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 $3,300/month.

Monday, July 6, 2015

Analysis of LMIR - Mixed News Recently?

Current Price on 2nd July 2015 = $0.37
  • Yield = 8.65%  
  • Price-to-book Ratio = 0.882
  • Assets per unit = $0.775
  • Debt per unit = $0.355 (including current liabilities)
  • Gearing = 45.8%
Recently LMIR has been in the news for a few reasons. However, with all these news, the price hardly moves. Let's look at them in detail.

Firstly is the credit rating which is good news as they are now classified as Baa3 which is investment-grade. This will provide them with cheaper loans which they need to push our yield upwards when they refinance. This to me is good. (I am vested with 30,000 shares)

Secondly, they are making an acquisition (reflected in the statistics above). I have assumed that they are paying this with debt as they are still not clear whether they are issuing units. Yield is still at a strong 8.65% and its price-to-book ratio is still below 1. Gearing (including current liabilities) is at a high of 45.8%.

But what is strange is the third news. They announce a $200 million 6 month loan facility with an interest rate of about 3.5% with two banks. I wonder why they wanted such a short loan facility so I checked and they have a $200 million MTN due this month. This makes me ponder on why the loan has such a short tenor. Is it that they have issues finding funds to refinance or are they negotiating a bigger loan to include their recent acquisition? This is unusual and a bit worrying.

I am vested with 30,000 shares and I will be checking on the website closely to see how they manage their acquisition and refinancing. It may also be likely that they are raising cash (consideration units) to convince finance companies to provide them with more funds.

12 comments:

  1. Hi,

    I am new to REITs and have been following your blog.

    1. "… (reflected in the statistics above)." The "statistics" is "Gearing Ratio"? There was an increase from 31.2% to 45.8%?

    2. "… an interest rate of about 3.5% …" Typo error? Not 2.5%? => http://goo.gl/1f3fi1

    Thanks.

    ST

    ReplyDelete
    Replies
    1. Hi, Here are my replies.

      Gearing ratio, I have included current liabilities which traditionally they don't include in their gearing. In my opinion, they are still liabilities so I include them.

      Interest rate is 2.5% above SOR. SOR is currently hovering at 1% so 3.5% :-)

      Hope it helps.

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  2. Thanks for your update. I had been vested in LMIR in a small way due to attractive yield. My concerns are the transparency. Do you have any view on this?

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