S-REIT Investment Blog: Analysis of OUE Commercial Trust

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.

Monday, September 15, 2014

Analysis of OUE Commercial Trust

Current Price on 10th Sept = $0.80

Current Yield = 7.15%
Price-to-book Ratio = 0.754
Assets per unit = $1.926
Debt per unit = $0.865 (including current liabilities)
Gearing = 44.9%

OUE Commercial Trust is one of the REIT which I am watching closely. The rise of one of my key assets (AIMSAMP REIT) has prompt me to monetize it and change it to something else. And this is one of those which I am considering.

Yield is at 7.15% which is very stable given that there is income support scheme. I have checked and the income support would last for four years which is very long and provided stability. Another advantage which you hardly see today is its price-to-book ratio which is at 0.754 and it is probably the best in the market. With these two criteria in place, this is a strong candidate.

OUE Bayfront has a valuation of $0.75 while Lippo Plaza has a valuation of $0.31. Thus, with a trading price of $0.80, I believe I will be paying $0.675 for OUE Bayfront (which is comparable to other office REITs which has a price-to-book ratio of about 0.90) and $0.125 for Lippo Plaza. This means I am getting Lippo Plaza at a steep discount, if I buy. For thoughts.

As the amount is fairly large (about $50,000), I need to consider more carefully before I make a move.