this one on my watchlist...

[throwerw]

What do you think about KLCC listed in Malaysia? Not dirt cheap, but it looks like they own some very high quality properties. They have a 50.5% stake in the Petronas twin towers.