Daiwa House Logistics Trust: FX and TA.

The unit price of Daiwa House Logistics Trust has declined 32c or almost 40% in the last 6 months.

This is pretty dramatic.

Although I was unimpressed by Daiwa House Logistics Trust at its IPO and had some concerns, I did not expect its unit price to crash so hard.

At the end of June this year, when a reader asked if I was interested in Daiwa House Logistics Trust as its unit price had declined, I raised a new concern which was the persistent weakness in the Japanese Yen.

Unlike the ECB which is raising interest rate, the Japanese central bank seems determined to keep interest rate low which is depressing the value of the Japanese Yen.

In reply to the reader who asked if the lower unit price made Daiwa House Logistics Trust a BUY back in July, I said that if the Yen was stronger, then, the REIT would be undervalued.

Unfortunately, it wasn't.

I said:

"Since the Yen declined so much, then, a similar decline in unit price doesn't make it (i.e. the REIT) undervalued."

More recently, just a few days ago, the Yen hit a historic low against the U.S. Dollar.

With this recent development, Daiwa House Logistics Trust's unit price has sunk even lower.

I said in my last blog that China was getting very hard to read.

Japan isn't much easier either.

Why is the Japanese central bank so stubborn?

All investments are good investment at the right price.

Unfortunately, at the moment, I do not know if it is the right price but as long as the Japanese central bank is bent on their current course, Mr. Market doesn't know either.

I do not see any positive divergence in the chart as MACD and RSI decline in tandem with the unit price.

I don't have an interest in Daiwa House Logistics Trust.

Just a quick blog sharing my response to a query from someone I know.

Daiwa House Logistics Trust was priced too dearly at IPO and we now have a persistently weakening Yen thrown into the mix.

On hindsight, it might have been a blessing in disguise that Saizen REIT, Croesus Retail Trust and Accordia Golf Trust were forcibly removed from my portfolio.

Recently published:
CLCT: Staying defensive and Chinese banks?

Reference:
Daiwa House Logistics Trust: Good or not?

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

Accordia Golf Trust: Buying cheap and cheaper.

Accordia Golf Trust requested for a trading halt three days ago on 18 December 2019.

I thought to myself then that it was probably too soon to release details about the offer.

Well, yesterday, they released some information along with the appointment of 

Daiwa Capital Markets Singapore 

and 

Ernst & Young Corporate Finance 

as financial advisers to look into the offer to buy all of the Trust's golf courses.

I don't know who drafted the announcement but it wasn't very clear at all what it would mean for unitholders.

The irony is that they called it "Clarifactory Announcement" and it didn't provide any meaningful clarity.

When I use a magnifying glass to read, it is so that I can see better.

It doesn't help if the magnifying glass is made of frosted glass.

Can see but cannot see.

See announcement in:
Accordia Golf Trust's Newsroom.






A reader provided a link to an article in The Business Times on this matter.

After reading the article, I wondered if the same person who wrote the "Clarifactory Announcement" for Accordia Golf Trust also moonlighted for The Business Times.

The newspaper article was simply more of the same.

It is like cleaners wiping dirty tables at a foodcourt with a dirty rag.

Alamak.

Read the article if you want to:
Accordia Golf Trust's parent weighs purchase of all its golf courses

You blur?

I also blur.






Anyway, I decided that I would simply wait and see what the financial advisers have to say.

Regular readers know that the prices I paid for my investment in Accordia Golf Trust were relatively low.

Bought at 54 cents a unit or lower, I believe that I have a pretty good margin of safety.

The last time I added to my investment was in September at 51 cents a unit.

Accordia Golf Trust was very much undervalued.

I believe the Trust is still undervalued today but not so much anymore.

To understand why I invested in Accordia Golf Trust when I did, see:
Accordia Golf Trust.






It is quite clear that I was more interested in Accordia Golf Trust as an income generator.

Don't need a "Clarifactory Announcement" to see that clearly.

Of course, being so undervalued, it could also be an asset play but it wasn't the primary motivation for me to invest in the Trust.

What this means is that I would be quite happy to hold on to my investment if the offer is a lowball one.

I am simply in no hurry to sell.

So, although disappointed and maybe even a little disgusted by the lack of clarity in the Trust's announcement and the newspaper article that followed, I am not losing sleep because of this.






Having said this, there are probably many people who were not shareholders of Accordia Golf Trust before and only bought into the Trust recently at higher prices because of the offer.

I hope they know that they are speculating.

Unlike people investing in Accordia Golf Trust for income, in case it is a lowball offer, holding on to their positions might not be a palatable option for speculators.

This is especially true if they are using money they really should not be using to invest or speculate with.

Unfortunately, from the "Clarifactory Announcement", it looks like someone thinks that Accordia Golf Trust's golf courses are cheap and they are trying to buy them cheaper.







Related posts:
1. Accordia Golf Trust: Reasonable or realistic?
2. Peace of mind as an investor.
"Eat bread with ink slowly." ----- "The letter "b" in "bread" stands for borrowed funds. Don't borrow money to invest."

Accordia Golf Trust: Reasonable or realistic price?

This is in response to a reader's question.

As it is going to be about managing expectations, I think it is important enough to be a blog.

In a recent blog on Accordia Golf Trust in response to a friend's question as to whether it was realistic to expect an offer price for Accordia Golf Trust's golf courses which would translate to $1.20 a unit at the Trust level, I explained that although I didn't know if it would happen, it certainly wasn't an unreasonable expectation.

If you are a new reader or cannot remember why I said that, I have provided the link to that blog at the end of this one.






Now, being reasonable and being realistic are quite different.

I said in the same blog,

"... to be realistic, when selling an entire portfolio, it is usually more difficult to command a big premium compared to selling the properties individually."

and I also said,

"Nonetheless, a compelling offer has to be one that is substantially above the NAV."

What is considered "substantially above the NAV"?

Well, there isn't a right or wrong answer and it is going to be really a matter of opinion.






For me, I feel that a 10% to 20% premium to NAV would be considered substantial enough to be pretty attractive if we were to use our past experience with Croesus Retail Trust and Saizen REIT as yardsticks.

In an earlier blog on Accordia Golf Trust, I daydreamed about the possibility of selling the golf courses at a 60% premium to their valuations.

Remember, I said I was merely speculating and that it was a daydream.

It might have been a reasonable expectation but it might not have been a realistic one.

Even as we manage our expectations, we can only hope that what Accordia Golf Trust received was not a lowball offer.






The next thing I am going to talk to myself about can be related or unrelated to the blog topic at hand, depending on our perspective.

You might or might not know about the "Reasonable Person Test".

I learned about the "Reasonable Person Test" when I did Business Law as a module donkey years ago.

If this is something new to you, it is probably good to learn about it.

The question to ask is, realistic or not,

"Would a potential jury agree that $1.20 a unit is a reasonable asking price?"

Here is a video on the "Reasonable Person Test":







Related post:
Accordia Golf Trust: Offer must be way above valuation.

Accordia Golf Trust: Offer must be way above valuation.

Accordia Golf Trust rose 10 cents or 16.7% to close at 70 cents a unit in the last trading session.

A friend who read my last blog on Accordia Golf Trust called me to ask if $1.20 a unit is realistic?

What did I say in reply?

Well, I do not know if it would happen but I think it is not an unreasonable price.

I told him the best test is to try and sell the golf courses in the open market and see how much potential buyers are willing to pay.

This was one of the ways I used to determine that Saizen REIT was undervalued so many years ago.






For example, in a blog on Saizen REIT 5 years ago in 2014, I said:

"I am inclined to believe that Saizen REIT's properties are worth much more since they managed to sell a property in May at 19% above book value and another one in August at 12.8% above book value. 

"This suggests that the book values of the REIT's properties are rather conservative."

Mr. Market will always pay what he feels is the right price for an asset at any particular point in time.

Not sure if valuations can be trusted? 

Mr. Market has the answer. 

This could very well be the same for Accordia Golf Trust.






If we recall, earlier this year in April, the Trust sold one of their golf courses at above valuation too.

"The consideration of the Divestment is JPY 200,000,000 (approximately S$2,415,751).

"The valuation of the Golf Course as at 31 December 2018 conducted by CBRE, the independent valuer commissioned by the Trustee-Manager as part of its annual valuation of its golf courses... is JPY 27,500,000 (approximately S$332,166)."

Full announcement on Accordia Golf Trust's website:
Divestment Of Village Higashi Karuizawa Golf Club.


You might want to read that again.

The consideration was jaw droppingly above valuation.

It could be the case that the book values of other golf courses in the Trust's portfolio are rather conservative as well.








However, to be realistic, when selling an entire portfolio, it is usually more difficult to command a big premium compared to selling the properties individually.

This was certainly the case with Saizen REIT.

Nonetheless, a compelling offer has to be one that is substantially above the NAV.

Otherwise, there is no reason to accept the offer.

Related post:
Accordia Golf Trust: 60% premium or $1.21 per unit?

You might want to read this:
My investment portfolio or investment philosophy?

Accordia Golf Trust: 60% premium or an offer of $1.21 a unit?

Some readers might remember Saizen REIT and Croesus Retail Trust.

They were two of my largest investments in the past.

If you are new to my blog and are interested in finding out more,

See:
History with Croesus Retail Trust.

Also see:
How much did I make from Saizen REIT? Offer by Lone Star.

Although I made good money in both cases, it was a challenge trying to find new investments for income that could even come close to what Saizen REIT and Croesus Retail Trust were doing for me.

To make it worse, they were relatively large investments for me and, therefore, harder to replace totally.






Why the sudden nostalgia?

Well, it seems that Accordia Golf Trust could go the same way Saizen REIT and Croesus Retail Trust went.

Accordia Golf Trust requested for a trading halt and issued a statement.

Part of the statement:

"... it has received a non-binding proposal in connection with a potential transaction which may or may not lead to a divestment of AGT's interests in all of its golf courses..."

I have mixed feelings about this.







I have been increasing my investment in Accordia Golf Trust as I believe it is undervalued.

I believe that it can be a more rewarding investment for income, given time.

See:
Why invest in Accordia Golf Trust?

I kept increasing my investment and, recently, it rose into the next bracket in my list of largest investments.

See:
Largest investments (4Q 2019).

My investment in Accordia Golf Trust is now basically similar in size to my past investment in Croesus Retail Trust.

A video clip by Accordia Golf Trust:







I hope the offer is going to be similarly compelling or more compelling if it should happen.

If we recall, Accordia Golf Trust's parent was sold to MBK at a 60% premium to NAV.

Could we see a similar premium for Accordia Golf Trust?

With a NAV per unit of 76 cents, that would mean an offer price of $1.21 or so.

Round it down to $1.20 a unit?

Sure, it is OK.

I am not greedy.

Well, I am just speculating.

It is healthy to daydream, I was told.






Accordia Golf Trust last traded at 60 cents a unit.

Still undervalued, I believe that Accordia Golf Trust still offers good value for investors.

However, the news of a non-binding proposal could attract speculators and I would avoid chasing rising prices.

I will just wait and see what happens next.

Recently published:
Are stock prices coming down?

Quek Leng Chan ups stake in Guocoland. Is AK buying? (How much exposure to property developers does AK have?)

Someone asked me if I would be increasing my investment in Guocoland recently as it is still trading at a big discount to NAV.

In fact, he also asked if I would be increasing my exposure to the property sector since interest rates look like they will stay low for some years to come.

Although I like undervalued investments, there is always the possibility of such investments staying undervalued for an extended period of time.

Some readers might have noticed that this is usually the case with property developers.






My preference is, therefore, to invest in property developers that are able and have shown a willingness to reward shareholders with meaningful dividends.

The wait can be a long one and being paid while we wait makes it more affordable for most people.

Guocoland is a pretty good fit.

Since becoming a shareholder of Guocoland, I have received three rounds of 7c DPS.

Dividend yield is about 3.8%.

That is pretty decent for a property developer.








I became a shareholder of Guocoland in 2017.

That was when I noticed persistent insider buying and decided to do an incomplete analysis.

Then, I decided to invest in Guocoland which was trading at a hefty discount to valuation. 

Well, there is more insider buying now.

Following recent purchases, Mr. Quek Leng Chan's stake in Guocoland increased to almost 72%.

Although paying a price of $2.05 a share is more than 10% higher compared to what we paid back in 2017, the price is still a big discount to the NAV of $3.47 a share.






I am quite happy to hold on to my investment in Guocoland but I won't be adding now.

Reason?

Although individually my investments in property developers are not big enough to be in my list of largest investments, collectively, they are.

So, which property developers am I invested in?

They are:

1. Guocoland
2. Ho Bee Land
3. Hock Lian Seng
4. OUE
5. Perennial Holdings
6. Tuan Sing
7. Wing Tai

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






Based on market value, together, they probably account for a sizable chunk of my investment portfolio.

For a retiree like me, I feel that is enough exposure to property developers.

For sure, I do not know when value would be unlocked and this unknown makes limiting the total investment exposure to 10% of my portfolio or lower sensible.

What if value is not unlocked in my lifetime?

Hmmm...






Although I am not interested in increasing my exposure to property developers, I have increased my investment in the property sector by putting more money into the following business entities not too long ago:

1. IREIT
2. Centurion
3. Accordia Golf Trust

(If you want to read my past blogs about these entities, click on their names above as they are hyperlinked.)






It should be obvious that the ability to generate a meaningful recurring income stream has always been an important consideration for me.

It has become more so as I grow more settled into my early retirement.

Of course, I am only doing what makes sense to me.

Others have to do what makes sense to them.

Oh, totally unrelated, I watched the following video by CPFB and had a good laugh:





Related post:
Largest investments updated (4Q 2019).

Largest investments updated (4Q 2019).

From my last couple of blogs, readers would be able to get an idea of what might have changed in my portfolio.


Since the last blog, however, I have made another significant investment or, more accurately, reinvestment.

What am I talking about?


Clue:

Some readers might remember that I reduced my investment in Wilmar significantly in 3Q 2019 in the month of July, booking a pretty decent capital gain in the process.

Wilmar lost its position as one of my largest investments in 3Q 2019 as a result of that move.


I explained that the move was based on technical analysis (TA) and not because I thought Wilmar was no longer a fundamentally good investment.

That meant I would be building up my investment in Wilmar again when the time is right.

I still like Wilmar as an investment today and if you are curious as to the reasons, you might want to read the following:

1. 3Q 2018 passive income: Wilmar.

2. Accumulating Wilmar...

My investment thesis remains, more or less, unchanged.

Wilmar is an amazing business that has gone unappreciated for a long time.

With the IPO of its Chinese subsidiary in the works, Mr. Market is beginning to appreciate the value that is locked within Wilmar.

Since reducing my investment significantly in July, I have been waiting to increase my investment in Wilmar again. 

Although I wondered if we could see $3.10 or even $3.00 a share again, using TA, I decided that buying at $3.60 a share or lower might be a good idea.








This is because even though Wilmar's share price has retreated, the 200 days moving average (200dMA) in its chart is still rising.

The 200dMA is a long term moving average and as it is rising, it should provide a stronger support.

The rising 200dMA is at $3.54, approximately.

Of course, TA simply shows us where supports could be found.






TA cannot tell us if the supports would be tested or not.

So, what to do?

Start buying at $3.60 a share, maybe.

TA also cannot tell us if the supports would hold or not.

So, what to do?

Make sure we don't throw in everything including the kitchen sink.

Anyway, informed by some simple TA, making use of Mr. Market's current depression, I significantly increased my investment in Wilmar so that it is again one of my largest investments.

So, together with Wilmar, what are my largest investments now?







$500,000 or more:
*CPF.

If you are laughing, I hope it is for the right reason.

Read:
Largest investments updated (3Q 2019).

From $350,000 to $499,999:
*AIMS APAC REIT.
(formerly
AIMS AMP Cap. Ind. REIT)

Nothing has changed here.

Yes, AK is so boring.





From $200,000 to $349,999:
*ComfortDelgro.
*Centurion Corporation Ltd.
*Accordia Golf Trust.
*Development Bank of Singapore.
*OCBC Bank.
*IREIT Global.

So, from having only two members, this group's membership has tripled in size, now boasting six members.

Increasing my investments in Accordia Golf Trust, DBS and OCBC meaningfully moved them up from the lower bracket.

The fourth new member, IREIT Global, made the biggest jump as it makes its first appearance in this list by skipping the lower bracket altogether.

Read related posts at the end of this blog if all these sound new to you.

From $100,000 to $199,000:
*Ascendas H-Trust.
*Wilmar International.

Wilmar returns as one of my largest investments by joining the lowest bracket in the list.

If Mr. Market continues to feel depressed about Wilmar, I would probably be buying more.



Now, remember, when we invest, we have to take into consideration our circumstances and not "suka suka" ride on other's coattails.

What?

Cannot find AK's coattails?

That is because AK doesn't wear a coat lah.

La la la la... lah. ;p

On a serious note, remember to "eat bread with ink slowly."

Don't know how?

Read:
How to have peace of mind as an investor?

Yes, peace of mind is priceless.





Related posts:
1. 3Q 2019 passive income: Numbers.
2. 3Q 2019 passive income: IREIT.

3Q 2019 passive income: Numbers.

It has been a while since my last blog and I hope everyone is doing well.

So, now that 3Q 2019 has ended, an update on what I did in the quarter is due.

Well, in terms of my investments, apart from collecting dividends, regular readers know that I sold quite a big chunk of my portfolio earlier in July.

See:
Sell into the rally...

And for what it was worth, I also provided an update on the largest investments in my portfolio.

See:
Largest investments...






Then, after that, I was mostly just adventuring in Neverwinter and taking it easy in RL (which stands for "real life"), collecting dividends from my RL investments.

Although readers should hopefully be used to the rather long breaks from blogging I have been taking as I spend more time on other activities, I would like to reiterate that this is the new normal.

If you leave comments in my blog and expect a timely response, you could and very likely be disappointed.






In fact, for the whole month of October, Neverwinter will be running the Neverember Recruitment Event which will reward the leveling of any new character created during the event.

This is not only a perfect opportunity for anyone who wants to give Neverwinter a try, it is also great for veterans to create new characters (up to a maximum of two) to get their hands on the rewards which are very generous, rewards which would have cost RL money to buy otherwise.

The Level Cap in Neverwinter is 80 but to get all the rewards from the event, we only have to hit Level 59, if I understand the event correctly.

So, I will be extra busy in Neverwinter as I will level two new characters to Level 59 and still be adventuring with the three Level 80 characters I have now.

Neverwinter is free to play (F2P) and lots of fun for anyone who enjoys the High Fantasy genre and is "giam siap" (not offering a translation for this) like AK.

Can barely see the word "Shift" and the letter "W" on my keyboard. 
Bad AK! Bad AK! ;-p

Anyway, total passive income from my investments in REITs and non-REITs in 3Q 2019:

S$ 31,789.91

This amount would have been much higher if I did not reduce my investments and rather significantly too in SingTel, Wilmar and ComfortDelgro back in July.

I say this as a matter of fact to explain why the amount is smaller than what some might be expecting and not because I regret my decision to realise gains, reducing investment exposure pretty significantly in the process.

After all, the capital gains from reducing exposure to the businesses mentioned were much more than what I would have received from them in dividends otherwise.








Also, it is almost never a bad thing to have more cash as it gives us options which include the ability to pounce on opportunities when they present themselves.

As it turned out, opportunities knocked in the following months as stock prices experienced a correction.

I added to my investments in a few businesses such as:

1. DBS

2. OCBC

3. ComfortDelgro (CDG)

The list doesn't end here, of course. 





As Centurion's stock price and Accordia Golf Trust's (AGT) unit price languished, I also added to my investments in these entities as my investment theses are unchanged.

I believe that they are undervalued and it doesn't matter to me that if their share or unit price continue to move sideways as long as they keep generating meaningful income for me.

In 3Q 2019, I also took part in CRCT's rights issue, taking up my entitlement and applying for excess rights at $1.44 a unit.

This bumps up my investment in the REIT but not by much as it is a relatively small rights issue.

Finally, I substantially increased my investment in IREIT Global as its unit price declined rather significantly.





I shall not explain my decisions to increase my investments in DBS, OCBC, CDG, Centurion or AGT again.

Anyone who is interested to find out more or in having a refresher can refer to my earlier blogs on these entities.

As for CRCT, I blogged about why I thought it was a well run REIT with a relatively attractive yield before.

See:
CRCT added in Jan 2017.

My view has not changed and there is no reason why I wouldn't take part in its relatively small rights issue to help expand its AUM.





I have also blogged about IREIT Global before and why I avoided its IPO.

This was back in 2015.

See:
IREIT: What is a more realistic distribution yield?



Of course, all investments are good at the right price and I invested in IREIT later on when its unit price declined sharply.

Adding to my investment in IREIT Global in 3Q 2019 meant paying a higher price than what I paid before, however.






Still, I chose to increase my investment in IREIT Global and I will share the reasons why in my next blog as this blog has become a bit too long.

I will try to do this within the next 24 hours because if I don't, I fear I might not do it once I seriously start to power up my two new characters in Neverwinter.

Yes, I know.

Bad AK! Bad AK!




For now, I will say that I am reasonably confident that all that I did to my investment portfolio in 3Q 2019 will better reward me in future.

What I did was consistent with my belief that investing for income is enriching and, so far, it has been the case for me.

Remember, if we do the right thing, everyone's life can be and should be better.

Investing for income can help us achieve financial security and, eventually, financial freedom.

If AK can do it, so can you!




You might also want to read:
1. Retirement adequacy 101.
2. Start with a plan to retire early.