Welcome

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 $700/month.

S-REIT News

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Thursday, April 2, 2015

Analysis of IREIT Global

Current Price on 27th Mar 2015 = $0.78
  • Yield = 8.57%  
  • Price-to-book Ratio = 1.095
  • Assets per unit = $1.091
  • Debt per unit = $0.378 (including current liabilities)
  • Gearing = 34.7%
Recently, I have been asked about IREIT Global which I have a lot from its IPO. The price has fallen by a lot since its IPO and their statistics seems favourable now.

8.57% yield is probably one of the highest in the market. Bear in mind that we still need to adjust to the falling Euro so I am not optimistic about it (even though they have hedge it). I made the adjustments on the assets and debts and found that the price-to-book ratio is at 1.095. It means we are paying 10% premium. I think it is still too high.

Although the yield is 8.57%, I am not keen until the situation of Euro stabilizes.

Monday, March 30, 2015

Analysis of OUE Commercial Trust

Current Price on 27th Mar 2015 = $0.80
  • Yield = 7.25%  
  • Price-to-book Ratio = 0.724
  • Assets per unit = $1.97
  • Debt per unit = $0.829 (including current liabilities)
  • Gearing = 43.0%
With $60,000 cash from the proceeds of all those sales that I have made, I am on the lookout for more investment opportunities. OUE Commercial Trust is one of those which I am considering.

One key attraction is the price-to-book ratio which is currently at 0.724. It is probably the lowest in the market with significant proportion of properties in Singapore. 70% of its portfolio is in Singapore while 30% is in China. Thus, I will proportion it to be S$0.77 in Singapore and S$0.33 in China. One key issue is that the Lippo Plaza has a remaining lease of 29 years which is very short. It means that the depreciation of its China asset will be faster compared to its Singapore properties which has an average lease of about 80 years (with exception of OUE Link).

Still I think that with the current trading price of $0.80, I am getting it at a steep discount even if I gave steep discount to NAV of Lippo Plaza. Moreover, they are still generating cashflow for us for 29 years so I thought it is still good for me.

In my investment criteria, I have a criteria of at least 8% yield which OUE Commercial Trust does not qualify. However, in view of its price-to-book ratio, I think it should be worth the risk and lower yield. I remember Suntec REIT was trading at a steep discount as well and it appreciated to match its peers. I hope OUE Commercial Trust will do the same.

Of course, with the current investment climate, we need to think whether we should hold cash as well.

Friday, March 27, 2015

Updates to my Current Holdings

Following my last post on Monday, I have sold my holdings in Viva Industrial Trust, making it one of the shortest investments that I have (3+ months). Not something to be proud of as my philosophy is more to hold on for as long as possible.

I have earned a dividend of about $400 and a capital appreciation of about $200. I think I am just lucky that I have managed to earn a bit considering the short tenure.

With that I am holding on to about $60,000 cash following those sales, with another $80,000 in Global Investment Limited. My reconfiguration of portfolio plan has been executed halfway and I will need to see how this $60,000 can be used to generate some income (without capital loss)

Anyway, here is my earlier post on my facebook page. https://www.facebook.com/sreitinvestmentblog

Monday, March 23, 2015

Updates on my Current Holdings

Ever since I posted that I will be selling my holdings, I have received a number of responses and I would like to thank all those who have contributed so that we can learn from each other.

I have tried to sell at a price which I am comfortable with so I did not manage to sell off all at this point. I only manage to sell AIMSAMP REIT at $1.46 (I was lucky). However, I did not manage to sell Viva Industrial Trust. With that, I netted about $31,000 (with a total capital profit of $2,800)

With only two major holdings i.e. about $80,000 in Global Investment Limited and about $30,000 in Viva Industrial Trust, it prompts a rethink of my earlier decision. When interest rates rises (eventually), the first thing that will happen is that NAV will drop. In my opinion, it will drop by about 4% which is similar to my earlier estimate. However, for REITs which have exposure to loans, the drop will be even greater since the cost of loan will increase. In my opinion, even if they hedge their loan, eventually they will need to refinance and that has an impact.

Thus, the impact on Global Investment Limited will be lesser than Viva Industrial Trust since Global Investment Limited has no debts. Moreover, they are already trading at a big discount to NAV so the impact will be even lesser. For Viva Industrial Trust, the impact will be higher since its gearing (including other liabilities) is 46.7%.

Thus for this week, I will continue to try to sell Viva Industrial Trust but I will keep Global Investment Limited for the time being until there are new information.

Thursday, March 12, 2015

Hypothesis - What happens if US increase their interest rates by 0.25%

One of my readers asked me about the impact of US interest rates hike which is coming soon. It brings me to think back on my portfolio and make some calculations.

When interest rates rises, it means that the risk-free rate increases and investors will seek a higher yield to match their investment profile. Thus, the price will drop. The question is how much.

I did some calculation and found that with every 0.25% hike, the market value of my portfolio will decreases by 4%. In fact, as I am writing this, it has dropped by 1.5% already. No doubt that my current portfolio is able to sustain the drop, but I ask myself whether I want to weather this storm that is coming. I have weathered the financial crisis and has reap rewards but was thinking whether I could have done better if I exited and re-enter again.

There are talks that interest rates may rises twice this year means that it is going to rise anyway. Thus, I am exiting my investment and hold cash while I wait for my next move. I have never tried this before so it is going to be an unusual decision from me. I would want to see whether this decision is correct or not to affirm my analysis skills.

By the way, here is my new facebook page. https://www.facebook.com/sreitinvestmentblog

Monday, March 9, 2015

New Facebook Page

Hi everyone,

SREIT Investment Blog has a new facebook page. This page also serves as another channel to interact with my loyal readers. Let's continue to learn from one and another as we continue this journey to build our second stream of income. Here it is.

https://www.facebook.com/sreitinvestmentblog


Monday, March 2, 2015

Analysis of Macquarie International Infrastructure Fund (Miif)

Current Price on 26th Feb 2015 = $0.097
  • Yield = 9.28%  
  • Price-to-book Ratio = 0.776
  • Assets per unit = $0.132
  • Debt per unit = $0.007 (including current liabilities)
  • Gearing = 5.4%
  • Secured NAV = $0.125 (128% of trading value)
Macquarie International Infrastructure Fund is one counter which consist of only one asset i.e. an expressway in China and is in the process of looking at opportunities to divest and wind up the company. They reported their results recently.

Since they have not sold it, I am going to take it that it will continue to exist. And its yield is quite good at 9.28%. Since it is going to wind up soon, we look at the NAV which shows very good sign. Firstly, price-to-book ratio is only 0.776. This means we are looking at about 22% discount. Moreover, it does not really have debt so it is fully owned by you. Thus the Secured NAV is 128% of the trading price.

I believe that they are trying very hard to sell at a fair price so I am going to assume that their NAV is $0.125 and I am going to get $0.125 per share back. Thus, I believe this is going to be a good deal to earn 22% more in capital. Even if they take longer to wind up, they will still need to pay dividends which is currently at 9.28%.

Patience is the key and I am considering putting money into this. If it does not wind, good. If it winds up, it should be better.