2015 full year income from non-REITs.

Before I reveal the numbers, let me talk to myself about what I did in 4Q 2015, investments wise.

I re-initiated a long position in ARA as I felt that its stock price declined to a reasonably attractive level. 

ARA's rights issue which followed not long after was unexpected but I took up my entitlement and applied for excess rights as I looked at it as an opportunity to buy more on the cheap. I will probably buy more if the stock declines further in price.

Of course, those who follow my blog will also remember another rights issue and that was by Croesus Retail Trust. I too participated fully in that rights issue.

A back of the envelope calculation shows that Croesus Retail Trust is now trading at a 10% distribution yield. 

Croesus Retail Trust has rather high gearing level but if we were to take that away, Croesus Retail Trust is actually still generating more than a 5% distribution yield (i.e. non-leveraged yield) which I think is very attractive for a portfolio of mostly freehold retail properties in Japan. 

As the Trust's unit price declined, I added to my position again in the middle of December at 78c a unit.

I also increased my investment in Accordia Golf Trust as its stock price declined. The last time I did this was in mid-December at 51c a unit.

Investing in Accordia Golf Trust, we must realise that weather plays an important part in its performance. So, we have to expect its revenue to fluctuate quite a bit seasonally, much like investing in hospitality REITs.

With sentiments pretty negative, if Mr. Market were to offer me meaningfully lower prices, I would probably be buying more.

I also did a bit of trading in 4Q 2015. I reduced my long positions in Wilmar and ST Engineering as their stock prices recovered. That gave me some trading gains for the quarter.

I don't trade very much anymore as it requires a bit more work. Now, I might not even look at the stock market for several days in a row.

I added to my long position again in ST Engineering as its stock price declined by more than 10% from my recent selling price. 


ST Engineering is still one investment for income and growth. I definitely want to buy more if Mr. Market goes into a depression.

For those who do not follow my comments section, I initiated a smallish long position in DBS. Some know that I have been thinking of buying into the three local banks for a while and have been waiting for their stock prices to become cheaper.

I chose DBS first because it was trading at the smallest premium to NAV compared to OCBC and UOB. There is also consensus that DBS would be the biggest beneficiary of rising interest rates.

I also added to my investment in SingTel as its stock price declined. We invest in SingTel, Starhub and M1 because they are defensive income generators but with SingTel, there is also a nice element of growth.

Finally, I added to my long position in APTT this month after having left it alone since its inception. The rapid plunge in APTT's unit price up till middle of December seemed excessive to me even though I have mentioned before that a DPU of 8c a year is unsustainable in the longer run.


A much lower DPU of between 4c to 5c would probably be more sustainable for APTT. So, adding to my long position at 63c a unit, I am expecting a more realistic distribution yield of 6.3% to 7.9%.


A more recent development was an expression of interest by a party to acquire Ascendas Hospitality Trust which I included in my income portfolio in 3Q 2014. I have added to my investment on a few occasions since then, as and when its unit price declined.

The last time I increased exposure to Ascendas Hospitality Trust was on 24 August 2015 at 58.5c a unit. With an estimated annual DPU of 5.5c, I was looking at a distribution yield of almost 10%.

Although I hope that the offer is going to be at a fairly attractive premium to valuation, I am aware that if the Trust should be taken private, my income from non-REITs next year would take a hit.

Very safe to show hand like this.

Including my first income distribution from Religare Health Trust (RHT), dividends from my investments in non-REITs in Q4 brings my income in 2015 from them to a grand total of S$76,804.69.

This works out to be about S$6,400.00 a month.

Including the distributions from S-REITs this year, I am pretty satisfied with the total income generated by my investment portfolio.


Related post:
1. ARA: Re-initiating long position.
2. Croesus Retail Trust: Rights.
3. Trading ST Engineering.
4. Religare Health Trust: Entered at 88c.
5. 9M 2015 income from non-REITs.

Accordia Golf Trust: A DPU of 2.32c and still a buy?

I was wondering how badly Accordia Golf Trust's revenue could have been affected by the inclement weather in Japan in recent months. That was really what was holding me back from increasing my exposure to the business trust significantly even as its unit price hovered near its historic low.

In its latest results, it was revealed that performance in 2Q was disappointing. This translated into a DPU of only 0.74c for 2Q. For the 1H, total income available for distribution translated into a DPU of 2.59c.

Personally, I was hoping for a 1H DPU of 2.9c or even 2.95c which would have been possible if DPU for 2Q came in at 1.1c. Investing in golf courses for income, I guess the weather is something I must learn to take into consideration.

Accordia Golf Trust also decided to hold back 10% of the income available for distribution which means that DPU is only 2.32c for the period from 1 April to 30 September. 

So, what is the distribution yield?

I believe that it would be a mistake to annualise the DPU of 2.32c because it would be assuming that the weather would continue to be horrible in Japan for the next six months. 

However, if we like to think of it as a worst case scenario, yes, why not? 4.64c. This, of course, assumes that the management continues to distribute only 90% of distributable income.

At 62c a unit, we are looking at a distribution yield of 7.48%. This, I believe is pretty decent and higher than the 7% distribution yield dangled at Accordia Golf Trust's IPO which was, of course, at 97c a unit (which I thought was pretty much rubbish).

So, the question which I foresee many asking is whether Accordia Golf Trust is still a good investment for income? Well, I think it still is.

I do not believe that Accordia Golf Trust could turn in results which are much worse for the next six months but, of course, one can never be too sure when it comes to the weather. Anyway, chances are that things would improve unless Accordia Golf Trust has really bad luck. It is a matter of probability, really.

Accordia Golf Trust's current gearing level is 28.8% and its stock is trading at a 30% discount to NAV. 

About three quarters of the land the golf courses are sitting on are owned by the business trust. The rest of the land are leased from individuals, corporations or the government.

It is apparent to me that Accordia Golf Trust has ample debt headroom. As the business trust has a pipeline of assets to acquire from its sponsor, with the interest rate in Japan so low, I think it is a matter of time before the business trust makes its acquisitions. Fully debt funded, such acquisitions are likely to be DPU accretive.

If Mr. Market should feel depressed about Accordia Golf Trust's results, I certainly hope that he would show his displeasure in the usual manner which would allow me to accumulate at lower prices.

Related post:
Accordia Golf Trust: A distribution yield of 12.16%?

9M 2015 passive income from non-REITs.

Some wonder if Mr. Market could go into a depression? I don't know but I do know that many stocks became much more attractively priced in the last three months.

Consistent with my strategy to diversify my portfolio to reduce reliance on S-REITs for income, I added to my long positions in the following as their stock prices declined more significantly recently:

1. Accordia Golf Trust

2. Ascendas Hospitality Trust

3. ST Engineering

4. Starhub

5. SembCorp Industries

In the last three months, I also initiated long positions in the following as investments for income:

5. VICOM
"A 15x PE ratio would give us a fair value of $5.36 or so per share."

6. Religare Health Trust
"Trust has demonstrated its ability to improve its revenue organically quite strongly which makes up for the expiration of the sponsor's waiver to their share of the distributable income."

7. King Wan
"King Wan is in a net cash position and it also has an order book that would provide earnings visibility until 2018."

Finally, I accumulated the following stocks which have a bit of an income investing angle but the main reason is because I think they are worth much more and at lower prices, they became even more attractive:

8. Wilmar

9. OUE Limited

If you should be interested, you could search ASSI for more of my blog posts on these stocks and why I decided to add them to my portfolio when I did.

Of course, stocks could stay undervalued for a long time but regularly receiving some dividend in the meantime makes the waiting more palatable. I like to be paid while I wait.

If you suspect that I have dipped into my war chest in the last three months, you are right. 

Could we see another big decline in the stock market? We could and we should be ready. So, being cautious, I have not exhausted my war chest.

I have a couple of fixed deposits maturing next month in October and I will probably be keeping the money close at hand instead of putting it in another fixed deposit or two.

In Q3 2015, the following non-REITs paid dividends:

1. SATS

2. Old Chang Kee

3. APTT

4. SingTel

5. SCI

6. SMM

7. Wilmar

8. NeraTel

9. ST Engineering

10. QAF Ltd.

11. Starhub

12. HongLeong Finance

13. Croesus Retail Trust

For the first 9 months of 2015, total passive income received from non-REITs: S$ 57,747.59. 

This works out to be S$ 6,416.40 per month.

Have a shopping list and be ready to pounce if Mr. Market becomes depressed.

Related post:

6M 2015 passive income from non-REITs.

An eye on Accordia Golf Trust, Croesus Retail Trust and Saizen REIT: 8.1 magnitude earthquake in Japan and the Yen.

On Vesak Day, a huge undersea earthquake was reported 874 kilometers from Tokyo. The epicentre was deep in the Pacific Ocean. Seismologists warned that another quake could be coming. See report here: Japan Today.

Expecting some negative reaction from Mr. Market, I looked at the prices of Accordia Golf Trust, Croesus Retail Trust and Saizen REIT this morning. Of the three, the unit price of Accordia Golf Trust retreated by almost 10%. It was a big decline but it probably had to do with the fact that the counter went XD as well.

Accordia Golf Trust announced their maiden DPU of 5.71c for the 8 months period since its date of listing. This included non-recurring gains. Based on the regular operation of the golf courses under management, it was estimated that full year DPU could come in at 6.23c. However, this was based on an exchange rate of S$1 to JPY 88.4. This was a couple of months ago.

Of course, the JPY has weakened significantly since then. The rate is now S$1 to JPY 92. This rate was last seen in late 2014 and could be the reason for the particular weakness in Accordia Golf Trust when the unit prices of both Croesus Retail Trust and Saizen REIT held up rather well. Accordia Golf Trust is, after all, the only one of the three that does not hedge currency risk and we must rightly expect DPU to reduce in S$ terms, therefore.

If we expect the DPU to reduce proportionally, we might see a revised full year DPU of 5.91c. Buying more at 71c to 72c a unit today means a distribution yield of 8.2% to 8.32%. If we need a minimum yield of 8% to make the investment worthwhile for us, then, based on the current weaker exchange rate, all else remaining equal, we should be able to accept a unit price of up to 74c or so. Coincidentally, this was the entry price of my current long position too.

Further weakness in the JPY cannot be discounted but I have made a case before on why I think the JPY's biggest declines are probably behind us. Getting into Accordia Golf Trust at its IPO was a bad idea for various reasons. At current prices, I believe that the business trust presents a decent enough investment for the income investor.

See an article in NextInsight on Accordia Golf Trust: here.

Related posts:
1. Accordia Golf Trust: Yield of 12.16%?
2. Croesus Retail Trust: ONE's MALL.
3. Saizen REIT: Deeply undervalued.

Accordia Golf Trust: A distribution yield of 12.16%?

Some time in August this year, I was a trader for a day. The stock traded was Accordia Golf Trust. I got in at 78c a unit because I thought I saw a positive divergence in the chart and I subsequently divested at 82 and 82.5c in the same day.

The unit price went higher to touch 92.5c a month later. Some asked if I regretted selling too soon. Well, I entered for a quick trade and I had minimal risk holding on to my position for only a few hours. I made pretty good money when I exited. My action matched my motivation. What's there to regret?

Today, I became a unit holder of Accordia Golf Trust's again. This time, at 74c a unit and it is not a decision based on technicals. This time, it is a decision based on what I think is a safer entry price for the level of income the Trust is expected to distribute to unit holders.

Some might remember that I mentioned 74c in a blog post in July when I wondered at what price was Accordia Golf Trust a buy. The IPO price of 97c a unit was unpalatable to me for various reasons although the Trust promised a 7% distribution yield. I said then that 74c a unit seemed like a more reasonable price to pay for the Trust.

For the 8 months from its listing date, the Trust is expected to distribute 6c per unit to unit holders. Subsequently, the estimate is for a DPU of 6.8c per year. I am of the opinion that the first income distribution is probably safe but I am not so sure about subsequent income distributions. This is the main reason why only a much lower entry price would interest me in the Trust.

The first income distribution will happen in 2Q 2015. It is likely to be in May or June. So, there are still many months before that happens.

Click to enlarge.

Technically, unlike in August when I turned trader for a day, there is much weakness in Accordia Golf Trust's chart. The downtrend that started in late September is very much intact. There is no sign of a positive divergence. There are no reversal signals.

So, it would not surprise me if the Trust's unit price should go lower although it is testing its channel support. 74c is, coincidentally, where we find the 150% Fibo line but support could break and if it should break, the next support is at 72.5c where we find the 161.8% Fibo line.

Related posts:
1. Accordia Golf Trust: A hole in one.
2. Accordia Golf Trust: At what price to buy?
3. How to size our more speculative positions?

How to size our more speculative positions?

I have shared before that it is OK to gamble a bit once in a while. 

I am Chinese and gambling is in my blood. 

It's not my fault that I am born Chinese.





So, I have nothing against speculation per se. 

1. As long as speculators know that what they are doing is speculation, 

2. As long as they are mindful of the possible consequences 

and 

3. As long as they are able to take the losses comfortably if things go wrong, there is nothing really wrong with speculation, is there?

http://singaporeanstocksinvestor.blogspot.sg/2014/08/accordia-golf-trust-hole-in-one.html

Well, I would say please keep speculative positions small. 

Of course, how small it is would depend on

1. our risk appetite 

and 

2. our ability absorb losses. 

2 to 3% of our portfolio size for some and 10% for others? 

Sounds rather arbitrary, doesn't it?





When a reader asked me for a "formula" to help quantify "small", what did I say?

I told him it would have to be an amount I can recover quickly within a year or less in case of a total loss. 

This measure has always given me peace of mind and he said it is helpful to him. 

So, I thought I should share this.





Of course, if I should have more than one speculative position, the total exposure should not exceed the amount I think I could recover within a year. 

It is a bit like having one or five credit cards from the same bank. 

The credit limit doesn't increase with each additional card issued.





Like with so many things in my life now, it is about avoiding stressful situations where possible and not losing more money than I can recoup in a relatively short time works for me.

Always ask "to what extent can I afford to be completely wrong?"

Once we have the answer to this question, we will know how to size our more speculative positions.



Related posts:
1. Motivations and methods in investing.
2. How to make recovery from losses easier?
3. To be richer, be comfortable with being invested.

Accordia Golf Trust: A hole in one.

I bought more this morning when the counter broke out of resistance:



In the afternoon, I closed my positions:

What if the unit price were to go higher? 

I would congratulate those who are still holding.




Won't I feel any regret? 

I might complain about it a bit but it would probably be in jest. 

What? 

Why won't I feel any remorse?




I always try to remember my motivation whenever I initiate a position. 

If the outcome matches my motivation, that is good enough for me.

Why should we feel sad if things turned out well in the way we had hoped they would?




Related posts:
1. Accordia Golf Trust: Blood in the golf course.
2. Motivations and methods in investing.

Accordia Golf Trust: Blood in the golf course.

Regular readers know that I do a bit of trading and that I like to look when there is blood in the streets. What about blood in golf courses? I am impartial.

Just a dash of technical analysis and a dose of luck.

Immediate resistance is at 80c. If that should break, the next resistance levels are at 82c and 84c.

Accordia Golf Trust: At what price is it a BUY?

Some readers asked me at what price would I be interested in Accordia Golf Trust since I have said that I was not willing to pay the IPO price of 97c a unit, believing that it did not represent good value for money although it promised a 7% distribution yield.

Some asked me if they should start buying once the unit price goes under the NAV per unit of 92c because with its IPO in Singapore just 0.7x subscribed, it could see unit price sinking quite rapidly on the first day of trading.

Of course, I almost never give a clear answer to questions like this.




However, I will say that although it could be nice to buy something below its NAV, when we are investing for income, we really want to see whether the level of income that is being generated is attractive enough and how much of that promised income to be distributed is sustainable.

To do this, I looked into the Trust's gearing. The first observation is the very high gearing level of about 53%. That is similar to Croesus Retail Trust's current gearing level and yet Accordia Golf Trust could only promise a distribution yield of 7%.

Next, I looked at the way its debt has been structured. Long term debt really consists of three term loans of JPY 15 billion each.

The first term loan is for 3 years and the cost? 1.25% +
The second term loan is for 4 years. 1.5% +
The third term loan is for 5 years. 1.75% +

What is that "+" for? Cost of debt is actually a base percentage + the 6 months JPY TIBOR. If you don't know what TIBOR is, it stands for Tokyo Interbank Offered Rate which is forecast to be about 0.3%.

I feel that the TIBOR is likely to stay low for some time as Prime Minister Abe keeps borrowing costs low to encourage economic growth and works towards a targeted sustainable inflation rate of 2% per annum for the country. So, there could be some comfort there despite the high gearing level.

Just like Saizen REIT's loans, the term loans here are amortising in nature. Per term loan, the Trust has to pay JPY 75 million half yearly starting 31 March 2015. This means JPY 75 million x 6 in a year starting 31 March 2015. Per year: JPY 450 million.

On top of this, interest payment if estimated on the high side using 2% is about JPY 0.9 billion or 900 million

With total annual comprehensive income at almost JPY 6 billion, yearly debt repayment will be about 22% of annual comprehensive income from March 2015 to July 2017. In August 2017, the 3 year term loan will have to be fully paid.

Of course, by then, let us hope that the Trust would have found some way of refinancing since it would probably be impossible for them to pay off the remaining JPY 13.6 billion or so in the first term loan using internal resources.

Accordia Golf Trust's guidance is to pay out 90% of its income to unit holders from the 2nd year onwards but what is the distributable income available then? Ah! That is a question people might not have asked as they simply assumed that it would be 90% of the first year's DPU.

At the exchange rate of S$12.20 to JPY 1,000, assuming an annual comprehensive income of S$73.2 million and almost 1.1 billion units in issue, we would get a DPU of 6.65c if 100% of income is distributed to unit holders. If we should expect that only 78% of comprehensive income would be available for distribution from March 2015, then, DPU falls to 5.2c. If we still want that 7% yield, then, unit price has to fall to 74c which is a 24% decline from the IPO price.

Now, if only 90% is to be distributed, DPU could be as low as 5.2c x .9 or 4.68c.

So, at what price would I be interested in initiating a long position in Accordia Golf Trust? Let me talk to my bowling ball and I hope it is in a talkative mood.

Related post:
Accordia Golf Trust: 7% distribution yield.

Accordia Golf Trust: 6.8% to 7% distribution yield.

A new business trust is set to list in Singapore and it owns golf courses in Japan. The IPO is expected to price the units between 97c to $1.00 each and distribution yield is going to be between 6.8% to 7%.

I have not looked at the prospectus but I tried to understand how the manager is compensated. It is frankly quite complicated to me. It isn't as straightforward as a trust involving real estate. See if you understand it: Golf Course Management Agreement (page 3).

I also looked at some published figures and I am not sure that the assets are doing very well:



Click to enlarge.

I would draw attention to "net income per share" and "dividend per share". Interesting, isn't it?

See: financial highlights.

Could Accordia Golf Trust see a meteoric rise in unit price like Croesus Retail Trust did during its IPO? Your guess is as good as mine. However, I know that I will be giving the IPO a miss.

Read article:
Accordia Golf Trust to list on SGX.

Related post:
High yielding business trusts: A discussion.