hello haim, <<Where are the carry traders?>> on the japan property club - actually a fund (as in money committed, and then it is called to duty as and when needed, placed, a real puzzle, and not just to me, but to another of this thread whom i had introduced into the schema - two folks i know, one a alumni of gs and another an entreprenuer of honest background and good track record had organized a series of property clubs starting around 2001, progressively larger in scale and successively further in scope;
one series focused on japan, and at the time the 'gross yield' was 7.5%, and due to leverage locked in in local currency, the resuultant 'net yield' ended up huge. the capital value has since gone up, of course, but it was a puzzle at the time.
further puzzle, i am not sure why mrs and mr watanabe are not buying in their own homeland of these reits:
Creed Office Investment (8983)
Global One Real Estate (8958)
Japan Real Estate Investment (8952)
Nippon Building Fund (8951)
Normura REITs (8959)
Tokyo Sumitomo Realty (8830)
I am in accumulation mode for them, am not in any particularly hurry, on balance hope for a collapse, but as you say, am puzzled about the lack of local buyers. Perhaps I do not understand something, but hey, must explore.
on property club (as opposed to fund), an on-shore corporate vehicle is set up, under british common law and fine hk enforcement, annually audited etc etc,
a investment management co (stand-in for organizer) is contracted to lead the club, takes a deserved fee upon exit over hurdle rate when exit happens, takes a small management fee for walk around money
a board comprised of the leader and co-leader, as well as 2 or more members selected from amongst the fellow investors who are geographically near to the scene of intended actions
basically a company with a governing board for major decisions (sell, debt, distributions, jv, etc; whereas to buy requires unimous shareholder approvalas they all need to pony up) operating in alignment with the shareholder agreement that encapsulates the common understanding and objective of the shareholders before signing on
an initial project/property is selected from some possibilities, folks fund up, and away we go
more projects are screened, folks vote, must be unanimous by all shareholders else ownership structure is disturbed
when ownership structure needs to be disturbed due to anyone not willing to pony up for any particular property, a new club is opened for operation, and the old club is managed until whenever
ownership disturbance of corporate vehicles in hk involving real estate require objective valuations - but simpler to simply open new club so that only folks who wish to participate need to participate, and new members can be allowed in
in the case of my first club, the objectives are simple: longterm parking of capital on more secure basis, supporting manageable debt, but initially on no-debt basis, investing in positive carry stuff fitting three profiles (whole building on CBD land, ocean view apartments, and industrial plates in redevelopment areas).
China will unlikely clobber HK, because China money in HK, and Taiwan money in HK
Difficult to play games with HK tax code, because capital flight out of HK takes nano seconds, and capital vaporization has enthusiastic following.
Macau is good, but choices are fewer, and the economy is too single minded (gambling and girls), neither of which will likely go out of style, but still, too focused :0)
Also, the tax regime in Macau is less friendly (got a small cap gain tax of sort for corporations)
No cap gain (as long as company's business is not trading real estate (as opposed to buy, rent, sell) / dividend taxes in HK, and no dividend tax. |
