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.

Wednesday, October 31, 2012

Analysis of FCOT

Current Price on 25th October 2012 = $1.20

  • Current Yield = 5.83%  
  • Price-to-book Ratio = 0.826
  • Assets per unit = $2.552
  • Debt per unit = $1.099 (including current liabilities)
  • Gearing = 33.5%
  • Secured NAV = $1.016 (84.6%)
FCOT has a series of announcements which include its prepayment of its debt, divestment of its Japan portfolio and its results. Let's see these, one by one.

Its prepayment of its debt is a good one as it helps to reduce interest paid and also attempts to release some of its properties from being tied to a debt. This helps to raise its secured NAV to 84.6% which is quite high. It is in our interest to have unencumbered assets so that the property is rightfully ours.

Divestment of its Japan portfolio helps to raise its NAV by a bit which I think is good since its NAV is negative. Yield will drop a bit but I think should be ok for us.

Their results shows a yield of 5.83% which is quite low compared to my target. However, I am waiting for the upgrade in its yield when 1) reduction of interest kicked in due to prepayment and 2) redemption of CPPU to boost yield. According to my estimation, its yield should move up to 7.07%.

One more factor which I have not considered is its plans with two others to rejuvenate Chinatown (Singapore) which will factor in China Square Central.

I am vested with 20,000 shares and it is exciting to be part of all these developments. However, I am worried that all these catalyst are priced in already. Thus, I am looking closely at its trading price to see whether it is time to exit.

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