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 $3,800/month.

Friday, October 28, 2011

Analysis of FCOT

Current Price on 25th Oct 2011 = $0.805
  • Current Yield = 7.14%
  • Price-to-book Ratio = 0.602
  • Assets per unit = $2.715  
  • Debt per unit = $1.378
  • Gearing = 50.8% (considering CPPU as liabilities)
FCOT has reported its full year results which gives very clear indication on its dividend income. It explains why different quarters can have vastly different yields. Therefore from now on, only the full year dividend will be considered for analysis. Anyway, it is giving me $580 in dividends which I thought was quite good.

With 7.14% yield, it has fallen short by quite a bit for my expectations but I am investing in this more for growth than stable yield (which is a deviation from my investment philosophy). Reasons are
1) Refinancing will give substantial savings in borrowing cost and that will boost yield.
2) CPPU - I have assumed that they will not pay the premium for FCOT units so FCOT would need to redeem it. This would increase borrowings again at a lower cost. Rights issue is also possible to remove this rather high cost "borrowing"
3) When FCOT retake management of China Square Central, there will be a rental increase which will boost yield again.

Thus, I am confident that things will work out fine for FCOT with the support of a strong sponsor (F & N). I already have 20,000 shares so I will monitor my investments here.

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