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.

Thursday, December 24, 2015

Analysis of Ascendas Hospitality Trust - Takeover Target!!!

Ascendas Hospitality Trust says unnamed buyer interested in takeover - Channel NewsAsia

This is an exciting news for us as there will be a second REIT that is potentially going to be taken over. With talks are all early on, there is a chance that we can enter and participate in this take over bid. I am excited after benefitting from Saizen REIT's offer. Here is the statistics.

Current Price on 23th Dec 2015 = $0.73
  • Yield = 7.56%  
  • Price-to-book Ratio = 1.013
  • Assets per unit = $1.282
  • Debt per unit = $0.562 (including current liabilities)
  • Gearing = 43.8%
Ascendas Hospitality Trust has a yield which is quite comparable to the others. At 7.56% yield, it is lower than OUE Hospitality Trust and Fraser Hospitality Trust. Moreover, their price-to-book ratio is currently at 1.013 which is the worst among all the hospitality trust. The rest are priced between 0.665 to 0.904. Gearing is at 43.8% which is still quite high.

With Ascendas Hospitality Trust being a target for take over, I am quite surprised especially with the current yield and NAV. The interested party would need to buy all units at a premium to their NAV in order to convince shareholders to sell to them and it would be a disadvantage to them. Yield might still be attractive enough though. There are others which are better i.e. OUE Hospitality Trust and Fraser Hospitality Trust. But I believe their sponsors won't be willing to let them go and wish to continue to have control over their hospitality operations.

It is seldom that I do prediction but I will make one here today. I am predicting that the take over price to be at $0.82. This price is arrived at a yield of 6.7% which is quite similar to the yield for CDL Hospitality Trust. The good thing is that there is a reference point from one of the anchor big shots in the sub-sector and for hospitality trust, CDL H-Trust is the one. Thus, with this prediction, I will be trying to enter tomorrow (Christmas Eve), looking at a potential profit of more than 10%.

I also believe this will propel the rest of the smaller REITs upwards as the consolidation of REITs starts to kick in in 2016. This is great news for investors in smaller REITs as we do stand to gain from it. Thus, price of smaller REITs, I believe, will at least stabilize.

3 comments:

  1. Hi, i have always wanted to generate passive income and it seems that i have finally found reits...

    May i know how old you are and how long it took u to generate $1450 of passive income..

    I am currently 33 and wonder whether i still have enough time to build up a reasonable amount of passive income for retirement..

    ReplyDelete
    Replies
    1. Hi Jax,

      I am 33 too. I started investing since Uni days and it is only recently that I am able to generate $1,450 per month. It is a simple formula. Spend less than you earn, and use the savings in income-generating investments.

      (By the way, I have family so dual income but expenses also not low because of kids)

      You need to see how much savings you have and calculate how much passive income you can generate. (See J5Investment link if you need a reference)

      Delete
    2. Sure thanks a lot for the reply... 😁

      Delete