Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Starwood Capital Group, a well-known real estate investor operating in half a dozen countries around the world, with current global AUM in excess of US$75bn. They manage private REITs globally and also manage the largest commercial real estate investment trust in the United States - <a href="https://www.smartkarma.com/entities/starwood-property-trust-inc" target="_blank" data-smartkarma-citation="entities:9223:1" rel="noopener">Starwood Property Trust (STWD US)</a> 
Together with affiliated investors, on Friday Starwood Capital Group filed that it owned just over 5% of <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> (filing attached below) and announced its intention to conduct a Tender Offer to buy out minorities. 
Invesco Office J-REIT, for its part, this morning <a href="http://www.invesco-reit.co.jp/file/en-news-060e1e4140efcec71c52617190ca80605a5d1749.pdf" target="_blank" rel="noopener">announced</a> that this was made "unilaterally and with no prior notification." This classifies the action as hostile.
The Tender Offer Price is to be set at JPY 20,000/unit, which is s 13.3% premium to Friday's close, and a premium of 14.68% and 23.71% to the 1mo and 3mo closing price averages. 
This appears to have been put together somewhat hastily as the starwood website outlining the Tender Offer - <a href="https://www.starwoodjapantob.jp/" target="_blank" rel="noopener">https://www.starwoodjapantob.jp/</a> - says the website is still being prepped.
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This deal comes in well over book and at something like 19x TTM FFO. 
The market's immediate reaction this morning is to bid the REIT through terms. 
Start Date? Unknown.  Minimum Threshold? Unknown. 
J-REIT takeovers are rare enough that hostile action is also rare, though not unknown. This will, however, be the first TOB of a Japanese REIT where the goal is to delist the REIT.
Hostile action on J-REITs comes with its own issues and parameters. And it is not as hard as it might be for a corporation. Starwood is counting on it. And that limits the Asset Manager's ability to defend itself.

Starwood Capital Group, a well-known real estate investor operating in half a dozen countries around the world, with current global AUM in excess of US$75bn. They manage private REITs globally and also manage the largest commercial real estate investment trust in the United States - Starwood Property Trust (STWD US) 
Together with affiliated investors, on Friday Starwood Capital Group filed that it owned just over 5% of Invesco Office J Reit (3298 JP) (filing attached below) and announced its intention to conduct a Tender Offer to buy out minorities. 
Invesco Office J-REIT, for its part, this morning announced that this was made "unilaterally and with no prior notification." This classifies the action as hostile.
The Tender Offer Price is to be set at JPY 20,000/unit, which is s 13.3% premium to Friday's close, and a premium of 14.68% and 23.71% to the 1mo and 3mo closing price averages. 
This appears to have been put together somewhat hastily as the starwood website outlining the Tender Offer - https://www.starwoodjapantob.jp/ - says the website is still being prepped.



This deal comes in well over book and at something like 19x TTM FFO. 
The market's immediate reaction this morning is to bid the REIT through terms. 
Start Date? Unknown.  Minimum Threshold? Unknown. 
J-REIT takeovers are rare enough that hostile action is also rare, though not unknown. This will, however, be the first TOB of a Japanese REIT where the goal is to delist the REIT.
Hostile action on J-REITs comes with its own issues and parameters. And it is not as hard as it might be for a corporation. Starwood is counting on it. And that limits the Asset Manager's ability to defend itself. 

Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Japan's largest Office REIT <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a> ("NBF") announced a ¥140bn (~US$1.3bn) <a href="https://www.nbf-m.com/nbf_e/release/files/20201009_Notice%20Concerning%20Issue%20of%20New%20Investment%20Units%20and%20Secondry%20Offering%20on%20Investments%20Units.pdf" target="_blank" rel="noopener">follow-on equity offering</a> on 9th October 2020 and I provided a brief introduction to the background of the REIT and its offerings history in <a href="https://www.smartkarma.com/insights/nippon-building-fund-8951-jp-reit-offering-take-it" target="_blank" data-smartkarma-citation="insights:44090" rel="noopener">Nippon Building Fund (8951 JP) REIT Offering: Take It</a>. As mentioned in that insight, the pricing date was expected to be between 20th and 22nd of October 2020 (pricing is normally on the first day in the pricing period).Today, after market close, NBF <a href="https://www.nbf-m.com/nbf_e/release/files/%E6%9D%A1%E4%BB%B6%E6%B1%BA%E5%AE%9A%E3%83%97%E3%83%AC%E3%82%B9_E.pdf" target="_blank" rel="noopener">announced</a> the Issue Price to be ¥527,240/unit.Below is a brief recap of the Deal details (including confirmation of key dates) and a closer look at the attractiveness of this pricing.

Japan's largest Office REIT Nippon Building Fund (8951 JP) ("NBF") announced a ¥140bn (~US$1.3bn) follow-on equity offering on 9th October 2020 and I provided a brief introduction to the background of the REIT and its offerings history in Nippon Building Fund (8951 JP) REIT Offering: Take It. As mentioned in that insight, the pricing date was expected to be between 20th and 22nd of October 2020 (pricing is normally on the first day in the pricing period).Today, after market close, NBF announced the Issue Price to be ¥527,240/unit.Below is a brief recap of the Deal details (including confirmation of key dates) and a closer look at the attractiveness of this pricing. 

NBF (8951 JP) REIT Offering: Pricing Announced. Wide Discount to Undisturbed.

Japan's largest Office REIT <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a> ("NBF") announced a ¥140bn (~US$1.3bn) <a href="https://www.nbf-m.com/nbf_e/release/files/20201009_Notice%20Concerning%20Issue%20of%20New%20Investment%20Units%20and%20Secondry%20Offering%20on%20Investments%20Units.pdf" target="_blank" rel="noopener">follow-on equity offering</a> on 9th October 2020 to fund their recent acquisition of Shinjuku Mitsui Building and Gran Tokyo South Tower. 
This is the biggest REIT offering in Japan this year so far, is large historically, and is the first offering by NBF, the largest Office REIT by Market Cap since 2014.
NBF plans to offer 171,000 units in the Domestic Primary Offering and 58,000 units in the International Offering (mainly in the U.S., Europe and Asia). However, final allocation can be different depending on demand conditions. The over-allotment quantity will be 11,500 units. 
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<div class="content-caption">Source: Quiddity, Capital IQ (Data)</div>
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As always, there is more below the fold.

Japan's largest Office REIT Nippon Building Fund (8951 JP) ("NBF") announced a ¥140bn (~US$1.3bn) follow-on equity offering on 9th October 2020 to fund their recent acquisition of Shinjuku Mitsui Building and Gran Tokyo South Tower. 
This is the biggest REIT offering in Japan this year so far, is large historically, and is the first offering by NBF, the largest Office REIT by Market Cap since 2014.
NBF plans to offer 171,000 units in the Domestic Primary Offering and 58,000 units in the International Offering (mainly in the U.S., Europe and Asia). However, final allocation can be different depending on demand conditions. The over-allotment quantity will be 11,500 units. 


Source: Quiddity, Capital IQ (Data)

As always, there is more below the fold. 

Nippon Building Fund (8951 JP) REIT Offering: Take It

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/123/994/original/2020-03-21_07-26-58.png?1584743238" class="editor-image img-responsive" data-smartkarma-image-id="123994"></figure><div class="content-caption">Source • Japan Analytics</div>TAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US dollars, while <a href="https://www.smartkarma.com/entities/ishares-msci-acwi-etf" target="_blank" data-smartkarma-citation="entities:24402:1" rel="noopener">ACWI (ACWI US)</a> fell by 13.6%. The 1% gain on Thursday was aided by the Bank of Japan US$1.8 billion purchase of ETFs which represented 4.3% of the value traded in TOPIX and is 80% of the average monthly total of such purchases over the last nine years. We expect the central bank to be in the market again at a similar level of commitment on Monday. We would use such generosity to now reduce exposure to Japan.<div class="content-highlight">In the DETAIL section below, we cover the outlook for a more prolonged Covid-19 bear market in Japan and suggest levels at which the market might offer some absolute value, hopefully within the next eighteen months.</div><blockquote>If there is no market economy, then the stock market is in a sense largely irrelevant at this time, although we would not close it either since it does give people something to do that does generate some information and some amount of GDP and income - Andrew Hunt</blockquote>

Source • Japan AnalyticsTAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US dollars, while ACWI (ACWI US) fell by 13.6%. The 1% gain on Thursday was aided by the Bank of Japan US$1.8 billion purchase of ETFs which represented 4.3% of the value traded in TOPIX and is 80% of the average monthly total of such purchases over the last nine years. We expect the central bank to be in the market again at a similar level of commitment on Monday. We would use such generosity to now reduce exposure to Japan.In the DETAIL section below, we cover the outlook for a more prolonged Covid-19 bear market in Japan and suggest levels at which the market might offer some absolute value, hopefully within the next eighteen months.If there is no market economy, then the stock market is in a sense largely irrelevant at this time, although we would not close it either since it does give people something to do that does generate some information and some amount of GDP and income - Andrew Hunt

🇯🇵 JAPAN MARKET UPDATE • Hit the BoJ Bid and Wait for the Absolute Value Opportunity

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.

Global Markets Outlook: Maintain Defensive Posture

Japan

Japan Real Estate Investment Corporation is a real estate investment trust (REIT) which invests in real estate and securitized real estate products. The Company directly invests in office properties with a focus on 3 wards(Chiyoda, Chuo, and Minato) in Tokyo.

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Japan Real Estate Investment (8952 JP)

Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT

Starwood announced it intends to conduct Japan's first TOB Tender Offer designed to delist a J-REIT. J-REIT voting rules/rights are different, and...

Travis Lundy

NBF (8951 JP) REIT Offering: Pricing Announced. Wide Discount to Undisturbed.

The Nippon Building Fund (8951) REIT placement - the largest J-REIT placement this year - has priced. Based on historical patterns and value, it is...

Janaghan Jeyakumar, CFA

Nippon Building Fund (8951 JP) REIT Offering: Take It

NBF's ¥140bn Offering is the largest J-REIT Offering in 2020. Historically, NBF Follow-On Offerings outperform TSEREIT and perform on an absolute...

Janaghan Jeyakumar, CFA

🇯🇵 JAPAN MARKET UPDATE • Hit the BoJ Bid and Wait for the Absolute Value Opportunity

TAKE PROFITS - Japanese equities, as measured by the TOPIX Index, rose by 1.7% over the last week in Yen terms and fell by only 0.86% in US...

Campbell Gunn

Global Markets Outlook: Maintain Defensive Posture

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term...

Vermilion Research

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