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"E-book" by AK

Second "e-book".

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ASSI's Guest bloggers

A chit chat session with AK on REITs.

Monday, September 7, 2015

This was a recent chat with a reader on some aspects of REITs:


  • F

    AK, i read your S-REITs postings and your aims amp reit

  • 5:46pm




    but given the conservative outlook for the industrial sector



    it will undeniably affect them i'm sure



    what's your thoughts?

  • and the decline in SG economy


  • Assi AK
    6:21pm


    Affect their unit price or affect their operations? Ask yourself.



    What do you mean by conservative outlook for industrial sector?



    Decline in Singapore economy? Like how?



  • 6:30pm
    F


    Their operations



    Rentals may not remain at optimum capacity



    The management statement in their AR



  • Assi AK
    6:35pm


    What is optimum capacity of rentals?



  • 6:36pm
    F



    100% lo



  • Assi AK
    6:36pm


    that is maximum occupation



    ok, I am beginning to understand your question



  • 6:37pm
    F


    Maximum is optimal mah





  • 6:37pm
    F




    No?? Why would you want to have empty units?



  • Assi AK
    6:38pm


    I didn't say that either



  • 6:38pm
    F


    Confused




  • Assi AK
    6:40pm



    If you own a store that sells mee Siam and let us say you have a capacity to cook 1000 plates a day. And you sell out every single day because you sell at $1 a plate. Are you optimising profits when a price consumers are willing to pay is $2 a plate?



  • 6:41pm
    F



    No.



  • Assi AK
    6:41pm



    Wouldn't it be better to sell at $2 a plate and maybe just sell 800 plates a day?



  • 6:41pm
    F



    Yes



    But if I can sell 1k played at 2 bucks



    Better



  • Assi AK
    6:42pm


    Of course. smile emoticon



    It is never as simple as a matter of achieving full occupancy means optimum performance. That is the point I am making.



    maximum occupancy might not mean optimum performance



  • 6:45pm
    F


    Ok.....



    But management has conceded themselves that performance might be weaker in coming fY



    What are your thoughts



  • Assi AK
    6:52pm


    I will leave them to do their jobs. So far, they have performed very well and I hope they continue to deliver. Our job as investors is to monitor and as long as the investment performs to our satisfaction, that is good enough reason to stay invested. What is good enough will depend on what we want out of an investment.



  • Assi AK
    6:53pm



    If you don't feel comfortable enough to be invested, it is best to stay out.



  • 6:53pm
    F



    Hmmmmmmmmmm



    I'm just wondering if prices might go lower



    In light of possible decline in revenue



    Got value



    But I'm uncertain on what is a good price to enter



  • Assi AK
    6:54pm



    I will leave the speculation to the speculators.




I don't always talk to myself, you know?

Related posts:
1. AIMS AMP Capital Industrial REIT: An opinion.
2. 6M 2015 passive income from S-REITs.

5 comments:

Sillyinvestor said...

AK,

The reader after reading, might be "stress" lol.

Btw OT a bit, a ... Can u enable your mobile blog a not !!

Damn irritating using mobile phone to view ddesktop version, keep swiping right to previous post when I want to read the post properly

AK71 said...

Hi Mike,

Really? Oh, dear. -.-"

As for my blog, the mobile version is enabled but it is a customised version that looks like the web version of my blog. If you did a Google, you would see that Google recognises it as a mobile friendly version.

It doesn't have lots of stuff you see in the full web version of my blog which you would only see if you used a PC or tablet. The left and right sidebars are mostly blank spaces in the customised mobile version.

I am giving this customised version a trial run to see how it works out. Maybe, just for a couple of months. If the mobile version of my blog sees significantly less traffic, it is back to the drawing board. -.-"

ted said...

AK71, does the Saizen DRP "new units" cause a dilution effect on existing unit holders? I did a quick google on this topic and couldn't really find a clear answer.

Thanks.

AK71 said...

Hi ted,

Everything else remaining equal, if more units are issued, in future, the NAV/unit will reduce and the DPU will also reduce. So, definitely, there is a dilutive effect on unit holders who choose to receive the income distribution in cash.

AK71 said...

Reader:
"Thanks AK. I am also looking at buying First and AIMs reits, agree with u they are well managed. But local industrial reits are feeling the pressure, what do u think?
I have read about your analogy of portfolio management using the pyramid where the speculative counters being at the top and warchest at the bottom. Among REITS that are catagorized as for income, do you further catagorize those mgtmt with proven track records, lower gearing, longer WALE etc to decide on the amount to invest?"
-----------------
AK:
"Er... I have nothing new to say regarding the local industrial space. All in my blog liao. You will have to search for the relevant blog posts. ;p
The pyramid is just a pictorial representation of my approach. How much to invest in a certain REIT? There is no hard and fast rule. Good, invest more. Not so good, invest less. Bad, don't invest. Agar agar."

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