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My first night on a working trip in Hong Kong and I am having trouble sleeping although I was feeling quite tired earlier. So, I went to the reception and purchased a card which allows me to have internet access for 3 hours for a fee of HK$40. Quite reasonable, I think.
The recent weakness in this REIT's unit price could be attributed to some heavily vested investors anticipating a lower than expected DPU which came in at 0.51c, payable on 15 March 2011. The guidance was for 0.52c in a circular dated 22 Sep 2010. I am not at all surprised since I had expected a lower DPU of 0.5c myself when I revised the DPU and fair value of this REIT on 11 Dec 2010. Read my blog post here.
So, a DPU of 0.51c is rather pleasant for me. This could be due to the fact that "I did not take into consideration the other positive developments in the Market Update which is the 100% occupancy achieved for 15 Tai Seng Drive (85.7% as of 31 March 2010) and 23 Tai Seng Drive (84% as of 31 March 2010). Conservatively, this should add about $400,000 to the REIT's annual rental income."
In its report, the management also said that the newly acquired property of 27 Penjuru Lane only contributed 78 days of rental income, being only acquired on 15 October 2010. So, could we expect next quarter's DPU to be marginally higher when the property contributes three month's worth of rental income to the REIT? Perhaps.
This REIT is still a strong proposition for anyone looking for a reliable stream of passive income. I have put in a BUY order at 21c in case the selling continues in the next session although I do not think anyone in his right mind would want to sell at that price.
Annualised DPU: 2.04c
Gearing: 32.7%
NAV/unit: 27c
See presentation slides here.
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