Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Starwood Bumps Terms, Lowers Threshold on Invesco Office

Invesco Office's Terrible, Horrible, No Good Very Bad Day... Changes Things

Invesco Office's Beige Knight (Deemed Dirty Gray By Markets) Suddenly Looks Brighter and Whiter

Invesco Office J-REIT Responds to Starwood's Hostile Offer

Starwood Rejection of Extension Means Full Hostile Tender

Quiddity Advisors

Event-Driven

<p>On 5 April, Starwood Capital Group launched a hostile Tender Offer on <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> to take over the J-REIT at ¥20,000/share, a 13% premium at the time.</p><p>It was the first hostile tender offer designed to take over a REIT in Japan. This was done without notice or warning. Invesco was not pleased. </p><p>For whatever reason, it took until the third day for the REIT to trade at terms. The "terms" were in fact ¥20,000/unit plus the ¥402/unit in expected dividends to be paid as of the end of the fiscal period ending 30 April 2021. It could actually come out higher if Invesco wanted to strip the REIT of excess cash but not a lot higher because leverage is pretty high.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/204/676/original/Screenshot+2021-05-06+at+7.54.23+PM.png?1620304651" class="editor-image img-responsive" data-smartkarma-image-id="204676"></figure></section><p>The arrows were my "bullish" (green), and "bearish" comments in prior insights. Given this is an arbitrage trade, the price moves and parameters required to flip are quite narrow. The last insight suggested buying back at 0.5% through ex-div terms, which is where the shares traded for much of the 28th and 30th of May (so investors should be long).</p><p>The units have traded at or above Terms+Dividend on all days since April 8. </p><p>Invesco responded by saying that it would reserve judgment on its Opinion Statement, but initially asked Starwood to lengthen the Tender Offer Period so Invesco could hold an EGM to get shareholder approval for the deal because if enough people accepted it, everyone else would get squeezed out without recourse to appraisal rights under the Companies Act because the squeezeout proposed was under the Investment Trust Act - itself a possibly illegal move.</p><p>Starwood rejected the proposal to lengthen the Tender, leaving Invesco with a legal fight and or White Knight option. </p><p>Insights to date are listed below.</p><table class="table table-striped"><tbody>
<tr>
<td style="width: 132px;"><h3>Date</h3></td>
<td style="width: 572px;"><h3>Insight Title</h3></td>
</tr>
<tr>
<td style="width: 132px;">5 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a> </td>
</tr>
<tr>
<td style="width: 132px;">8 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a> </td>
</tr>
<tr>
<td style="width: 132px;">15 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/invesco-office-j-reit-responds-to-starwood-s-hostile-offer" target="_blank" data-smartkarma-citation="insights:50381" rel="noopener">Invesco Office J-REIT Responds to Starwood's Hostile Offer</a> </td>
</tr>
<tr>
<td style="width: 132px;">23 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-rejection-of-extension-means-full-hostile-tender" target="_blank" data-smartkarma-citation="insights:50641" rel="noopener">Starwood Rejection of Extension Means Full Hostile Tender</a> </td>
</tr>
</tbody></table><h2>The NEW News</h2><p>The NEW News out today after the close is that Invesco has officially <a href="http://www.invesco-reit.co.jp/file/en-news-a4c6e3cb798557f1ff9a03dad4e284e3b2495ada.pdf" target="_blank" rel="noopener">released</a> a Revised Opinion Statement which is AGAINST the Offer, and asks unitholders to not tender, and for those who have <em>already</em> tendered it asks such shareholders to withdraw their tender submission.</p><p>Furthermore, it notes that it has requested a Requested Party - Invesco Investments (Bermuda) Ltd (indirect holder of 3.06% of units outstanding) - to purchase units on the market so as to obstruct the Tender Offer by Starwood. </p><p>It is not a white knight putting out an opposing bid. It is, rather, an off-white knight - quite beige even - standing in while the price is is near the Tender Offer, with a buying power designed to absorb selling interest so that the selling interest does not tender.</p><p>This is a wrinkle. There are considerations. And more wrinkles. </p><p>Investors should consider carefully all the parameters. </p><p>I outline them below.</p>

On 5 April, Starwood Capital Group launched a hostile Tender Offer on Invesco Office J Reit (3298 JP) to take over the J-REIT at ¥20,000/share, a 13% premium at the time.It was the first hostile tender offer designed to take over a REIT in Japan. This was done without notice or warning. Invesco was not pleased. For whatever reason, it took until the third day for the REIT to trade at terms. The "terms" were in fact ¥20,000/unit plus the ¥402/unit in expected dividends to be paid as of the end of the fiscal period ending 30 April 2021. It could actually come out higher if Invesco wanted to strip the REIT of excess cash but not a lot higher because leverage is pretty high.The arrows were my "bullish" (green), and "bearish" comments in prior insights. Given this is an arbitrage trade, the price moves and parameters required to flip are quite narrow. The last insight suggested buying back at 0.5% through ex-div terms, which is where the shares traded for much of the 28th and 30th of May (so investors should be long).The units have traded at or above Terms+Dividend on all days since April 8. Invesco responded by saying that it would reserve judgment on its Opinion Statement, but initially asked Starwood to lengthen the Tender Offer Period so Invesco could hold an EGM to get shareholder approval for the deal because if enough people accepted it, everyone else would get squeezed out without recourse to appraisal rights under the Companies Act because the squeezeout proposed was under the Investment Trust Act - itself a possibly illegal move.Starwood rejected the proposal to lengthen the Tender, leaving Invesco with a legal fight and or White Knight option. Insights to date are listed below.

Date
Insight Title


5 April 2021

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


8 April 2021

Starwood Hostile REIT Tender Launched 


15 April 2021

Invesco Office J-REIT Responds to Starwood's Hostile Offer 


23 April 2021

Starwood Rejection of Extension Means Full Hostile Tender 

The NEW NewsThe NEW News out today after the close is that Invesco has officially released a Revised Opinion Statement which is AGAINST the Offer, and asks unitholders to not tender, and for those who have already tendered it asks such shareholders to withdraw their tender submission.Furthermore, it notes that it has requested a Requested Party - Invesco Investments (Bermuda) Ltd (indirect holder of 3.06% of units outstanding) - to purchase units on the market so as to obstruct the Tender Offer by Starwood. It is not a white knight putting out an opposing bid. It is, rather, an off-white knight - quite beige even - standing in while the price is is near the Tender Offer, with a buying power designed to absorb selling interest so that the selling interest does not tender.This is a wrinkle. There are considerations. And more wrinkles. Investors should consider carefully all the parameters. I outline them below.

Ichigo Office REIT Investment Corporation (8975 JP)

Ichigo Office REIT Investment Corporation

Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight