Three point turn!

This weekend, I am going to leave you with a very short blog post. Nothing original but sometimes, we need a few reminders, don't we?

Man is created in the image and likeness of God but there is nothing Godly about Man.

So, here are the three points which could turn our lives (for the better):

1.  We only need so much money in life. The rest is for showing off.

2.  Keep our needs simple and our wants few. We will have less money problems that way.

3.  Know what and who matter to us. Don't waste time and money on others.

True or not?





I hope we are all truly happier individuals over time. Have a good weekend, everybody.

"Every man is rich or poor according to the proportion between his desires and his enjoyments." (Samuel Johnson)

AIMS AMP Capital Industrial REIT: 2Q 2013.

A DPU of 2.5c has been announced. The REIT goes XD on 2 Nov 2012 and the income distribution is payable on 20 Dec 2012.

Gearing is comfortable at 31.5%. This leaves ample debt headroom for further yield accretive initiatives.

The REIT now has a new source of funding via a $500m Medium Term Note Program. It issued a $100m 4 years 4.9% fixed rate notes due in August 2016. Being an unsecured facility, the cost of debt is dearer but if we should continue to see positive rental reversions, this is still acceptable.

Indeed, the REIT manager has not disappointed as they have been successful in renewing leases with higher weighted average rental with positive rental reversion of some 17.3%. They have also reduced concentration risk as the proportion of leases expiring by 2013 have reduced from 35.7% one year ago to 9.9%. Of course, it remains to be seen if they could secure positive rental reversions by renewing the 9.9% now remaining. Negotiations are in progress.

The management should also continue to work towards 100% occupancy although, at 99.2%, it is already above average for industrial properties in Singapore.

Average security deposit of 7.2 months per property provides a peace of mind.

In the papers, it is reported that distributable income reduced some 5.4% but on a quarter to quarter basis, the reduction is much lesser at 0.6%. So, I wouldn't be too worried.

Although gross property income improved some 3% quarter on quarter, NPI reduced 1.4% due to an increase of 13.9% in property operating expenses. This includes repair and maintenance of some properties which should be a one off expense. Having said this, the management should continue to be prudent in managing expenses.

See presentation slides: here.
See financial statement: here.

Related post:
AIMS AMP Capital Industrial REIT: 1Q FY2013.

First REIT: 3Q 2012.

As the contribution from the divestment of its Adam Road property has run out, First REIT's DPU sees a reduction of 12.5%, quarter on quarter, from 1.92 to 1.68c.

Year on year, however, DPU has improved from 1.58c to 1.68c.

I would say that First REIT has produced sterling results yet again.

Income distribution is payable on 29 November 2012.

See financial statement: here.

Related post:
First REIT: 2Q 2012.

LMIR: More acquisitions and lesser DPU again.

The latest acquisitions of Pejaten Village and Binjai Supermall will further reduce DPU.

Of so many REITs I am vested in, LMIR is one which has constantly disappointed in more ways than one.

The management has listed the advantages of acquiring these malls and they sound like a rehash from their equally distasteful purchase of 4 malls recently:

1. Acquisitions are at a discount to NAV.
2. Enhance earnings of the Trust.
3. Properties are of good quality.
4. Increase economies of scale in operation and marketing.
5. Minimise concentration risk.

The price tag for the purchase of the two malls: $126.5m
NPI of the two malls: $7.0m
NPI yield: 5.53%

Just like its recent purchase of 4 malls, these acquisitions are not NPI yield accretive. NPI yield of the REIT's portfolio is being gradually diluted with these overpriced purchases.

It does not matter that purchases are at a discount to valuation. They are still too expensive if ordinary unit holders are getting less income even as the REIT's asset base grows! If there is nothing worth buying, don't buy anything. Doesn't sound too difficult or does it?

The primary beneficiary here is the REIT's manager as they will be paid an Acquisition Fee equal to 1% of the purchase price which works out to be about $1.3m!

I think Ms. Viven Sitiabudi should consider retiring as CEO.

Read announcement: here.

Related post:
LMIR: More benefits from acquiring 4 malls?

Dynasty REIT: At what price would I bite?

Recently, I received quite a few emails regarding Dynasty REIT.

With full page ads taken out in the newspapers, few could have missed the promise of an approximate 7% distribution yield. It seems that the REIT is generating quite a bit of interest in the current low interest rate environment.

I have not subscribed to any IPOs in many years, believing that they are on terms which are more in favour of the issuers. Of course, there are cases in which IPOs have done quite well because Mr. Market's sentiment towards them was favourable.

So, for people interested in IPOs, they should develop the ability to read Mr. Market's mind! Personally, I already have great difficulty reading Mr. Market's mind with the help of charts. Without any trading history (i.e. no charts), it is a tall order indeed for me to read Mr. Market's mind towards IPOs.

For example, some people were saying that the unit price of Religare Health Trust would probably do very well because the public tranche was 13.5x over subscribed. On the first day of trading, it tanked 10%. It is still trading below its IPO price today.

What about Dynasty REIT? Could its unit price tank 10% on the first day of trading too? Who knows? I have said before that as an investor for income, I am more concerned with the distribution yield and that any capital gain is a bonus. Of course, we want to avoid any loss of capital at the same time. How do we do this? Buy when things are inexpensive. So, is Dynasty REIT's IPO price inexpensive?

Shanghai International Capital Plaza:
29 floors office and retail building plus a basement.
Committed occupancy rate: 86.8%

The promised distribution yield of about 7% per annum is largely achieved through a waiver of entitlement to income distributions by sponsor units. Now, the sponsor is not being altruistic or generous. It has to do this in order to make the IPO attractive. Without the sponsor waiver, the distribution yield would approximate 4% only. A big difference.

Of course, there are many assumptions that could be made for a possibly higher income distribution over time which could make up for the loss of the sponsor waiver by December 2017. However, we would be counting the chickens before they are hatched and in this case, we are not even sure we have the eggs for counting.

This IPO is heavily engineered and, in my opinion, at 85c to 91c a unit, it is not a good value proposition. I could be interested in initiating a long position if its unit price were to be closer to 55c a unit.

You might also be interested in these blog posts:
1. Religare Health Trust: 8.5 to 9% yield.
2. Perennial China Retail Trust: A weak debut?