Welcome to my investment blog where I share with you my analysis of REITs in Singapore.

I hope that my investment philosophy will bring me a steady stream of income apart from my job. I am aiming for at least $3,000 per month which can sustain the current expenses of myself and my family.

Do enjoy reading my blog and post any comments that you have. I welcome them because it is a time to learn from each other.

When I am looking at investing in REIT, here are some of the guidelines that I am looking at. Feel free to comment on it. I am willing to listen to ideas.

-> at least 8% yield.
-> Price that is lower than its NAV.
-> Low gearing (if possible)
-> High secured NAV.

Current Dividend income is $3,800/month.

Thursday, May 24, 2018

Updating my Portfolio - Adjusting for more stable income although there is higher risk.

Hi everyone,

Here is my update of my portfolio after a series of announcement on their results which I have some issues.

Global Investment Limited

They have made an announcement which I am quite disappointed especially when they cut their dividend to 0.5 cents per half year. Thus, we are looking only at less than 7% yield from a level of over 8% yield. Originally, I do have a holdings of about 1,100,000 shares. Thus, I have reduced my holdings by 500,000 shares so now I am holding on to about 610,000 shares. I sold them at $0.144, netting $72,000 back.

Sabana REIT

At the same time, I used up some of my CPF to purchase Sabana REIT (about 55,000 shares). Their yield is about 8% and they are still trading at a 20% discount to NAV. Thus, I thought that the metrics are good and stable so I purchased at $0.43. Moreover, if they are able to improve their occupancy, it will be greater income for us.

Asian Pay Television Trust

With the $72,000 that I have netted from selling Global Investment Limited, I used some to buy APTT. I notice that their price has fallen by a lot to $0.465 which means their yield is a huge 14%. And they are still trading as a discount to NAV (about 43% discount). Although they are struggling, I felt that it is priced in and the yield is extremely attractive. Thus, I made a 100,000 share purchase at $0.465 to increase my yield.

Thus, with all these adjustments, here is my portfolio.

When Global Investment Limited reduces their payout, my monthly income went down by more than $100 per month. However, after adjusting my portfolio, now my monthly income is close to $5,000 while I have just reduced my Maybank Margin Loan to about $234,000 which is quite comfortable as of now. Moreover, the margin level is still comfortable such that I am still able to withstand a significant drop in value so it is still good for me.

Enjoying the passive income that I am getting.

Monday, May 21, 2018

Analysis of ESR-Viva Merger - Viva Industrial Trust to benefit from it more.

ESR REIT and Viva Industrial Trust has finally announced their merger. To sniff out the details took longer than expected but I hope that my analysis is correct for all of us here. I am holding on to both ESR REIT and Viva Industrial Trust so I am affected both ways.

Merged ESR Price on 18th May 2018 = $0.53
  • Yield = 6.75%  
  • Price-to-book Ratio = 1.034
  • Assets per unit = $0.956
  • Debt per unit = $0.443 (including current liabilities and perpetual securities)
  • Gearing =  46.4%
  • Secured NAV = $0.513 (97% of trading price)

If you look at the announcement on both sides, it seems a win-win situation but I don't think so. Let's take a look at the argument.

While there is an increment of 5.6% in yield to the merged yield of 6.75%, there is at the same time a 10% drop in NAV from $0.584 to $0.513, a loss of about 7 cents per share for ESR REIT unitholders. This is because Viva Industrial Trust has been trading at a premium to NAV, about 15% more based on a price of $0.915, the price which was shown while trading is halted. Moreover, they are buying at $0.96 which is even higher. Thus, it is inevitable that the price-to-NAV would suffer. Whether we are able to accept this is another issue.

As for Viva Industrial Trust unitholders, while they sold their shares to ESR REIT at a 20 cents premium per share from their NAV which is very high, their new yield suffered from 8.03% to 6.75%, a more than 1% drop. Thus, they will be getting close to 20% drop in yield. To be frank, I think this is a smaller loss compared to the original ESR REIT as it is probably about 1.6 cents lesser per year. Moreover, they got to invest in the merged REIT at close to NAV price which is quite good for them. And they are getting 9.6 cents per Viva share for this deal which is a great sweetener and makes the deal attractive.

To be frank, I was expecting the merged yield to be above 7% so that it is good enough for ESR REIT to say yes to the deal. With 6.75%, I don't think the deal is very appealing although it seems fair. They are really banking just on the asset scale and equity scale, with a strong sponsor for the market to re-rate them accordingly to a level that is at least Frasers Logistics and Industrial Trust. However, the yield is quite comparable already although the merged REIT is still cheaper compared to Frasers Logistics and Industrial Trust. For Viva Industrial Trust unitholders, it seems better solely because of the 9.6 cents which ESR REIT is going to pay.

I have about $80,000 in Viva Industrial Trust and $100,000 in ESR REIT and it makes it extremely tricky for me. As a Viva Industrial Trust unitholder, I am satisfied with the premium that I am getting. As an ESR REIT unitholder, it doesn't make a lot of difference to me. I am still in a daze of what I should do especially I participated in the preferential offering at $0.54 and now it is trading below that price. Thus as an merged unitholder, I hope that the re-rating turns out to be true so that there is a chance for me to sell some of my holdings for a profit.

Thursday, May 17, 2018

Analysis of LippoMall Indonesian Trust - Not trusting myself

Current Price on 6th May 2018 = $0.32
  • Yield = 8.38%  
  • Price-to-book Ratio = 1.025
  • Assets per unit = $0.708
  • Debt per unit = $0.396 (including current liabilities and perpetual securities)
  • Gearing = 55.9%
  • Occupancy = 94%
LippoMalls Indonesian Trust is one which is probably the worst performing REIT that I have seen. In my last analysis, I was thinking whether to offload them but did not do it. Thus, I regret my decision or indecision that I have made. Let's take a look at the statistics now.

Yield is at 8.38% which is still quite high compared to other REITs. However, with the recent pull-back, there are REITs which are trading at similar yields. Their valuation is also still low so price-to-book ratio is at 1.025 which means we are buying at a slight premium to their valuation. Gearing, if you include perpetual securities apart from debt, is quite high at 55.9%.

One thing about LMIR is that we are subject to Indonesian regulations and also currency risk, both which work against us this round and it will take a while for LMIR to turn it around. As I have said earlier, I regret not selling earlier and I am holding just to hope that it will continue to hold and move back up. However, looking at the statistics, I still think it is fairly valued and probably there is only value in holding on. I am vested with 30,000 shares, and I am still observing whether I should unload and switch to another counter. I just hope that I am right this time.

Monday, May 14, 2018

Analysis of Sabana REIT - Recovering from Lows.

Current Price on 6th May 2018 = $0.425
  • Yield = 8.28%  
  • Price-to-book Ratio = 0.783
  • Assets per unit = $0.917
  • Debt per unit = $0.374 (including current liabilities)
  • Gearing = 40.8%
  • Secured NAV = $0.255 (60% of trading price)
Sabana REIT has recently delivered a set of results which I thought was good actually. Moreover, there is big boys interest i.e. e-Shang buying it which fuel speculation that it will also merge with the ESR REIT and Viva Industrial Trust. Let's take a look at the statistics.

Their yield is currently at 8.28% which is very high compared to other REITs. Viva Industrial Trust is yielding at around the same level. One advantage they have is that their price-to-book ratio is at 0.783 which means we are buying at close to 22% discount. This is attractive considering that the bigger REITs are trading at a premium.

In my previous analysis, I thought it is a time to buy. The problem is that I did not as I used up the funds to participate in the rights issue of ESR REIT. If I have bought it earlier, I would have gained about 8% in capital return. With the current price, I believe it can move higher when things are more settled in Sabana REIT and the occupancy goes up.

Wednesday, May 9, 2018

Analysis of Frasers Logistics and Industrial Trust - Growing the portfolio to become a big boy in the market

Current Price on 30th April 2018 = $1.08
  • Yield = 6.67%  
  • Price-to-book Ratio = 1.152
  • Assets per unit = $1.39
  • Debt per unit = $0.453 (including current liabilities)
  • Gearing = 32.6%
Frasers Logistics and Industrial Trust caught my eye because of its relative high yield compared to the rest of the Industrial REITs. Although it is still not within my target, it is worth a look.

With a yield of 6.67%, it is actually higher than most of the bigger Industrial REITs in SGX. Ascendas REIT is yielding at 5.90% and Mapletree Industrial Trust is yield at 5.8%. Being one of the bigger boys in the market, it does seem attractive. Its price-to-book ratio is 1.152 which means it is trading at 15% premium. It gearing is at 32.6% which is quite low.

With the acquisition of the Europe portfolio, it is set to grow bigger which is good for the REIT. But the details are key and it does have room to price it such that it is good for existing REIT unitholders. With this purchase, it does become much bigger and therefore more stable so probably it is justified why it is trading at low yield and premium to NAV. However, it is still not within my target of 8% and it is still trading at a premium so I won't be considering it.

Wednesday, May 2, 2018

Analysis of Ascendas REIT - A Proxy analysis related to Merger of ESR & Viva?

Current Price on 30th April 2018 = $2.67
  • Yield = 5.90%  
  • Price-to-book Ratio = 1.264
  • Assets per unit = $3.53
  • Debt per unit = $1.421 (including current liabilities)
  • Gearing = 40.2%

Ascendas REIT is worth researching now not only because of their recent release of results but also because of the impending merger of ESR REIT and Viva Industrial Trust. We need a proxy as comparison as the merger helps to grow the new REIT to a much larger size (although not as big as Ascendas REIT). Let's take a look at the statistics.

With a yield of 5.90%, it is the lowest yielding industrial REIT in SGX. Moreover it is trading at 26% premium to its NAV, probably due to its size and stability of returns over the years. Gearing is at a good 40.2% although it is not easy to grow any further.

With the impending merger of ESR REIT and Viva Industrial Trust, I have chosen to use Ascendas REIT as a proxy because most of the properties are still in Singapore. It does seems that the merging REIT has some room for re-rating since ESR REIT is trading at 6.3% and Viva Industrial Trust is trading at 8.4%. Moreover, ESR REIT is trading at a discount to NAV which means probably it will trade at at least NAV price for the new merging REIT.

I am vested with 190,000 shares of ESR REIT and 87,100 shares of Viva Industrial Trust. I look forward to the deal and hopefully it works out well for me since I am so heavily vested in this. However, I also know that once it is re-rated, I would probably sell and look for REITs with higher yield.

Monday, April 9, 2018

Analysis of Asian Pay Television Trust - Extreme High Yield

Current Price on 5th April 2018 = $0.515
  • Yield = 12.62%  
  • Price-to-book Ratio = 0.622
  • Assets per unit = $1.943
  • Debt per unit = $1.116 (including current liabilities)
  • Gearing = 57.4%
Asian Pay Television Trust recently release an investor update presentation slides which prompt me to review my investments in APTT. Here are the statistics.

With 12.62% yield, this is probably the highest yieldings trust you can find in the market. It is at least three percentage points higher than the next highest which is Dasin Retail Trust. However, it comes with a price and risk. Its gearing is at 57.4% which is extremely high, although it is trading at 38% discount to NAV. It seems to be trading at a level which is similar to levels during a crisis, although they are not going through one.

In my opinion, the high yield comes with a high risk and their assets are not brick and mortar like REITs which means it is not as reliable as valuing properties. However, I will still be holding on to my 200,000 shares, enjoying the dividends even though it has fallen 8 cents since my last analysis.