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, September 7, 2015

Analysis of Far East Hospitality Trust - Hotel Assets with largest discounts

Current Price on 6th Sept 2015 = $0.61
  • Yield = 7.61%  
  • Price-to-book Ratio = 0.628
  • Assets per unit = $1.429
  • Debt per unit = $0.458 (including current liabilities)
  • Gearing = 32.1%
  • Secured NAV = $0.971 (159.21% of trading price)
Since the meltdown, it will be nice and interesting to look at REITs which are trading at deep discount to NAV. This is like looking for investment products on big sales. Far East Hospitality Trust is probably on the biggest sale.

Price-to-book ratio is at 0.628. This means that it is now trading at at least 37% discount which is by far the cheapest REIT on sale. Moreover, its secured NAV is $0.971 which is 159.21% which means that even in a worse scenario and they need to sell assets, you still probably get your capital back at least. Well, likely with a profit as well. The only drawback is the yield which is 7.61%. Not bad actually considering that its is 100% Singapore-based so there is no foreign exchange risks.

Far East Hospitality Trust, to me is a good proxy on the tourism sector in Singapore. So if Singapore economy is doing well and many people are coming, they will do well i.e. yield will improve. Moreover, where can you get such deep discounts for properties? For me, I am looking at diversifying as my portfolio is too heavy on industrial properties in Singapore. This will be the one if I decide to invest in hotels.

1 comment:

  1. I notice the Payout Ratio (from another site ) is 447%.
    Isnt a payout of more than 100 per cent is a warning sign that the company is paying out more than it earns?