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.

Thursday, April 4, 2019

Analysis of Far East Hospitality Trust - Is the price too high?

Current Price on 26th March 2019 = $0.675
  • Yield = 5.93%  
  • Price-to-book Ratio = 0.775
  • Assets per unit = $1.417
  • Debt per unit = $0.546 (including current liabilities and perp securities)
  • Gearing = 38.5%
  • Secured NAV = $0.871 (129% of trading price)
Far East Hospitality Trust has risen by quite a bit this year at $0.675. I am vested with about 104,000 shares (I took scrip dividend) worth about $70,000. Let's take a look at the statistics.

With a yield of 5.93%, it seems very low now compared even to its peers like CDL H-Trust, OUE Hospitality Trust, Fraser Hospitality Trust etc. But its price-to-book ratio is at 0.775 which means we are buying at a 23% discount to its valuation. It is ranked the best among its peers. Gearing is at 38.5% and because all its debts are unsecured, we have a secured NAV of $0.871 which is 129% of its trading price.

I do find it very strange because it is the lowest yielding hospitality REIT and yet its price is moving up. Frankly speaking, it no longers fits into my criteria of at least 8% yield by a large margin and I have been pondering for a while whether to sell it off. What is holding me back is its price-to-book ratio and its secured NAV. Its secured NAV is the highest among the REITs in SGX.

There are a lot of reports which upgrade its target price to 70 cents and 75 cents which is very high. Probably its stability contributes to its current trading yield but I am not so sure. Looking around to see whether there are better REITs which offer higher yield with similar metrics.

1 comment:

  1. Hi ,
    May i ask how do u calculate the percentage difference for

    " But its price-to-book ratio is at 0.775 which means we are buying at a 23% discount to its valuation."

    Noobie learning haha,