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.

Monday, March 14, 2011

Analysis of Saizen REIT (after Japan Earthquake)

Saizen REIT is probably the worst-hit REIT in SGX with about 15% of their portfolio being damaged. For the purpose of this analysis, there will be a few assumptions.

- Assuming that the properties are wiped out and will not contribute to the REIT anymore.
- There is a 10% decrease in valuation due to increased risks. 

Here are the statistics on Saizen REIT ($0.14)
  • Yield = 6.31%
  • Price to Book ratio = 0.817 (NAV at $0.171)
  • Asset per unit = $0.369  
  • Debt per unit = $0.198
  • Gearing = 53.6% 
From the data, we can see that the NAV is still at $0.171 (from $0.271) even when the affected properties are abandoned. Moreover, the unaffected properties are still giving a modest yield of 6.31% (drop from 7.43%), which does not fit my criteria but nevertheless still respectable. The current panic selling, in my opinion, is just an over-reaction and will provide opportunities for buy-in.

One thing which I worry about is the debt. Debt is assumed to remain the same (repayments are still expected) which pushes the gearing up near 60% limit. Moreover, the higher the debt, the weaker it is. I expect rights issue to come to 'normalize' the REIT and bring it down to a respectable level. This will be a critical factor.

I am currently out of cash to invest (my family needs them more) so I will wait and see first. In any case, I am holding on to my current investments with Saizen REIT

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