This blog post is in reply to a reader's question on Croesus Retail Trust: here.
Hi Capricon,
Not that I know of, no. Of course, I could have missed it. -.-"
I know the management is caught in a situation where they really want to seize acquisition opportunities because commercial property prices are rising fast in big cities in Japan.
However, the biggest advantage of being a business trust has been blocked by the management's own promise not to gear beyond 60%. After their recent two acquisitions, they don't have much left in terms of debt headroom.
I do not see how a higher unit price will help them to borrow more money since gearing is calculated based on the value of the properties in the Trust and not its market cap.
If they want to do another acquisition without having gearing cross beyond 60%, the way is to do ......
