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First REIT: DPU increased 16.4% (Part 1).

Friday, July 26, 2013

First REIT declared a DPU of 0.86c. This is for the period of 22 May to 30 June 2013. This will be paid on 29 August 2013.

Including 0.99c paid for the period of 1 April to 21 May 2013, the total DPU for the quarter is 1.85c.



Gearing ratio: 33.4%

No debt will be due until 2016 once a fixed rate loan is finalised next month.

NAV/unit: 89.65c

Unit holders have to be prepared for more private placements as the REIT's managers have stated their intention to keep gearing at 30% even as they embark on future acquisitions and AEIs.

With unit price way above the NAV/unit, it is less expensive for the REIT to raise funds through issuing more equity now. As long as they are able to grow DPU in spite of a larger number of units in issue, I don't have a big issue (pardon the pun).

Like what the management has stated, despite a larger number of units in issue, DPU has grown 16.4% year on year. This means that without me having to invest more money, I am getting significantly more income from my investment in First REIT now.

Therefore, it would not be wrong to say that my investment in the REIT has been quietly growing a passive income stream for me without additional cost to me. 

This makes me happy.

See presentation slides: here.

31 comments:

Cory said...

This put annualized yield above 6% at current price.

AK71 said...

Hi Cory,

Almost 6.22%. :)

Tan said...

First Reit did another great job. I am expecting 1.74cents/quarter, any amount beyond that is bonus to me...

Cheers, Gregg

AK71 said...

Hi Gregg,

Another investment we have in common, I see. :D

Tan said...

HI Ak,

I have been following up your blog, only First Reit and Marco are in common, lol..

There is another one, Neratel but i have divested @ $0.570 few months ago. My heart broken when look at recently rally price... haha

Cheers, Gregg

AK71 said...

Hi Gregg,

I had to think hard whether to add aggressively to my long position in NeraTel at 60c to 63c last month and I am lucky that I did.

Of course, share price could always come back down. So, you could have a chance to get back in at a lower price. :)

Tan said...

HI AK,

Side talk topic, previously First Reit has one IR officer, Lee Hao Wee, he is quite fast in responding the email but unfortunately he left in Mar 2013 after spending 6 good years in First Reit.

Thanks for his hard work and hopefully he is one of AK follower to read this post. lol...

Gregg

Tan said...

HI AK,

Referring to slide#23, http://infopub.sgx.com/FileOpen/2Q2013_PPT_Final.ashx?App=Announcement&FileID=249374

Interesting to see First Reit also have AEI works for 3 property. I am sending in asking what is the budgeted capital expenditure, total added beds and any impact on the DPU. Hope to get their reply sooner than Marco response time. :)

They did not update on the Lentor Residence Extension project. Suppose to be completed by Q2 2013.

Gregg

AK71 said...

Hi Gregg,

I was wondering about the expected effects of the proposed AEIs as well. I have not gone through the rest of their announcements and might have missed something.

Anyway, it is always better to get the information right from the horse's mouth. Will wait for your updates here. Thanks. :)

INVS 2.0 said...

Didn't have any money to invest when the market crashed in 2008. Now I have but the market has gotten expensive. :/

Hope for another crash so that I can get First for 0.73 again.

AK71 said...

Hi INVS 2.0,

There are always value for money deals around. Even now, there are a few. ;p

Zoy Zoy said...

Hi AK,

May I ask what the significant of nav/unit?
Is higher or lower implies certain aspects of first REIT ?

AK71 said...

Hi Zoy Zoy,

NAV/unit refers to the per unit value of the REIT. Take the total value of all the REIT's assets minus all liabilities and divide this by the number of units outstanding.

So, for example if a REIT had a NAV/unit of $1.00 and we bought it at $1.20, we would have paid a 20% premium but if we bought it at 80c, we would have bought at a discount instead.

Generally speaking, for real estate, it is better to buy at a discount to valuation unless there is a good reason why that piece of real estate should be worth more.

Kim said...

Hi AK
Few 'Value for money deal'???
Can name the few?
Thanks

AK71 said...

Hi Kim,

I blogged about them before. LOL. ;)

For example, I talked to myself about Marco Polo Marine a lot.

Kim said...

Hi AK
yeah heard u talking abt neratel and marco polo....hmmm....no reits???

AK71 said...

Hi Kim,

I talked about REITs too and only recently too. ;p

Kim said...

Hi AK

Thanks. Got link to that reits post ?

AK71 said...

Hi Kim,

Just read my recent blog posts on some REITs and you might also want to read the comments. I said some things here and there. ;)

Kim said...

Thank you AK, got it liao:)

AK71 said...

Hi Kim,

Yikes! You found the room I was talking to myself? Sigh, my illness is more serious than I thought. -.-"

Kim said...

Hi AK
Plse continue to talk to yourself...errhh...more loudly plse...so that we don't need to extend our ear too long to try to eavesdrop...kekeke..

AK71 said...

Hi Kim,

You must be like James Bond 007. Use hi tech stuff to spy on people. Just subscribe to both "posts" and "comments". Then, you will never miss anything. ;)

Elaine K said...

Hi AK

First Reit has been very beaten these last 2 days... but I can't find any updates on it.

May I know if you haver any idea why the drop?

cheers
EK

AK71 said...

Hi Elaine,

Generally, the mood has become rather pessimistic towards REITs. I don't know any specific reason for First REIT's price decline.

ZHANG Zheng said...

Hi AK
I believe the recent drop in the exchange rate from Indonesia Rupiah to USD causes the drop in Indonesia IDX composite index as well as the poor performance of REIT which derives their most incomes from Indonesia, such as FIRST REIT and LMIR.

AK71 said...

Hi Zhang Zheng,

If I am not mistaken, their incomes are hedged. Their income in S$ terms should not be affected. :)

I am sitting up now and looking at prices of S-REITs with more interest as the decline. ;)

ZHANG Zheng said...

Hi AK
Yes, I know that FIRST REIT has a hedge or something like fixed exchange rate between Rupiah and S$ (I am invested in FIRST REIT). Not sure about LMIR.

Some market participants may not be aware. It is good that the drop in FIRST REIT presents some good opportunity. I saw its CEO, Dr. Tan, keeps buying its share.

AK71 said...

Hi Zhang Zheng,

LMIR has a hedging strategy too. I am not too worried. :)

The rough patch we are going through now is likely to get rougher and there will be opportunities to buy good quality assets cheaper. ;)

Lancelot Chua said...

Hi AK, is it worth buying First Reit now considering that its price ($1.245) is above its NAV ? Used to be vested but sold off for some cash flow, hence i am seeking your opinion on this.

Cheers,

Lance

AK71 said...

Hi Lancelot,

Well, I cannot tell you whether it is worth buying or not. All I can say is that I am not tempted at all. ;p

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