S-REIT Investment Blog: Analysis of Fraser Commercial Trust

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.

Thursday, February 9, 2017

Analysis of Fraser Commercial Trust

Current Price on 27th Jan 2017 = $1.26

Yield = 7.97%
Price-to-book Ratio = 0.808
Assets per unit = $2.614
Debt per unit = $1.054 (including current liabilities)
Gearing = 40.3%
Secured NAV = $1.56 (123% of trading price)
Credit Rating = Baa2

Fraser Commercial Trust was one of the past anchor investments but I have since sold it quite a few years back. Now it is back in the spotlight for the reason that it is one of the highest yielding office REIT with properties in Singapore, competing directly with OUE Commerical Trust which has quite similar statistics.

Yield is at 7.97% which is quite high and there is room for improvement because it is still developing a hotel segment which has no yield. Moreover, it is trading at a 20% discount to NAV which means we are (again) buying at a discount which is good for us. Gearing is at a healthy 40.3%. What is more important is that its secured NAV is $1.56 which is at 123% of the trading price. This means that in the very bad scenario, we should be getting $1.56 back which is still higher than the trading price. With a credit rating of Baa2 which is investment grade and quite good, I don't see why they should be trading at this price.

I am vested with OUE Commerical Trust (30,300 shares) and I am thinking of switching it to Fraser Commercial Trust. With some cash, I might put in more.