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 $4,200/month.

Thursday, April 26, 2012

Analysis of FCOT (Sale of Keypoint)


Current Price on 25th Apr 2012 = $0.900
  • Current Yield = 7.32%
  • Price-to-book Ratio = 0.603
  • Assets per unit = $2.803  
  • Debt per unit = $1.312
  • Gearing = 46.8% (not considering CPPU as assets)
  • Secured NAV = $0.378 (41.95%)
FCOT has announced the sale of Keypoint for $360 million which gave us a realized profit of $72 million. Thus, our NAV has increased. According to my estimates, it is $1.491 which is much higher than its trading price. This is the surprise which I have mentioned earlier last year.

I am expecting FCOT to use it to pay off CPPUs which the interest rates are high. I have not considered CPPU as assets before so I has not affected my analysis. Just that I hope DPU will rise due to this repayment. (Unless the CPPU holders are going to convert to ordinary units which is favourable to current unitholders as they will be paying $1.18 for each unit compared to current price of $0.90)

Ever since my last analysis, the price has gone up a lot so the yield stays at 7.32% which is not favourable to my criteria. However, it is still trading at 40% discount to NAV so I am still holding on to it until its yield reach 7%.

2 comments:

  1. I know its fallen under the 8pc minimum dividend you have, but at a 40 pc discount to NAV - that's fantastically undervalued still. If something is selling at that much below its actual value, then you have a huge margin of safety. All this is my opinion of course, and each person must make their own decisions according to their criteria, but I generally give highest priority to margin of safety, although dividend rate is of course important as well.
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  2. I think that is a very good point which is why it is one of my criteria. I believe I can achieve both with some REITs that are available in the market.

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