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Galileo Japan Trust - A Change of Environment

Galileo Japan Trust (ASX:GJT) announced a proposed sale of its entire Japanese property portfolio and return of net proceeds to GJT Unitholders via Special Distribution(s).

  • The sale of 18 of the 19 properties ("IPO Portfolio") for ¥57.4 billion is conditional on a successful capital raising and listing of the proposed purchaser (J-Reit) on the Tokyo Stock Exchange ("Japanese IPO"). The current timetable anticipates the Japanese IPO occurring in August 2016
  • The sale of Prejeal Utsubo, which is a property with structural deficiency, has a valuation of ¥452 million (less than 1% of the value of the Japanese Property Portfolio). This property has been excluded from the IPO Portfolio due to its structural deficiency which made it unsuitable for the Japanese IPO without rectification. 
  • Prejeal Utsubo is being marketed for sale 'as is' and is expected to be sold prior to the completion of the Japanese IPO. If not sold prior to the Japanese IPO, the intention is that it will be sold on completion of the rectification works. 
  • The asset manager for the proposed purchaser of the IPO Portfolio will be a Japanese incorporated asset management company jointly owned by Galaxy (a Galileo/Neil Werrett related entity) and a TSE listed entity whose core business is real estate related services. 

The Proposal, if completed, is expected to result in the payment of a special distribution to GJT shareholders which are estimated to be AUD 2.65 per unit in total; the exact figure will be determined by the AUDJPY exchange rate on completion of the Proposed Sale.

This transaction is essentially a way for GJT management to wind-up their Australian Trust at a premium to NTA and list the same Japanese portfolio in Japan where the environment is better suited to the new company. 

This insight is part of Smartkarma. For more follow this link.

This post first appeared on Smartkarma | Intelligent Investing, please read the originial post: here

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Galileo Japan Trust - A Change of Environment


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