This REIT is probably new, maybe 3-4 yrs.old. If you鈥檝e heard me speak this year, you鈥檝e heard me talk about Japanese real estate... I think it鈥檚 the best investment opportunity for the next 15 years...
I strongly believe that the investment I鈥檒l share with you today has virtually no downside. Yet the upside potential is hundreds of percent.
You see, right now, we鈥檝e got the setup conditions for a ridiculous bull market in real estate in Japan. It鈥檚 really a 鈥渙ne-way bet.鈥?It鈥檚 cheap, hated, and the uptrend is just beginning.
Up until just a few months ago, property prices in Japan had been falling 鈥?for 16 years straight. The government had tried everything to entice people to spend their money.
The Bank of Japan (Japan鈥檚 equivalent of the U.S. Federal Reserve) even went as far as lowering short-term interest rates to 0% 鈥?and it kept interest rates there for five years.
Long-term interest rates are around 2% in Japan. Amazingly, property prices continued to fall, even in a low-interest world.
Think about this for a moment... what do you think would happen to U.S. real estate prices if mortgage rates went from 6% to 2%?
Real estate prices would soar...
Most people don鈥檛 shop for homes based on the sticker price. It鈥檚 nearly irrelevant. Instead, most people buy based on what they can afford in a monthly payment. You see, at 6% interest, a $1,500 monthly payment will get you a mortgage of $250,000. Yet at a 2% interest rate, a $1,500 monthly payment will get you a mortgage of $400,000.
In the U.S., we take it for granted that if mortgage rates fell from 6% to 2%, prices would soar.
Americans believe that 鈥測ou can鈥檛 go wrong in real estate.鈥?br>
However, after 16 years of falling prices, the Japanese now believe that 鈥測ou鈥檒l never make money in real estate.鈥?br>
Real estate prices in Japan fell between 50% and 90% from 1990 to 2000 (depending on where in Japan and what type of real estate we鈥檙e talking about). And they鈥檝e stayed down.
Now 鈥?finally 鈥?the Japanese are starting to buy real estate once again. And prices are starting to rise.
The thing that kicked off the bust back in 1990 was the Bank of Japan raising interest rates too fast.
And today, the Japanese government will do everything in its power to prevent going back into bust mode. It will NOT get in the way as property prices start to rise. And it will do everything possible to keep prices from falling. Therefore, we鈥檝e got a one-way bet.
Let me sum up the important details:
鈥?Prices are down 50%-90% in the last 16 years, but rising now.
鈥?Mortgage rates are ridiculously low.
鈥?The Japanese people are sitting on more cash than anyone.
鈥?The government will fuel the fire instead of put it out.
Here鈥檚 How to Play It...
The most profitable, and safest way to play this situation is with Japanese REITs.
If you鈥檙e not familiar with REITs, (pronounced "reet") or Real Estate Investment Trusts, they are a similar to stocks... but unlike stocks, they get a special tax break that many companies don鈥檛 get.
And in return, they have to by law pass on their earnings to you, the shareholder.
And the best way to play Japanese real estate is through one REIT that owns apartments in Tokyo. The company actually sells for less than the liquidation value of its buildings. And it currently pays out nearly all the profits it receives from rent in the form of dividends... I expect that dividend will be about 5% a year.
I like this play for a variety of reasons. But mostly because it fits into my philosophy of buying what鈥檚 cheap and hated, when the uptrend is just beginning.
It is extremely hard to get all of these at once. But we have them in Japanese residential properties now.
Another reason I like the stock is the folks behind it.
Instead of being part of the old-boy network in Japan, where you can only deal with your old cronies, this business was started by an interesting American.
His name is Collin Francis.
Collin Francis first went to Japan at age 19 as a missionary. Now in his mid-40s, Francis has worked in Japanese investments for two decades.
According to Barron鈥檚, he worked in Tokyo in the 1980s with Nikko Securities and Shearson Lehman, and he worked with Deutsche Morgan Grenfell in the early 1990s. In 1994, he started his own company. By 2005, Collin was managing a billion dollars in Japanese stocks.
In 2002, Francis had the foresight to see that Japanese real estate was going to bottom out soon. So in 2002 he got the wheels in motion to get a REIT started in Japan.
Collin Francis had the IPO of his apartment REIT just over a year ago.
And today, this stock is the cheapest way for you to buy into Japanese real estate... By buying the stock now, you are actually buying at less than the liquidation value of the company鈥檚 properties!
If Collin Francis sold all the apartments today, and gave us our money, we鈥檇 get more money than the stock is worth now. It鈥檚 crazy.
When we compare Francis鈥?REIT with the four largest REITs in Japan, we can easily see what kind of value we鈥檙e looking at...
COMPARING THE BIG REITS TO OURS
Market Value
(in US$ millions)
Dividend Yield
Price-to-Book Value
Nippon Building Fund
5,312
3.1%
1.77
Japan Real Estate Investment
2,966
3.3%
1.70
Japan Retail Fund Investment
2,220
3.6%
1.42
Nomura Real Estate Office Fund
1,869
3.1%
1.73
Collin Francis鈥?REIT
244
4.4%
0.82
Sources: Datastream and www.tse.or.jp/english
The far right column tells the story... most REITs in Japan trade at significant premiums to the value of the properties they own. The far right column shows the price-to-book-value, which represents purchase price, not market price.
It shows that you only pay 82 cents for every dollar of property the REIT owns!
The REIT bought its properties very recently 鈥?it just had its IPO last year. And while the price of shares may seem high you鈥檙e able to buy in for a steal... at 82 cents on the dollar.
The business this company is in is not complicated... It simply owns 42 apartment buildings in Tokyo. Prospect鈥檚 occupancy rate is 95.1%.
The property market in Japan is just about to go nuts. And thanks to this REIT, American investors can get in on the action with just a simple phone call.
New laws passed in Japan from 1996 to 2002 have deregulated the industry and allowed REITs to be publicly traded like stocks.
In the U.S., our massive boom is coming to an end. In Japan, their massive boom is just about to begin.
If you get on board now, with Collin Francis鈥?REIT, you鈥檒l be an instant real estate mogul in Japan, owning an interest in 42 apartment buildings in Tokyo... Be proud that you bought them for less than liquidation value... And enjoy your dividends, which could be as high as 5% as we see substantial price appreciation over both the near term and the long term.
Your upside potential here is triple digits. I would like to hold this one for a very long time.
If you like the sound of this investment idea and would like to learn more, I suggest you act quickly.
But I have to warn you...
A Warning
This is not your typical stock investment.
I can almost guarantee you will not hear about this unique investment anywhere else. It might be too unconventional for you.
So, if you want to take advantage of this market, I recommend you first read my new investment research report on this situation.
This research report is called; FINALLY! The 16-Year Bear Market Just Ended... It's Time to Buy. You can have a free look at this report before you decide whether or not this investments are right for you.
It couldn't be easier to participate. One phone call is all you need to get started.
It's happened over and over again in the past few years... I find unusual opportunities which I simply can't recommend to my True Wealth newsletter subscribers...
I had to keep these ideas to myself.
But now I've figured out a way to share these kinds of limited opportunities with you... if you're interested. |
