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First REIT: Bought more at 73.5c.

Monday, April 11, 2011

Today, I bought more units of First REIT at 73.5c. It should be quite obvious that the unit price of this REIT has gone into a trading range. There is no trend.

In my blog post of 1 April, I said "The REIT's price action looks rangebound and if we believe that there is no trend, we should pay attention to the Stochastics which suggests that the REIT is correcting from an almost overbought position. So, more weakness to be expected? Possibly and I am waiting to accumulate on any further weakness."

The Stochastics were coming off a high of 80% in late March. It has now flatlined at 50% which sometimes act as a support in a decline. With Stochastics no longer bordering on overbought, could we see price pushing the higher end of the range in the near future?

The rising 100dMA seems to be providing some measure of support and this is now at 73c. 74.5c is a many times tested resistance and would have to be cleared before price could go higher.

With the quarterly report and income distribution announcement drawing nearer day by day, a positive catalyst for price to move higher in the near term is possibly at hand. Could we then see a retest of January's high of 77c? Why not?

Related post:
First REIT: Bought more at 73c.


JJ said...

Hi AK,

With the Payout ratio for First reit around 185% and dividend >8%, how long do you think First Reit to sustain this kind of dividend yield.

Don't you think that this yield should and will eventually come down?.

What is your criteria (apart of non-measurable factor) of choosing a reit, if I may ask.

AK71 said...

Hi JJ,

I rather doubt that the payout ratio is 185%. We have to remember that the current projected annualised DPU of 6.4c includes two properties purchased in FY2011 and their contributions would not be reflected in FY2010 financial reports.

Newly acquired MRCCC and SHLC expected to raise distributable income by 89% to S$40.3 million in Projection Year 2011.

Basic criteria for choosing REITs: High yields: Successes, failures and the in betweens.

WK said...

i think this Q result will be good... so buy more before they announce the results...

AK71 said...

Hi WK,

I already bought more at 73.5c. Haha.. Your turn. ;)

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