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First REIT: Revelation. (Part 2- DPU increased 16.4%).

Saturday, July 27, 2013

Now, many readers are curious to know how much have I invested in REITs but I have always been reserved for good reasons, as you can imagine. That has not stopped some readers from becoming more creative in their questions.

A reader lately suggested that I could reveal details for a small portion of my portfolio which might not cause too much personal discomfort and I think this is acceptable. 

Personally, I think it will also serve another purpose which is to show that I do not have as much invested in REITs as some might think.
So, let us start with when was the last time I did something to my investment in First REIT. It might come as a surprise but I haven't done anything to my investment in First REIT in a long time. 

The last time I bought more was in March 2011 at 73c a unit. It has been pretty much a buy and hold strategy for me although I did trade around my investment from time to time.

I have never bothered to really keep track of exact numbers but a back of the envelope calculation shows that I received more than $15,000.00 in income from First REIT in the last 12 months. I estimate the distribution yield to be about 10% on cost. 

At the moment, although it is not as important a consideration to me, there is also a paper gain of more than 70%.

So, you might agree that this has been a pretty good investment for income for me.

Some might wonder why I invest for income? 

Well, a big purpose of investing for income is so that our investments could help to pay for some of our expenses in life. 

Of course, the ideal situation is for them to pay for all our expenses in life.
For example, the largest expense item in my life really is my car and the income I receive from First REIT more or less pays for this including the car's depreciation which is more than $500 a month.

So, imagine if I did not put my money to work by investing in First REIT or some other investments which generate income, that money would probably have sat in my bank account collecting 0.125% per annum in interest in the last few years. 

Utterly miserable and the interest payments would probably not even be enough to pay for transportation by bus and the MRT for a year!

It is, therefore, not surprising that I still feel my investment in First REIT is for keeps although some might say that I should sell to lock in capital gains. Well, maybe if future conditions suggest that it could be a good idea to do so. 

For now, I will just sit back and relax.

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10 comments:

Tan said...

Hi AK

$15k in one year, rough estimation you have more than 200lots........I only have 70lots.... Big big big gap .... Lol...

Gregg

AK71 said...

Hi Gregg,

You might have a bigger investment in Marco Polo Marine than I have. ;p

Most of my readers are younger than I am. So, I am hazarding a guess that you are too. Young people have time on their side. :)

B said...

Hi AK

I've known you for having a big part of your portfolio in REITS but I didn't imagine you to have so much stake in First Reits (I thought you have a much bigger portfolio in Sabana and others).

S$15K income in First Reits is no joke. A 10% yield on cost would probably mean that you have S$150K invested and probably around 200 lots.

I could never imagine breaking the 100 lots club on a single stock. :D

AK71 said...

Hi B,

My two largest investments in S-REITs are in AIMS AMP Capital Industrial REIT and Sabana REIT. You remember correctly. :)

Off the top of my head, First REIT is probably my 4th largest investment in S-REITs now.

When I am confident about an investment, I usually try to build a large position as quickly as I can. Unfortunately, my resources are limited. I would have preferred an even bigger exposure to First REIT.

Tan said...

Hi AK

I am early 30, not too far from you...lol

Gregg

Busta said...

Hi AK

I'm also a big supporter of First Reit. Started buying at 40+ cents during the financial crisis and got over 400 lots after the rights issue. Unfortunately trimmed half of it since then, and see it goes from strength to strength.

Nevertheless it's good to see fellow investors getting great returns from this gem!

Busta

AK71 said...

Hi Gregg,

A decade is a big deal for humans. LOL. You definitely have time on your side. :)

AK71 said...

Hi Busta,

I also bought more during the GFC at 42c but you must have bought twice as much as I did.

First REIT is indeed a gem. :)

Cory said...

I came in late. So my position here is the smallest .... :(

AK71 said...

Hi Cory,

You make big money from elsewhere. First REIT is just dessert for you. ;p

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