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 $1,350/month.



Tuesday, July 28, 2015

Analysis of Viva Industrial Trust

Current Price on 24th July 2015 = $0.81
  • Yield = 9.13%  
  • Price-to-book Ratio = 0.974
  • Assets per unit = $1.403
  • Debt per unit = $0.572 (including current liabilities)
  • Gearing = 40.7%
  • Credit Rating = BB
Viva Industrial Trust reported their results on Friday which is pleasing to me as I am vested with 79,100 shares worth $64,000. Let's look at the statistics.

Yield is at a high of 9.13% which is probably one of the highest in the market. Only Accordia Golf Trust and IREIT Global REIT has higher yields. Moreover, due to the major increase in valuation of TPCC in their portfolio (an increase of $100 million), price-to-book ratio has fallen to 0.974 which is below the critical value of 1. This means that we are buying at a discount to NAV which is fantastic.

One thing to note is that their credit rating for both the trust and its MTN has been downgraded to BB and BB+ respectively. Downgrade means that its credit profile is not doing well although the downgrade is not major. Nevertheless, there is an impact on interest rates should they decide to raise funds or secure debts.

I am heavily vested and I am glad that I have managed to participate in the private placement which I manage to make a paper profit (I bought it at $0.793). However, to place $64,000 in Viva Industrial trust is something which I will ponder for a while as it may be a bit too much. May pare down a bit and transfer to something else.

Monday, July 27, 2015

Analysis of Mapletree Commercial Trust

Current Price on 24th July 2015 = $1.44
  • Yield = 5.58%  
  • Price-to-book Ratio = 1.164
  • Assets per unit = $2.014
  • Debt per unit = $0.777 (including current liabilities)
  • Gearing = 38.6%
  • Credit Rating = Baa1
Mapletree Commercial Trust has reported their results which I think is worth looking as one of the benchmarks in Retail REITs together with CapitalLand Mall Trust and Fraser Centrepoint Trust and Starhill Global REIT. Let's look at the statistics.

Yield is at 5.58% which I thought was comparable to the rest. Price-to-book ratio is at 1.164 which means we are buying at 16% premium. (Not favourable to me) Gearing is at a healthy 38.6% and they have a credit rating of Baa1 which is great for S-REITs.

I like Mapletree Commercial Trust because I like Vivocity. It is always so vibrant with lots of people enjoying themselves there. Moreover, majority are actually Singaporeans. Having Resort World Sentosa just beside to bring in tourist receipts just make it more attractive especially when the retail segment in RWS, in my opinion, is quite weak. Whether it justifies the premium is not my judgement call as I am not trained to quantify it. Of course, the trading market does say so.

I am not vested in this and its yield is not appealing. Its price-to-book ratio is also not attractive at all. But I may just get emotional and get a small stake when there is a chance i.e. the price went down for a while.

Friday, July 24, 2015

Analysis of Suntec REIT

Current Price on 24th July 2015 = $1.715
  • Yield = 5.83%  
  • Price-to-book Ratio = 0.815
  • Assets per unit = $3.412
  • Debt per unit = $1.307 (including current liabilities)
  • Gearing = 38.3%
  • Credit Rating = Baa2
Suntec REIT is one of the largest REITs in Singapore with only Singapore assets. They have just reported their results which are quite good as there is an improvement from the previous quarter. Let's look at the results.

Yield is at a decent 5.83%. I used the word decent because that is the average of office REITs in Singapore. And the price-to-book ratio is quite strong at 0.815 which means we are buying top grade office assets at 18% discount. This is one of the lowest among the office REITs. Gearing is at 38.3% which is quite normal.

Suntec REIT is one of the largest companies in Singapore. Thus, if I use OCBC Securities Margin Loan guidelines as my guide, OCBC Securities is willing to lower their loan interest rates on Suntec REIT to 3.5% from 6.5%. I see that as an affirmation of their company strength and credit rating even though it does not fulfil my investment criteria.

This REIT is for those who are only keen to invest in blue chips or only major companies. 5.83% yield is quite decent. For me, I see this as a office REIT benchmark to compare with other office REITs but I am not investing in this. Maybe I belong to those who are keen to take more risk to achieve higher yield.

Thursday, July 16, 2015

Current Investment Holdings at a Glance...

Hi everyone,

Just a summary of my investments just before all my investments start to report their results.

Total Investment Value = $172,692 (No equity loans)
Dividends for 2015 = $16,375
Dividend Yield = 9.48%

If we were to calculate all the assets and liabilities of all these holdings converted to number of shares I am holding, here is the statistics

Total Assets = $273,000
Total Liabilities = $65,000
Total Net Asset Value = $208,667
Secured NAV = $154,074 (89.2% of investment value)
Price-to-Book Ratio = 0.82

Well, not bad huh, considering that I liquidated some of my holdings to pay for my executive condo late last year. May not be as stellar as those who trade for a living but I am satisfied with my results. There are more news upcoming which I will update on this blog. :-)

Monday, July 13, 2015

Query and Response from a Reader

Hi everyone,

Every now and then, I receive emails from my readers who ask specific questions. I just thought that it will be nice to post it in my blog so that everyone benefits, especially when you ask specific questions like processes of rights issue etc. So if you are asking questions, I will be replying through email (as much as possible as I have a day job and family), and I will repost it on my blog without your name and email.

So here is the first one (for those whom I replied earlier, if I would like to repost, I will seek your permission first.)

Email from Reader,
Hi, Firstly, thank you for your regular updates. I have been influenced by you quite a fair bit - Global Investment 35k, Viva 35k. And yesterday I copy cat you and bought 2000 shares of OUE to have a feel of the process of "rights issue". I saw the 9 to 20 offer announcement in SGX. Can I find out from you what will happen next and how to go about participating in the rights issue ? 
I have also started the 5 days ein55 course to better manage my finance. 
Lastly, admire your gungho to try gearing up investment via external financing. What interest rate ? My guess is must be high. 5%, 6% ? 
My response
Wow! I am humbled that there are people who are following what I am investing. Thanks for the affirmation.
For OUE C-Trust, the next step is the subscription of the rights issue. They will announce via a letter to you on how many shares you are entitled to buy. For your case, it will be 900 shares so you can choose to pay for the shares at $0.555 per share through ATM. After which, you can choose to apply for excess rights in case there are people who gave up their rights. However, there is no guarantee that you will be given. So total will be 900 + excess rights issue for this exercise.
Yes, a bit too gungho that there there are other people who have advised against this practice through my blog so I have kept this strategy on hold actually. Will update you all once I have done my review.

Thursday, July 9, 2015

IPO Analysis of Manulife US REIT

Offering Price = $0.82 (US$0.617)
  • Yield = 6.00% 
  • Price-to-book Ratio = 1.065
  • Assets per unit = US$0.933
  • Debt per unit = US$0.354 (including current liabilities)
  • Gearing = 38.0%
I was about to post this when it is launched but I received news that they have pulled it off last night. Nevertheless, let's just look at the statistics and see whether it is worth it even if it is launched.

Yield is at 6.00% which is hardly exciting. It's price-to-book ratio is 1.065 which means we are paying a premium to buy these assets. Gearing is at 38.0% and they have a credit rating of "BB" which is not strong. To me, all the statistics does not conform to my criteria.

One more thing which I thought was important. In other news report (see my earlier post), when they do their pre-marketing, their dividend yield was reported to be between 5.5% to 5.9% with a price-to-book ratio of 1.1 to 1.2. With these data and the current one from their prospectus, I am quite sure they had trouble getting investors to invest before their IPO. That is why they have to reduce their price to improve the yield to convince investors. To me, that is a bad bad sign.

I am quite sure that when it is officially listed for trading, it will drop below $0.82 so I am not applying for any lots. Although they are located in US, they are traded in SGX which means they compete with funds and valuation with local REITs and business trusts. And I believe that Singapore REITs is able to offer more. So, it may well be good news for investors that they are pulling it out.

Monday, July 6, 2015

Analysis of LMIR - Mixed News Recently?

Current Price on 2nd July 2015 = $0.37
  • Yield = 8.65%  
  • Price-to-book Ratio = 0.882
  • Assets per unit = $0.775
  • Debt per unit = $0.355 (including current liabilities)
  • Gearing = 45.8%
Recently LMIR has been in the news for a few reasons. However, with all these news, the price hardly moves. Let's look at them in detail.

Firstly is the credit rating which is good news as they are now classified as Baa3 which is investment-grade. This will provide them with cheaper loans which they need to push our yield upwards when they refinance. This to me is good. (I am vested with 30,000 shares)

Secondly, they are making an acquisition (reflected in the statistics above). I have assumed that they are paying this with debt as they are still not clear whether they are issuing units. Yield is still at a strong 8.65% and its price-to-book ratio is still below 1. Gearing (including current liabilities) is at a high of 45.8%.

But what is strange is the third news. They announce a $200 million 6 month loan facility with an interest rate of about 3.5% with two banks. I wonder why they wanted such a short loan facility so I checked and they have a $200 million MTN due this month. This makes me ponder on why the loan has such a short tenor. Is it that they have issues finding funds to refinance or are they negotiating a bigger loan to include their recent acquisition? This is unusual and a bit worrying.

I am vested with 30,000 shares and I will be checking on the website closely to see how they manage their acquisition and refinancing. It may also be likely that they are raising cash (consideration units) to convince finance companies to provide them with more funds.