Singapore industrial property market picking up!

People tell me to be careful about investing so much in industrial property S-REITs. They think it is going to experience a contraction in demand. I personally do not think so and shared my research here in my blog.

"According to Colliers International, average monthly gross rents for prime factory and warehouse spaces surged between 6 and 7 per cent on-quarter. This was the fastest quarterly growth in three years.

"But rents for all segments of prime factory and warehouse space are still below peak rates in the second half of 2008...

"Chia Siew Chuin, Director of Research & Advisory of Colliers International, said rents and capital values of industrial properties are expected to grow more moderately, in the range of 10 per cent in second half of this year." Read full article here.

For AIMS AMP Capital Industrial REIT, leases representing 4.3% of its rental income are due to expire in the financial year ending March 2012. We could see some positive rental income growth and, therefore, higher DPU, everything else remaining equal. With its properties likely to enjoy another bout of revaluation upwards, we could see its gearing level dropping as well. Good news are in the pipeline, it would seem.

Good luck to fellow unitholders.

Related posts:
Higher rents to benefit industrial properties S-REITs.
Industrial rent forecasts strongest for Singapore.

Worst ever NDP song!

Legal issues aside, this song is really mindless.

We are celebrating National Day! We are suppose to celebrate Singapore's achievements and vision for the future!

How does this "Fun Pack Song" fit into the picture? It is demeaning! The organising committee should be taken to task! Definitely in bad taste.

Haresh Sharma, this is a joke!

I want Newater and I want a cold drink
You and me, let's share a bit
I want a biscuit and I want a sweet
You and me, let's share this treat

Puke nation!

See the video here:
http://youtu.be/aoExTn7PC2E

Hyflux secures funds of S$150m.

The Tuaspring desalination plant is part of a project expected to cost S$890 million, which the firm said it is "on track" to secure funds for this second tranche.

More fund raising exercises on the way, I think.

Related posts:
Hyflux: 6% perpetual Class A preference shares.
Hyflux: $800 million bridge loan.

Male cheerleader brings it on!

Thoroughly entertaining and somewhat disarming!

Golden Agriculture: FA and TA.

I retain a very small long position in Golden Agriculture. The price of crude palm oil (CPO) has made a new low for 2011, closing at RM3,040.

"Inventories are likely to accumulate in the coming months, unless prices fall to around MYR2,700-MYR2,800/ton, levels that might spur strong physical demand for the commodity and prompt traders to buy on dips, said a trading executive in Kuala Lumpur...

"June output is expected to rise 7%-10%, from 1.74 million tons the previous month, and end-June stocks could rise by as much as 24% to 2.38 million tons." Dow Jones Newswires, July 05, 2011 07:17 ET (11:17 GMT).

The longer term fundamentals, given the strong and growing demand for the vegetable oil, are still intact. However, short term weakness could present rather strong downward pressure on prices. Therefore, I am exercising caution and not adding to my long position in Golden Agriculture. This decision is also informed by technical analysis.

If we look at Golden Agriculture's daily chart, the symmetrical triangle is quite obvious. Two thirds to its apex, we could see a movement breaking the triangle in the near future. Up or down? With price finding it hard to recapture support provided by the 200dMA, the bias is towards the downside. With the ADX indicating a lack of trend, look to the Stochastics for clues. It is turning down from the border of the overbought region. Some softness in the counter's share price would not be surprising.

A look at the weekly chart shows that the Stochastics has broken support. A weakened momentum is obvious. If price were to break the symmetrical triangle to the downside, we could see a test of support provided by the 100wMA. 61c? Could happen.

Long holders could be walking on thin ice here. Good luck.


Related post:
Golden Agriculture: Strong resistance.

Capitaland: Weekly chart.

Capitaland seems to be enjoying a respite.

A quick look at the weekly chart suggests that a retest of the declining 20wMA as resistance is likely. It could happen this week or the next couple of weeks.

If I were to hazard a guess, it could be at $3.14 if it should happen as that is also where we see some resistance provided by the candlesticks. However, volume declined in the last couple of weeks. So, this brings into question whether recent strength is sustainable.

Wait and see.

Independence Day special deals!

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Happy shopping!

Silver: Price formed another lower high.

Staying cautious on silver has been the right thing to do. The declining 50dMA seems on track to forming a dead cross with the 100dMA in the near future with silver's price forming another lower high this week, closing the week at US$ 33.70 an ounce.

All eyes are on the 200dMA and whether silver's price could stay above this long term moving average. If the support holds up, we could see bulls coming back with a vengeance. If the support breaks, the bears could have a field day. The 200dMA is currently at US$ 31.71 an ounce.

A quick look at the weekly chart shows that the uptrend is still intact although the momentum has clearly weakened. RSI has gone under 50% which was acting as support. A lower low on the MACD is a forgone conclusion although it is currently still in positive territory.

I am maintaining the status quo. This is a time of waiting and could be a most unbearable period. A time to add to long positions would come and that is probably when the supports provided by the longer term MAs hold up. Till then, I just have to sit tight.

Related post:
Silver: Trying to find a base.

AIMS AMP Capital Industrial REIT: 2nd AGM.

Northtech

Some readers are concerned that I am divesting my investment in AIMS AMP Capital Industrial REIT. Is there a change in its fundamentals? Is it going down from here?

 I did blog about my reasons for partially divesting my investment in AIMS AMP Capital Industrial REIT. In a nutshell, I am just re-balancing my portfolio to reduce over-exposure to this REIT. It is a risk management exercise, nothing more.

 If my total portfolio size were twice or thrice as large as it is now, I would probably not reduce my investment in the REIT. I could, in fact, increase my long position in the REIT. Now, how's that for re-assurance?

 The presentation at the second AGM shows a robust set of numbers:

Earnings per unit: 2.75c
Gearing: 31.9%
Interest cover ratio: 4.9x
No debt due until October 2013.

27 Penjuru Lane



What I would like to see is the REIT increasing the share of high tech space and better quality logistics buildings in its portfolio. Currently, high tech space account for only 17.7% of its portfolio.

Although its acquisition of 27 Penjuru Lane and 29 Woodlands Industrial Park E1 (Northtech) are steps in the right direction, it has to do more and stay vigilant, looking out for more yield accretive purchases.

The management also plans to carry out asset enhancements for selected properties in the year 2012. I like this since many of the REIT's properties have yet to take advantage of their plot ratios to the maximum. So, even without further acquisitions, we could see the REIT's distributable income increasing with asset enhancements.

After two years, this REIT seems well managed by the team from AIMS and AMP Capital and my leap of faith has paid off nicely so far. I look forward to more good news in future.

Substantial shareholders:
AMP Capital Investors (Luxembourg No. 4) S.A.R.L. 15.35%
Dragon Pacific Assets Limited 11.98%
APG Algemene Pensioen Groep N.V. 9.42%
Universities Superannuation Scheme Limited 8.19%
George Wang 7.19%

See presentation slides here.

My very first blog post on the REIT in December 2009:
AIMS-AMP Capital Industrial REIT (MI-REIT).

Related posts:
AIMS AMP Capital Industrial REIT and Sabana REIT.
Balancing AIMS AMP Capital Industrial REIT and Sabana REIT.
Mr. Market is always right.

Perry Ellis: 40% discount storewide!

Perry Ellis brings a new look to American sportswear, elevating casual clothing to designer status, while always maintaining great prices.

From now till 4th of July, Perry Ellis is offering 40% discount storewide!

Yes! 40% Off ENTIRE ORDER with promo code PEJULY40.

Visit their online store today:

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CitySpring Infrastructure Trust: Rights issue.

I divested my investment in CitySpring Infrastructure Trust last year in October. At that time, the Trust was trading at 60.5c/unit. Long regarded the investment as a mistake, the divestment was premised upon the Trust's weak fundamentals and relatively low distribution yield.

The Trust's last done price was 53.5c/unit today and its managers announced a rights issue to raise about $210.2 million in gross proceeds to strengthen its balance sheet. Each unitholder will be asked to buy 11 new CitySpring units for every 20 held at 39c per rights unit. This rights issue is, more or less, expected with a very weak balance sheet.

I have mentioned before that rights issue to fund yield accretive purchases is good for unitholders. However, a rights issue to "strengthen balance sheet" which, basically, acknowledges a weak balance sheet in the first instance is not a good deal. They are asking for money to pay down debts. So, this rights issue lowers both the DPU and distribution yield straightaway.

A unitholder with an investment of 20 lots in the Trust would end up with 31 lots if he subscribes to his entitlement. He would still get the same total quarterly income distribution in dollar terms with 31 lots as he did with 20 lots. A lower DPU and distribution yield. Definitely not a good deal.

Good luck to existing unitholders.

Related post:
CitySpring Infrastructure Trust: Thoughts on divestment.

Read announcement here.

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Cityspring makes rights offer to raise $210.2m
Thursday, 30 June 2011

© 2011 - The Edge Singapore

Mr. Market is always right.

I blogged about my partial divestment of Saizen REIT as price gap closed at 15c. I still retain more than 10% of my original investment in the REIT. See blog post here.

As Saizen REIT was the largest investment in my portfolio, making up some 40% of total funds invested (excluding funds in my frozen portfolio), the amount of money released was no small change. Leaving the money in the bank was not an option with interest paid on savings a paltry 0.1% per annum.

So, at the right time, I moved bulk of the funds into Cache Logistics Trust, First REIT and Sabana REIT. I blogged about these quite a bit too.

See the following blog posts:
Cache Logistics Trust: Accumulate on weakness.
First REIT: Bought more at 73.5c.
Sabana REIT: Bought more at 93.5c.

Another round of income distribution from all three REITs was received in the last few weeks. The unit prices of all three REITs also went up in the same time.

Today's closing prices are:
Cache Logistics Trust: 97c.
First REIT: 79c.
Sabana REIT: 94c.

What does this suggest? Investing in these REITs has been and still is the right thing to do. Mr. Market is always right.

My largest investment in a REIT now is in AIMS AMP Capital Industrial REIT. The unit price has moved up very nicely as well to 22c. So, the units I accumulated at 19.5c, 20c and 20.5c back in March are in the money too.

Recently, I have taken the opportunity to divest partially and I blogged about my reasons for doing so as well. Read it here.

Generally, I am going to hold on to these REITs for their very attractive distribution yields. I could divest some if they become overvalued (based on fundamental analysis) or overbought (based on technical analysis) or both. No reason to divest until then.

This has been another long day as I try to get used to a new routine. This is likely to continue for weeks to come. Physically and mentally exhausted, I am not in the best condition to trade the market. Being more than 80% in REITs, investing for income, is the best strategy for someone in my position now. Good luck to us all.

Related posts:
REITs lower portfolio risk.
Staying positive on S-REITs.