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Croesus Retail Trust: Acquisition of ONE'S MALL.

Monday, September 1, 2014

I had expected some form of equity fund raising and although I was hoping that it would be a rights issue, I was not surprised that a private placement has been chosen instead. It is more expeditious, after all.

However, it does not mean that I am happy about it since, in all likelihood, I won't be one of those "other investors" who would be offered new units in the Trust to be priced between 89c and 92c per unit. What? Unit price was about $1.00 when you last looked? Wow! 89c would be a steal, wouldn't it? Bummer.

Anyway, the acquisition of the new (freehold) mall, ONE'S MALL, in Greater Tokyo will cost about S$132.5 million.

The private placement is expected to raise S$70.2 million to S$72.6 million. The Trust will also be drawing upon a Japanese local bank loan for most of the shortfall (equivalent to S$74.1 million) at an interest rate of 1.29% per annum. I like the natural hedge that comes with this and also the very low interest rate.

A much smaller amount of S$6 million will be drawn from the Fixed Rate Notes issued in January this year. To utilise funds from the Fixed Rate Notes minimally is a good move as it attracts a higher interest rate of 4.6% and it is also denominated in S$. So, there will be some FOREX risk but it will be miniscule here with only S$6 million drawn.

Overall, income distribution per unit (DPU) is not expected to receive much of a boost with this acquisition because it is half funded by the private placement. Expect an increase of only 0.2% in DPU. Expect NAV/unit to increase by only 0.1%.

What about gearing level? As the purchase is about half funded by the private placement, gearing level stays more or less unchanged, reducing from 51.7% to 50.5%.

Nothing to be too excited about.

See announcement: here and here.

Related post:
Croesus Retail Trust: 4Q FY2014 DPU improved.

If our income is $3K a month, we could get a 6.6% raise!

People sometimes wonder if it takes a lot of time to prepare food to bring to work. It surprises people to find out that actually it could take very little time. It is very easy to cook oatmeal and to make sandwiches, for examples.

It could take 15 or 20 minutes to make some sandwiches to last us for a few days each time we do it. Therefore, the time taken to prepare meals on a per meal basis is actually very little. (See related post #2.)

Oatmeal takes very little time to prepare too. (See related post #1.)

So, join me for some home made lunch?

What's this?

Bread, cheese, lettuce and ham. Yummy!

Evidence of me chomping away.

Cost? Probably $1.00 or a bit more.

Whenever I ask people to try making their own lunch to bring to work, a common reason for not even trying is that they don't have the time or energy to do it.

Well, I understand that it is more convenient to simply buy cooked food outside but there is always a price to pay for convenience. We might want to ask if the price we pay for convenience is too high.

High, higher, highest. It is all relative, isn't it? So, if our gross salary is $3,000 a month and we spend $450 a month eating out at work (15% of our gross income), is that too high? I don't know about you but it seems like a lot to me.

Of course, for someone who makes $10,000 a month, that same $450 monthly spending on food at work is more manageable, everything else remaining equal.

All our circumstances are probably different and saving a couple of hundred dollars a month might not look like much to some people but to the vast majority of working Singaporeans, I believe that it does make a difference.

A dollar saved is a dollar earned and, for someone who makes $3,000 a month, if he could save an extra $200 each month, it is like getting a 6.6% salary increment each month. Is that not good to have?

Related posts:
1. It takes only a few minutes to cook oatmeal.
2. Prepare 6 gourmet sandwiches at one go.

How much term life insurance should a fresh graduate have?

Sunday, August 31, 2014

I don't know if it is a trait of Asian families but it seems that there are certain topics related to money which are taboo. I know my family generally don't like to talk about death and insurance, for example. Maybe, it is considered inauspicious but I don't care. I will talk if I think it is necessary because I do care.

When a reader sent me an email with regards to one of my blog posts about what I think young graduates might want to do to get their personal finances in order before thinking about investing money in the stock market, I said the same thing.

As we grow older, our parents grow older too. They will retire one day and might depend on us for financial support. Buying insurance on our life is for our dependents. So, it is important to talk to our parents about insurance and what we are doing for them if they should be dependent on us. They have to know.

In that blog post the reader referred to, point number 1 was:

1. Buy a term policy. Very important if we have parents or other dependents to care for. How much should the coverage be? It is up to you but I feel that $500K is probably more than adequate for most. (See related post number 1 at the end of this blog post for the full article.)

He wondered why I thought $500,000 was probably an adequate amount for a start? There is a very simple reason.

In case the insured (i.e. the fresh graduate) should meet with an untimely demise, each parent would get $250,000. If the parents were financially prudent, they would use the money to buy an annuity each. There could be a 5 year or 10 year accumulation period but if the annuities were worth their salt, they could provide a monthly income of $2,000 or more for each parent. Sounds good?

This is how that $500,000 paid out by the term life policy should be utilised, in my opinion.

Unfortunately, not everyone is financially prudent. $500,000 may look like a big amount of money but it could disappear very quickly in the hands of the less prudent. Then, there are people who are at the other extreme who might just put all the money in a fixed deposit or a few which is better than squandering away the money but it is still far from ideal.

So, although possibly losing their child is not something parents want to think or talk about, we have to talk to them about it at least once and tell them what they should do with the money paid out by the insurance company if the bad thing should happen. I believe that talking about it will ultimately give everyone a peace of mind.

The sooner we do it, the better.

Related posts:
1. Take steps towards financial security.
2. Financial freedom is a family affair.
3. An annuity proposal: A case study.
4. Free medical insurance in our old age.
5. What is our attitude towards having children?

Accordia Golf Trust: A hole in one.

Friday, August 29, 2014

I bought more this morning when the counter broke out of resistance:

In the afternoon, I closed my positions:

What if the unit price were to go higher? I would congratulate those who are still holding.

Won't I feel any regret? I might complain about it a bit but it would probably be in jest. What? Why won't I feel any remorse?

I always try to remember my motivation whenever I initiate a position. If the outcome matches my motivation, that is good enough for me.

Why should we feel sad if things turned out well in the way we had hoped they would?

Related posts:
1. Accordia Golf Trust: Blood in the golf course.
2. Motivations and methods in investing.

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