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, May 2, 2018

Analysis of Ascendas REIT - A Proxy analysis related to Merger of ESR & Viva?

Current Price on 30th April 2018 = $2.67
  • Yield = 5.90%  
  • Price-to-book Ratio = 1.264
  • Assets per unit = $3.53
  • Debt per unit = $1.421 (including current liabilities)
  • Gearing = 40.2%

Ascendas REIT is worth researching now not only because of their recent release of results but also because of the impending merger of ESR REIT and Viva Industrial Trust. We need a proxy as comparison as the merger helps to grow the new REIT to a much larger size (although not as big as Ascendas REIT). Let's take a look at the statistics.

With a yield of 5.90%, it is the lowest yielding industrial REIT in SGX. Moreover it is trading at 26% premium to its NAV, probably due to its size and stability of returns over the years. Gearing is at a good 40.2% although it is not easy to grow any further.

With the impending merger of ESR REIT and Viva Industrial Trust, I have chosen to use Ascendas REIT as a proxy because most of the properties are still in Singapore. It does seems that the merging REIT has some room for re-rating since ESR REIT is trading at 6.3% and Viva Industrial Trust is trading at 8.4%. Moreover, ESR REIT is trading at a discount to NAV which means probably it will trade at at least NAV price for the new merging REIT.

I am vested with 190,000 shares of ESR REIT and 87,100 shares of Viva Industrial Trust. I look forward to the deal and hopefully it works out well for me since I am so heavily vested in this. However, I also know that once it is re-rated, I would probably sell and look for REITs with higher yield.

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