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Why First REIT and why worry?

Tuesday, October 9, 2018

I get asked from time to time why I invest in First REIT and not Parkway Life REIT?

Actually, more accurately, people should ask why did I invest in First REIT and not Parkway Life REIT?

Yes, asking when a decision was made matters.






When I was deciding between First REIT and Parkway Life REIT, the choice was a much simpler one.

First REIT was trading at a big discount to NAV and its distribution yield was much higher compared to Parkway Life REIT.

Money should go to where it is treated best, I told myself then.






So, if you guess my entry prices were very low, you are right.

Actually, no need to guess because I have blogged about this before.

As First REIT's unit price has been declining, many readers have asked me if it is a good time to buy more.

My response was rather predictable.






"I don't know if it is a good time to buy more for you.

"I only know it is not a good time to buy more for me.


"Have a plan, your own plan."


It does not fit into my plan to buy more First REIT but I am more than happy to hold on to what I have.








Even if First REIT should see a 20% decline in unit price or even a 30% in unit price today, it would still be higher than my entry prices.

However, for someone who decides to invest in First REIT today, surely, he would not feel indifferent if such big declines in the REIT's unit price should happen.

A big decline in unit price could happen if First REIT's largest tenant, LPKR, which is feeling the strain of a falling Rupiah, should default on rental payment

For sure, I do not know if this is going to happen.




I do know that investing in First REIT, more than ever, investors have to be ready for rights issues with a new pipeline of assets in Japan, China and Malaysia from OUE Lippo Healthcare which is taking over the management of the REIT.

If we believe that First REIT's income stream is in peril and if we do not like the idea of a big rights issue, then, we should not be investing in First REIT.

Why worry?





Related post:
Free income producing assets.

7 comments:

AK71 said...

Reader says...
Hi AK, do u have any insights of 1st reit? Most articles talked about how OUE will benefit but not about 1st reit. It will be helpful if u can give some comments. 1st reit share price has been dropping. Wonder if it's a gd time to accumulate. Thanks.

AK says...
Do what you feel is right for you ๐Ÿ™‚
For me, I think the deal is neutral for First REIT.

Reader says...
I see. The price seems to be attractive but I worry whether there are some risks which I may not be aware. ๐Ÿ˜…

AK says...
I always worry. ๐Ÿ˜ž

Reader says...
Do u think the price drop recently is due to forex concerns? ๐Ÿ˜‚

AK says...
I really have no clue ๐Ÿ˜›

Reader says...
๐Ÿ‘Œif u don't know, means safe. ๐Ÿ˜

AK thinks...
(Alamak.)

Laiye said...

someone with nick assiak71 posted in hardwarezone that it is the end for first reit.

AK71 said...

Hi Laiye,

There was a fake Warren Buffett Twitter account at one time.

Now, there is a fake ASSI AK71 HWZ account.

Alamak.

SkinnyOldMan said...

Hi AK,

You should be happy (perversely) that there is a fake Warren Buffett account, and now a fake ASSIAK71 account. People impersonate only those who have some credibility.

: )

So, you should continue to blog actively and educate folks like us.

AK71 said...

Hi SkinnyOldMan,

A friend of mine in the USA was a victim of identity theft.

It was a terrible 2 years for her.

-.-"

NerdLibrarian said...

Hi AK

What's holding you back from buying more First REIT?

AK71 said...

Hi NerdLibrarian,

I could be suffering from an "anchoring effect". ;p

You might want to read this blog for some clues as well:
3Q 2018 Passive Income (S-REITs).

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