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.

Wednesday, November 8, 2017

Analysis of ESR REIT - With a Sponsor comes strength?

Current Price on 31st October 2017 = $0.555
  • Yield = 6.95%  
  • Price-to-book Ratio = 0.87
  • Assets per unit = $1.123
  • Debt per unit = $0.485 (including current liabilities)
  • Gearing = 43.2%
  • Secured NAV = $0.638 (115% of trading price)
ESR REIT is formerly Cambridge Industrial Trust. Their change in name reflect that they have a strong backing now. Let's take a look at the statistics.

Yield is at a weak 6.95%. It is considered weak as I have expected higher yield from the same value of properties. Their price-to-book ratio is 0.87 which means that we are buying at a 13% discount. Only Sabana REIT is trading at a higher discount to book value which probably gives more value for money buys. EC World REIT is also trading at 0.87 price-to-book value but they are based in China. Gearing is at 43.2%.

What is attractive is that now their loans are all unsecured which means their secured NAV is $0.638 which is 115% of their trading price. It gives a lot of margin of safety to the investors and in the worst case scenario, we are probably still looking at getting back this amount. :-)

Another point to note is that they are buying a property which should be completed by this month. This will help to improve their yield to about 7.5% which in today's standards, is quite attractive.

I have recently purchased 55,000 shares of ESR REIT due to its margin of safety and its improved yield. May not be the best in the market but certainly fulfill my needs.

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