2Q 2020 passive income: COVID-19 crisis.

I thought of not blogging about my 2Q 2020 passive income till a couple of weeks later because Mod 19 of Neverwinter, Avernus, just went live this morning.

Yes, the world of Neverwinter just received another expansion.

Anyway, after an initial foray which lasted almost 3 hours in the new adventure zone, I told myself I should quickly pen and get this blog published so that I can continue adventuring without feeling terrible about myself.

Before I start, this is a peek into the world where I will be spending most of my time in the next few weeks:







Some might remember that in the title of the blog on my 1Q 2020 passive income was the phrase "COVID-19 disaster."

This time, in the title, I have the phrase "COVID-19 crisis."

Although economies are re-opening, we are not out of the woods.

The virus is alive and kicking and we are seeing many cases of resurgence.

The COVID-19 pandemic has been described as "a crisis of a generation" by our country's leaders.

The COVID-19 virus is showing some worrying staying power.

The pandemic has damaged economies around the world very badly, erasing years of progress, plunging countries into deep recessions.






Unlike the Global Financial Crisis some 10 years ago, this is a Global Health Crisis.

A recession that stems from a financial crisis can be ended with financial tools.

A recession caused by a health crisis like the one we have now cannot be ended with financial tools.

The aggressive implementation of supportive monetary and fiscal policies around the world has provided relief but it does not address the root of the problem.

As long as a safe and effective vaccine for COVID-19 is unavailable, a return of the global economy to pre-COVID-19 level in a short time is rather unlikely.

We would probably see more of the population suffering from joblessness and business failures in the meantime.

Not being pessimistic.

Just being realistic.

An important thing for us to do is to make sure we can definitely survive this crisis financially especially if it drags on for much longer.

Instead of chasing possible upside, it is more important to be prepared for possible downside in life.

If you are new to my blog or cannot remember, you might want to read this blog:
The most dangerous crisis and what should we do?





Now that I am done nagging, how much did I receive in passive income in 2Q 2020?

$57,395.95

I will say a few words about the entities which made more substantial contributions to my passive income in 2Q 2020.

Frasers Commercial Trust contributed a smallish 4 figure sum which will not be repeated.

This is because they have been bought over by Frasers Logistics Trust (now Frasers Logistics & Commercial Trust).

My investment in Frasers Logistics & Commercial Trust has also become bigger because of this and should continue to be a good income generator for me.





Other entities which made much larger contributions than Frasers Commercial Trust and Frasers Logistics & Commercial Trust to my passive income in 2Q 2020 were Centurion Corporation, DBS, OCBC, ComfortDelgro, VICOM, WILMAR, AA REIT and Accordia Golf Trust.

Of these entities, I expect Centurion Corporation and ComfortDelgro to be the most challenged during this crisis.

AA REIT reduced their distribution by about 20% in 2Q 2020 but I am reasonably confident that they will stay resilient.

WILMAR looks set to list their Chinese business before the end of the year which should result in a special dividend.

Accordia Golf Trust has revealed details of the offer by its sponsor to acquire all its assets and I blogged about this recently.

Although my passive income in 2Q 2020 looks healthy, I am aware that it was paid out by my investments from their strong performance in the past.

With their future performance likely to be weaker, I expect my future passive income to weaken in tandem, all else being equal.






Apart from the passive income received in 2Q 2020, my float has also been strengthened through selling a big chunk of my investment in Ascott REIT-BT.

Ascott REIT-BT is no longer one of my larger investments.

I have also received money from BreadTalk as they paid me 77c a share for my investment as they delisted.

This was a smallish investment but a profitable one.

As for the stock market, it looks like the dust has settled.

Although the economy is quite sick and will probably continue to be sick for some time to come, the stock market has found a bottom.

Technically, there is still a chance that the bottom could be tested in the next few weeks or months but the chance of that happening is slimmer now.

Having said this, if the COVID-19 pandemic has taught me anything, it is that low probability events could happen and they could pack quite a punch when they do.







I see the moving averages turning up and rising in many charts.

So, I am likely to add to my investments if prices should retreat to some of these moving averages as they should provide support.

I would not be throwing in everything including the kitchen sink because if the supports break, the fall might be another big one.

Technical analysis shows where the supports are but it does not tell us if the supports will hold.

No one knows for sure.

Oh, please allow me to nag again before I go.

Please continue to act responsibly and keep all of us safe.

We are #SGUnited.




Related posts:
1. Accordia Golf Trust: $0.732 offer.
2. AA REIT, IRET, Ascott REIT-BT.

Accordia Golf Trust: $0.732 offer.

Finally, we have news.

"... sponsor of Accordia Golf Trust (AGT) has proposed to acquire the trust's 88 golf courses in Japan for S$804.1 million, or an implied purchase consideration of S$0.732 per unit, it said on Monday."

What do I think?

Too low!

Why do I say so?

If you are new to my blog or if you cannot remember, read the following blogs:

1. Offer must be way above valuation.

2. Accordia Golf Trust: Reasonable or realistic price?





Basically, I think that an offer price of $0.732 a unit undervalues Accordia Golf Trust by a lot.

Long time readers know that I invest in Accordia Golf Trust mainly for income.

Having said this, my belief that Mr. Market does not fully appreciate Accordia Golf Trust's value only became stronger in the last couple of years.

There is definitely evidence of undervaluation. 

I have shared some thoughts towards this in some of my past blogs.

It isn't a secret that I have a soft spot for what I believe to be undervalued investments which pay dividends while I wait for their value to be possibly unlocked.

That was the case with Saizen REIT.

It was also the case with Croesus Retail Trust.

What about Accordia Golf Trust?

Accordia Golf Trust is a good fit too.





I increased my investment in Accordia Golf Trust significantly in 2018 and 2019 so that my position crossed the $200,000 mark in market value.

See:
3Q 2018 passive income: AGT.

and

Largest investments updated (4Q 2019).

That was after substantially reducing my investment in 2017 at $0.70 a unit.

To understand why I did that, see:
Reducing investment in Accordia Golf Trust.







Looking at my records, I see purchase prices of 49c to 54c in 2018 and purchase prices of 51c to 53c in 2019 as I substantially increased my stake.

The records are all hand written, of course.

Feeling a bit sentimental.

At $0.73 a unit, the market value of my investment in Accordia Golf Trust would cross the $300,000 mark easily.

Been receiving nice passive income from Accordia Golf Trust.

This might end soon, it now seems.

Even though some of that $0.732 a unit would likely go towards costs and some of it might be retained at the Trust level as Accordia Golf Trust is not being delisted, receiving approximately $0.70 a unit would still give me a pretty nice capital gain.

When I take into consideration the dividends received in the past, my investment in Accordia Golf Trust has turned out pretty well.





Having said this, honestly, I am perfectly OK with holding on to my investment and to continue receiving passive income especially because I think an offer of $0.732 a unit is really too low.

I am pretty disappointed and even disgusted.

Well, I guess there is really no point in being upset about this.

Could have been worse, I suppose.

It is what it is.

For what it is worth, having a lot more cash in my bank account is a rather comforting thought.

Well, for a while anyway.

Have to try to look at the bright side of things a bit more, especially during these trying times.






Reference:
The Business Times