WHY CROESUS RETAIL TRUST IS A BUY

Croesus Retail Trust is a REIT listed on the SGX (S6NU). It has 7 shopping malls in Japan, 2 of which is in Tokyo, 3 in Greater Tokyo, 1 in Osaka and 1 in Suzuka, Mie.

4 of the malls are currently enjoying 100% occupancy while the other 3 with occupancy of 95% and above.

Things are finally looking up for Croesus REIT.

Below are some compelling financials which support my BUY rating

YTD Revenue Growth 20.7%
YTD Profit Growth including Net Gains in Assets Value -35.6%
YTD Profit Growth excluding Net Gains in Assets Value 32.2%
Distribution Yield (Tax Free) 8.5%
Current Ratio 1.91
Gearing Ratio 0.23
Net Asset Value per Unit S$0.86
Current Price S$0.93

I often discount the Net Gains in Assets Value when assessing a REIT because it has nothing to do with the business operations. The value of properties can go up aggressively, then less aggressively. This type of fluctuations give a wrong picture of the profitability of a REIT.

As you can see, Croesus' Current Ratio is very strong. Its Gearing is also very low, which indicates it can still take on liabilities to acquire assets without damaging the company's balance sheet unfavourably.

Most noteworthy is its Dividend Yield which is 8.5%, higher than many other REITs. This is against a backdrop of inflated prices which affects the yield of many stocks.

Other compelling reasons to invest in Croesus are:

1) Japan's GDP is improving. It's Q1 2015 GDP grew by 2.4%, better than the 1.5% forecast.
2) Assets price are increasing.
3) Potential rent reversion in 2015. This could see an increase in rent reversion, which will contribute positively to its revenue
4) Fixed rate financing for 5 years. This will offset any interest rate increases in the medium term.
5) First right of refusal two acquire two properties which are currently in negotiation.

As I mentioned above, Croesus Gearing is low, so any acquisition should not impair its balance sheet, but will contribute to an increase in its revenue.

The above is just my opinion.

My disclosure: I am long Croesus Retail Trust.