Investment in SPH is larger now.

Back in early 2017, I blogged about my decision to substantially reduce my exposure to SPH, an old timer blue chip investment in my portfolio.

However, I still retain till this day my investment in SPH made during the Global Financial Crisis more than 10 years ago.

In early 2017, the decision to reduce my exposure to SPH, selling my later investment in the business, was based on the accelerated disruption of its print media business.

I knew of the disruption and was expecting a gradual decline.

Unfortunately and also shockingly, it happened a lot faster than I thought it would.

Then, more recently, SPH's stock price crashed dramatically due to the crisis caused by the COVID-19 pandemic but failed to recover with the broader market.

It reminds me of a Chinese saying:

病來如山倒.

Unfortunately, SPH's print media business is a shadow of its former self today.

However, is this enough of a reason for such an enduring sickness in its stock price?




Back in the day when AK and Facebook were still friends, I had discussions with some readers on what SPH would be worth.

If we thought that the media business might be worth nothing one day, then, we could value SPH based only on its property investments.

Back then, some said SPH stood for "Singapore Properties Holdings."

SPH has many property investments and probably the most prominent to many people is its big stake in SPH REIT.

Unfortunately, SPH REIT suffered from disruption as well when the COVID-19 pandemic hit.

SPH is terribly unlucky.

It is reasonable to expect that tourists visiting Singapore will not be returning to the pre COVID-19 numbers anytime soon.

It could take a year or two or more.

So, although not hit as hard as hospitality, it is a reasonable assumption that SPH REIT's crown jewel of a mall along Orchard Road, The Paragon, will continue to suffer.

After all, The Paragon depends to a large degree on patronage by tourists.




Still, since SPH's NAV per share is almost all made up of its property investments today, buying at a big discount to this should give some margin of safety.

Of course, like I said before, if the COVID-19 pandemic stays with us for a longer time, we could see defaults becoming more common.

During the Global Financial Crisis, around the world, we saw massive devaluation of properties, for example, and a downward revaluation of 20% to even 30% was pretty common.

If we were to assume a massive revaluation of SPH's property assets to distressed levels, knocking off 25%, we get about $1.50 NAV per share.

So, I believe that, fundamentally, any price below $1.50 a share should give some margin of safety, all else being equal.

The lower the price, the bigger the margin of safety.




Of course, investors for income should also be interested in SPH's dividends.

SPH slashed dividends drastically to conserve cash because of the COVID-19 pandemic.

Prior to the COVID-19 crisis, SPH recorded an earnings per share (EPS) of 13c.

SPH also paid an 11c dividend per share (DPS).

With these numbers, at $1.35 a share (which was the price on 11 June 20 when I was asked about SPH as an investment by a relative), if the pandemic did not happen, it would be quite a straightforward buy.




Now, as COVID-19 lingers, there is uncertainty over the future of SPH's property investments including its student hostels in the UK.

It is fair to say that there is uncertainty too over its ongoing residential property development on a plot of land in Woodleigh in Singapore which they might have paid too high a price for.

Of course, as the local property market has remained rather buoyant in the face of the ongoing COVID-19 crisis, Woodleigh Residences could still do well for SPH and their Japanese partner, Kajima Corporation.

I do like the development's location and the fact that it is integrated with a shopping mall and MRT station on the purple line.

This is not an advertisement but if you are curious and want to take a look, here is the link:

https://woodleighresidencesofficial.com/

Mr. Market just doesn't like uncertainty.

Even so, SPH REIT's unit price has recovered from its lows while SPH's stock price has only recently formed a new low.

Now, for a bit of speculation again.

SPH REIT's DPU during normal times was around 5.5c.

Is it conceivable for SPH to pay, say, an 8.0c DPS when normal times return?

Why do I ask this question?

If an investment in SPH is able to give a dividend yield that is similar to or higher than the distribution yield offered by SPH REIT, I would rather invest in SPH instead of SPH REIT.

This is especially when Mr. Market is offering a selling price now that has discounted SPH's media business and more.

Then, any better performance by the media business however unlikely would simply be a bonus.




So, was I thinking of increasing my investment in SPH at $1.35 a share?

No.

Why?

Looking at the charts then, SPH's downtrend was stark.

The 50 days moving average was still on a steep decline and it was providing a strong resistance.

Too much dust and I could catch a falling knife.

So, I decided to wait.

Give it more time and see what happens.

I remember having a K.I.V. file in my army days and that was where I kept SPH, I guess.

That decision turned out to be quite fortunate.

What about now?

The air is still dusty and I could still catch a falling knife. 

However, the knife is probably a smaller one and might not be as sharp.

What does this mean?

It means that if this is a mistake, it should be a less costly one.

Yes, to be quite honest, this is all still slightly speculative.

So, I am crossing fingers and maybe toes as my investment in SPH is a little larger now.

Related posts:

1. Financially free and Facebook free.
2. Sizing my investment in SPH.

Should invest (more) in SPH now?

Reader:
Hi ak, I like to hear your view on SPH. 

I have hold the stocks which I bought few years ago avg price 4.1. 

With this recent big drop, do u think it make sense to buy more to avg down the cost? 

The business seems to cutting more div in coming future 😟





AK:
Whenever you are thinking of investing more, ask yourself if you were not already an investor, would you invest now. 

You will have your answer. 

Quite simple. 😉

Reader:
My feeling is telling me not to buy if I do not have any.. thanks

Regular readers might remember my blogs on QAF Limited and why a higher share price might not mean that the stock is more expensive. 

In actual fact, QAF Limited's stock could actually be cheaper even though the price was higher.

(For those who are new to my blog or are growing forgetful, read this:
http://singaporeanstocksinvestor.blogspot.sg/2015/04/qaf-limited-114-share-is-cheaper-than.html)





Along the same line of thought, a lower share price might not mean that a stock is cheaper. 

The stock could actually be more expensive.

It has to do with earnings.





Related posts:
1. Fate of my investment in SPH.
2. Sizing my investment in SPH.

Sizing my investment in SPH.

When I tell people I am a blogger, some assume that I am IT savvy. 

People who say that are probably not very IT savvy. We only need to know how to use a word processor to blog.

My generation and those who are older would remember that in between typewriters and PCs, we had word processors. Their time on Earth was pretty short, however.

I am really a dinosaur. 

If I were to look for a job today, with my qualifications and skills, I would probably have a hard time getting a job that pays more than $3,000 a month.




From being economically inactive to being unemployed? I shudder at the thought.

I still like hard copies of newspapers, magazines and books. I tried using an e-book reader which someone gave me many years ago. I didn't like it.

I should have sold it when it was still worth $500 but it was a gift. Now, it is just another item collecting dust at home but I can be rather sentimental.

Being sentimental can be a terrible thing for an investor, of course, as we constantly tell ourselves not to fall in love with our investments. Well, I can only try my best as I am only human.

I am lucky that I am also pragmatic. I like to think that being pragmatic helps to temper any sentimentality in me. 




When I spoke with somebody who bought SPH shares recently, I said that I wouldn't buy SPH shares today. It happened so quickly that I surprised myself a little bit.

I have always suspected that there is more than one AK inside me. Spooky!

I have been an SPH shareholder for many years and doing a back of the envelope calculation tells me that, taking in the dividends collected over the years, my earlier investment in SPH is almost free of cost.

However, dividends collected for my later investment in SPH probably managed to do only a bit more than cover the decline in its share price over the same number of years.

Like it or not, media remains the core business of SPH and that business is very much disrupted. 





On hindsight, SPH should have ventured more aggressively into real estate but they didn't. 

I remember Dr. Tony Tan mentioned that selling their land in River Valley was a mistake many years ago. He was right.

Now, we see disruption technology everywhere and our investments could get disrupted one way or another. 

Being rather old fashion could be a problem for an investor like me as I am not always in touch with the changes in technology nor fully aware of the implications of such changes on the ground.




Having said this, until I could find replacement investments for income, I was quite willing to hold on to my investment in SPH. It is still an entity which has a relatively strong balance sheet and is still generating an income for me.

Recently, as things turned out, I added several income producing stocks to my portfolio and I decided to let go of my later investment in SPH.

This effectively reduced one of my larger non-REIT investments by half, boosting my cash level which would allow me to take bigger positions in other income generating investments.




I am retaining my earlier investment in SPH as it is almost free of cost and I still hope to benefit from possibly the sale of Seletar Mall to SPH REIT at a later date.
-----
Added 18 July 2017:

A journey through time with SPH.



Related post:
Fate of my investment in SPH.

The fate of my investment in SPH.

"At SPH, we recognise the power of sharing in a world that's more connected than ever, across multiple platforms."

Disruption to the media industry is faster and more frightening than I had expected. Actually, if an IT dinosaur like me can be a blogger, I shouldn't be alarmed by this but I am.




That the disruption has impacted SPH is amply evident with its earnings declining in the last few years. DPS declined by 33% or so in the last 5 years and we will probably see DPS dropping by another cent or two this year.

If the decline is seasonal, there is no reason to fear because some months will do better. If the decline is cyclical, we can always wait for the cycle to turn up if we are patient enough. 

However, if the decline is structural, whether a business can do well again would depend on whether it is able to re-invent itself to stay relevant in the face of a new reality.




The move to diversify its business to reduce reliance on the media industry made sense but although SPH has investments in real estate which provides recurring income, the bulk of its fortunes is still tied to the media industry.

Witnessing its decline is very sobering for me. The world is changing and changing fast. What has not changed is my attachment to SPH. I belong to the old economy and I guess SPH still does.

I have been a shareholder of SPH since before the Global Financial Crisis and taking into consideration the years of dividends received as well as the low prices I paid during the Global Financial Crisis, I doubt I have lost money being invested in SPH. 

Even taking into consideration the highest price I paid when SPH REIT was listed in the middle of 2013, with the dividends paid out since, I doubt I have lost money.




Will I add to my investment in SPH now? 

I am happy enough to hold on to my investment but to add to my investment in SPH, there must be a sign that earnings will improve or at least stop declining.

I can see that SPH is changing but is it in the right direction and is it fast enough?

Of course, if Mr. Market should offer me a price that I cannot refuse, even with SPH's declining earnings, I might buy more, but, for now, I am keeping the status quo.




See update here:
Sizing my investment in SPH.

2016 full year passive income from non-REITs (Part 1).

During an "Evening with AK and friends", someone asked if I was going to sell my stocks as market guru Hu Li Yang was expecting a stock market crash. I said we should stay invested as the market was still awashed in liquidity and money will go to where it is treated best. See: Evening with AK and friends.



So, what did I do in 2H 2016 in the non-REITs space? I made various purchases but, mostly, I was buying DBS shares. Besides DBS, I also bought some shares of OUE Limited, PREH, Wilmar, OCBC, Breadtalk and Starhub.

(I am impressed by DBS' cost management. Their cost to income ratio keeps declining.)

The narrative for investing in OCBC was similar to the one for DBS. Although all three local banks' stocks looked cheap to me, my preference was for DBS because of the perceived cheaper valuation.


The reason for me putting some money in OCBC's stock was mostly because my long position in DBS grew so big (and I do mean BIG) that it was prudent for me to step on the brakes. 




Using a strategy I employ frequently for stocks which I am highly confident in, my relatively large position in DBS included both a core position for income as well as a trading position.

Why not UOB? 


Well, I think UOB has been a bit laid back. I am not saying that it is a bad thing, mind you, but its growth story seems less exciting.

Of course, some might say that DBS and OCBC have been more "adventurous" but I like to think that they are more enterprising.

I feel that growing their wealth management business more aggressively will continue to set them apart from UOB as that business contributes more and more to their earnings.

Next, Wilmar. I continue to like Wilmar's business strategy and their very impressive scale of operations. It is an amazingly complex business and, to be quite honest, I have no way to analyse most of its operations.

However, when Mr. Kuok thinks their shares are cheap and bought more at $3.00 a share, that was a pretty clear signal to me. At that price, we would also be buying at around its NAV which seems conservative.

Source: RHB.

Having accumulated a rather significant long position in Wilmar in recent years, I am quite happy to wait while being paid to do so.

Now, for OUE Limited. I blogged about my rationale for increasing exposure to OUE Limited when I shared my numbers for 1H 2016 (see related post #1). Back then, I added at $1.51 a share. In 2H 2016, I added more at $1.53 a share.

Twin Peaks.

My decision to increase exposure was mostly driven by the even larger discount to NAV from the time I initiated a long position. 

There is much value in OUE Limited but waiting for value to be unlocked requires a lot of patience. Well, remember, a wise man did say before that the big money is in the waiting.

Along similar line of reasoning, I also added to my investment in PREH at 80c a share a few days ago. This is the lowest price I have ever paid for PREH. The last time I bought any PREH shares was more than a year ago. 

It is interesting to me that Mr. Ron Sim, Mr. Pua S.G. and Mr. Kuok K.H. have been increasing their stakes in PREH on price weakness. 

PREH is an asset play but it is also a growth story. It is not for the faint hearted.

PREH

As for Breadtalk, I have a more recent blog post on my decision to initiate a position. I compared it to Old Chang Kee and QAF Limited, both of which I have been a shareholder of for many years. 

If you are interested to know why I had a change of heart and decided to initiate a smallish long position in Breadtalk, go to the related posts at the end of this blog post (see related post #2).

Starhub. In June last year, when I did a technical analysis for Starhub, I said:

"The widening of the Bollinger Bands indicates increased volatility. The OBV shows selling pressure. The MACD is declining and shows no sign of a positive divergence. These are all on the weekly chart which suggests that continuing weakness in the longer term should not surprise us." Read blog post: here.


We saw Starhub's stock price sinking and I nibbled  again in late November. I feel that Mr. Market is right to be concerned but might be overly pessimistic about Starhub's prospects with the introduction of a 4th telco.

There is plenty of speculation now but, to be realistic, it will take time for the new entrant (which is expected to enter the market in 2018) to gain traction and it remains to be seen how successful it will be.




Back in June 2015, I also said that SPH and Starhub were similar:

"They could see earnings come under pressure for different reasons but that makes them similar too as the challenges are very real.... I would like to have some buffer in terms of dividend yield buying into SPH and Starhub because I am investing in them primarily for income and not growth." Read blog post: here.

I believe I am getting a much thicker cushion buying Starhub at under $2.80 a share and that was what I did.

As for SPH, let me share here a recent conversation with a reader:

I have been a SPH shareholder for many years and I am happy enough to be paid while I wait.
---------------------
As this turned out to be a very long blog post, I chopped it up into two parts. Read Part 2: HERE.
Related posts:

1. 1H 2016 income from non-REITs.

2. Breadtalk, OCK and QAF.

3. Made $1m investing for income.
4. 2016 FY income from S-REITs.

AK anyhow picks 5 stocks for income investors.

UPDATE (January 2017):
"...with CRT no longer having an external trustee-manager, we believe this may remove a hurdle to a potential takeover by a J-REIT as speculated by some market participants due to CRT’s persistent high yield and discount to its NAV. " DBS Research.
Is Croesus Retail Trust an asset play that pays a good dividend while we wait? Sounds like Saizen REIT? Another Saizen REIT?
-----------------------------
Hi AK,
Thanks for your reply. :)
Rest assured I'm not trying to dig your portfolio value, rather, I have an planned/budgeted for a 5% yield on my portfolio returns and am not sure if this is something that is achievable or I might even be too conservative and should be aiming for something in the 7-8% range?


Hi,

7 to 8% yield is not unrealistic if we are invested in AIMS AMP Capital Industrial REIT, for example. ;)

Something higher? I-REIT and Croesus Retail Trust should do it.

If you don't like REITs and Biz Trusts, you can still get close to 4% yield (e.g. DBS) and 5% yield (e.g. SPH).

Best wishes,
AK

Note: 
AK is just throwing some ideas in the air. If they fall and hit your head, don't scold me. DYODD.

Related post:
1. AIMS AMP Capital Industrial REIT.
2. 1H 2016 income from S-REITs.
3. 1H 2016 income from non-REITs.

Another special dividend from SPH in future.

One of the larger investments in my non-REIT investment portfolio is in SPH. Actually, SPH is also one of my oldest investments for income. 

Most of my investment in SPH is priced between $2.86 to $3.55 a share with a more recent tranche at $4.20 a share purchased in 2013 when SPH REIT was created. 

Wah! $4.20 a share? Then, lost money already lah. Well, some might look at it that way. 

For me, as an investor for income, assuming a DPS of 21c at the time, I was looking at a 5% dividend yield. With a much stronger balance sheet than SPH REIT, SPH made more sense to me as an investment for only a slightly lower dividend yield.

When SPH REIT was created, SPH declared a special dividend of 18c a share while retaining major ownership of both Paragon and Clementi Mall. In fact, when the counter went XD back then, I added to my investment again at $4.03 a share. (See: The mystery of the extra money in my account.)

Will SPH declare another special dividend when it sells a percentage of its stake in Seletar Mall to SPH REIT? Very likely.

Seletar Mall is 70% owned by SPH and the other 30% is owned by UE. It would probably be cleaner for SPH to take 100% ownership of Seletar Mall before injecting the asset into SPH REIT. 

Of course, only time will tell how things progress but we know for a fact that SPH REIT has been granted right of first refusal on Seletar Mall by SPH.

Visiting Seletar Mall has been on my to do list for a while and, recently, I did. 

I didn't see any vacant shop space and I saw a pretty good crowd on a weekday evening.

I am sure it will be a matter of time before SPH REIT is offered Seletar Mall and, as a SPH shareholder, I am looking forward to that day. 

Patience will surely be rewarded.

Related post:
SPH or SPH REIT?

SPH Reit Management CEO Susan Leng said that SPH has granted a right of first refusal to the Reit, but it is only when the sponsor has decided to divest the property that the Reit can evaluate the opportunity... - Source: AsiaOne

Goh Eng Yeow's anguish over his paper losses etc.

AK is an accredited kay poh and is always looking around. 

If we train ourselves to be more observant and to be more aware of our environment, we might learn something or find something which might benefit us now or in the future (either by participating or avoiding). As investors, it could be a good idea to be a kay poh.

Today, I visited a mall that I have a stake in through my investment in a listed company. I saw a good crowd in the late morning and that made me happy. Did I hear SPH?

I bought myself a curry puff at an Old Chang Kee kiosk and I had to queue. A lady in front of me bought all the fried chicken wings available despite a recent price increase of 10c per wing. I had to wait quite a while for my turn but I was happy.

I went to a bank to place a fixed deposit and I saw that they had an air purifier. So, I chose the seat that was the closest to the machine while waiting to be served. A bit noisier but the air was probably better. 

Alamak, AK is so kiasu and kiasi. Yah lor. Regular readers know that I have two air purifiers at home and that they are on almost 24 hours a day. It is always good to be prepared. Prevention is better than cure, isn't it?

This leads me to another idea about how we should always be prepared, whether we are investors or not. I have a friend who was looking high and low for an air purifier when the haze was at its worst recently. 

Despite my advice a few years ago that he should get an air purifier for his home, my friend didn't get one. He said the haze wasn't that bad. This time round, his parents developed respiratory issues due to the haze.

As investors, we probably get the best deals when the market is not interested. When everyone is interested in buying a stock, it is hard to get a good deal. Well, when everyone was interested in getting an air purifier, it became harder to get our hands on one. Same, same but different.

So, since the haze is an annual event, why not be prepared for it? If only price movement in the stock market is just as predictable.

As investors, we want to be prepared too. We want to make sure we have a war chest ready and that we have a shopping list ready. We don't know if a crash is going to happen but if it should happen, we should know what to do and make fast decisions. 

We must be prepared to seize opportunities or be prepared to lose out on opportunities.

While waiting for my turn at the bank, I read an article by Goh Eng Yeow in the papers and I would like to highlight these few paragraphs:

As investors for income, if we have invested in good companies, even badly timed entries should eventually turn out well. 

The fluctuations in prices should not affect us much if we have been eating bread with ink slowly (see related post no. 3).

So, how's your Sunday? 

Told you AK is kaypoh. ;p

Related posts:
1. Protect ourselves from the haze.
2. Tea with Solace: Common sense investing.
3. How to have peace of mind as investors?
4. Feeling depressed about paper losses?

Starhub: A nibble at $3.85 a share.

Friends would remember that I looked at possibly investing in Starhub a couple of years ago but its high level of borrowings frightened me.

Of course, Starhub has chugged along quite nicely since then and it was only later that I discovered how its very predictable and strong cashflow was able to accommodate its high level of borrowings.

So, I have been waiting for a chance to get some since...

Starhub's stock price plunged today, hitting a price (of $3.70 a share) not seen since late 2012. The big movement downwards was unexpected, of course, although the charts show the 150% Fibo line to be at $3.70, a golden ratio and supposedly a strong support.

I was more expecting a slow drift downwards in price and thought I could, perhaps, buy if the share price hits the 200 week moving average (200W MA) which is currently at $3.87. This is a long term support and should be quite strong.

So, looking at the chart when its share price had already recovered from $3.70 to $3.85, I wondered what to do because breaking the 200W MA is a bearish signal.

The widening of the Bollinger Bands indicates increased volatility. The OBV shows selling pressure. The MACD is declining and shows no sign of a positive divergence. These are all on the weekly chart which suggests that continuing weakness in the longer term should not surprise us.

In the near term, however, share price could rebound as they sometimes do. In fact, the higher low on the MACD in the daily chart suggests that this is a distinct possibility. Such a big one day movement in price should have attracted short sellers and shorts have to be covered eventually.

In terms of fundamentals, it won't be wrong to say that Starhub has challenges. Like SingTel and M1, the other two local Telcos, Starhub must deal with loss of revenue from the more and more popular use of apps such as Whatsapp (please pardon me if I did not get the name right as I don't use this) instead of voice calls and SMS.

Fortunately, Starhub has Cable TV but that business has not been growing much recently. Anecdotal evidence shows that more people are watching free online streaming content. I do that too on my iPad. Japanese anime, remember?

Of course, now, the new threat is the introduction of a fourth Telco in Singapore and this is probably "da bomb". How badly would Starhub's business be affected? I don't know. Would Starhub's ability to pay 20c in dividend per share (DPS) annually be affected? I don't know.

I do know that paying 20c per share annually in dividend means distributing almost all of its earnings to shareholders. So, if its business should suffer a decline in earnings per share (EPS) and this is a real possibility, we could see a reduction in DPS.

I could get a 5% dividend yield if I were to invest in SPH now. Of course, Starhub is not SPH. They are different animals but paying out almost all their earnings as dividends to shareholders make them similar in that respect. They could see earnings come under pressure for different reasons but that makes them similar too as the challenges are very real.

I would like to have some buffer in terms of dividend yield buying into SPH and Starhub because I am investing in them primarily for income and not growth. A more or less predictable 5% dividend yield might be attractive to me but to have a buffer means getting in with a higher yield which means a lower entry price.

Anyway, I decided to nibble at Starhub at $3.85 a share. That gives me a prospective dividend yield of 5.19% which provides a very thin cushion. This is really nothing to shout about and, definitely, I am not expecting to make a lot money with this entry price. From here on, I could, however, buy more if its stock should see more price weakness.

Related post:
How much to invest? Nibbles and gobbles.

2014 full year income from non-REITs.

This is the first time I am blogging about my full year income from investments in non-REITs. As my passive income generated from investments in S-REITs has for many years overshadowed income received from non-REITs, it wasn't very meaningful to blog about the latter.



Now that passive income received from S-REITs took a plunge, it has become more essential to talk to myself about what I have done in the non-REIT space which has shored up dividends received this year, making income contributions by non-REITs a more significant part of my total annual income from the stock market.


Before I continue, readers might want to bear in mind that a few of my investments in the non-REIT space have been with me for many years. They are not all new investments, therefore.

Anyway, non-REITs which have contributed to my passive income in 2014 are:

1. Croesus Retail Trust
2. Hock Lian Seng
3. Perennial China Retail Trust *
4. CapitaMalls Asia *
5. NeraTel
6. Wilmar
7. Yongnam
8. APTT
9. ST Engineering
10. SPH
11. QAF
12. Old Chang Kee
13. K-Green Trust *
14. SATS
15. Ascendas Hospitality Trust
16. Singapura Finance

* Sold and will not contribute any income in 2015.

New or old, I have blogged about all the above stocks before. So, if you should be interested in understanding why and when I invested in these stocks, just do a search for them in my blog and you will find the relevant blog posts.

Of these 16 stocks, I increased my long positions or initiated long positions in the last 12 to 15 months in Croesus Retail Trust, Hock Lian Seng, NeraTel, ST Engineering, SPH, SATS, Ascendas Hospitality Trust and Singapura Finance. 

Apart from Singapura Finance, it is quite obvious that I increased or initiated exposure to these stocks because of their relatively attractive dividend yields. I am still an income investor at heart.

I wouldn't say that all the stocks are of the "good to hold forever" variety but it should be obvious to regular readers that I am not averse to selling a stock if I am no longer impressed by its prospects. 

There are many examples which I have blogged about in the past and examples from this year are Perennial China Retail Trust and K-Green Trust in the list shared earlier.

Anyway, the total amount of dividends from non-REITs in 2014 is beefed up mostly by my rather big investment in Croesus Retail Trust which happened when its unit price took a severe beating shortly after its IPO. 

The relatively large increases to my investments in SPH and NeraTel also helped.

Income from non-REITs in 2014:
S$ 61,752.66

This figure could increase in 2015 despite losing the contributions from Perennial China Retail Trust, CapitaMalls Asia and K-Green Trust. This is because Ascendas Hospitality Trust will make a full year income contribution in 2015.

Of course, it is hard to say at this point in time if I could divest partially or fully some of the investments mentioned here in 2015. 

Indeed, I could also put more money to work in the stock market. So, nothing is set in stone. However, I do know that if valuations should go closer to crisis levels, I will be buying more.

I understand that the stock market could get a bit bumpy but my investments for income should provide me with much comfort and also help to fill my war chest in the meantime.

Related posts:
1. 2014 full year income from S-REITs.
2. AK went shopping in the (stock) market.
3. Be comfortable with being invested.
4. Mystical art of wealth accumulation.
5. Portfolio review: Unexpectedly eventful.
"... my decision to increase my level of investment in SPH and NeraTel last year so that my overall portfolio is less reliant on S-REITs for passive income was pre-emptive. Enlarging investments in Hock Lian Seng and Croesus Retail Trust earlier this year has also helped to reduce reliance on S-REITs for passive income."

They invested in multiple properties and are now retrenched. (Two questions we should ask when buying investment properties.)

UPDATED (DEC 2016):

People do lose their jobs and for those who are financially leveraged to the max, it could be hell.

A reader's comment:

"...recently I attended a workshop at LLI. I spoke to an uncle in his 50s who is unemployed after he was retrenched... He has friends in the same industry who bought multiple properties and are currently retrenched as well... Other friends working in a prominent engineering company received letters asking them to opt for voluntary retirement after 59..." 





Full comment: here.

If those multiple properties are rented out and if the rentals are able to cover the mortgages, good. 

With the rental market being what it is (i.e. high vacancy rate and declining rents) or if the properties were purchased in the last 3 or 4 years (i.e. relatively high purchase prices and low rental yield), his friends (without an adequate emergency fund) could be in trouble.





Don't let greed get to us. 

Always stay grounded. 

Over leveraging (explained at the end of this blog post) could lead to trouble.

Financial prudence will not make us rich overnight but it will ensure we avoid painful falls some of which we might not recover from.





(Up to November this year, more than 800 transactions involving non-landed private properties were loss-making, double the figure in 2015. Analysts told The New Paper that "unprofitable" deals are common in a cyclical downturn where market sentiment and employment prospects are poor. Expectations of a US Fed rate hike by the end of the year, which would increase interest rates here, are also driving these loss-making sales. Source: The New Paper, 13 Dec 16)




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We always hope to make money from our investments and this could happen through capital gains, regular income or both. 

Knowing our motivations for being invested will go a long way in determining what are suitable investments for us.

It is well known that the luxury segment of the residential property market in Singapore has never been very good for income investors. 

In recent times, it has become worse. 

A gross rental yield of 2% is considered to be quite good for some properties in this segment, it seems, if tenants could be found at all as vacancy rate has been climbing.

Well, investors who bought into luxury residential properties in Singapore were probably going for potential capital gains and not rental income, anyway. 

This means that they hope to sell their properties at a higher price to another buyer later on.

The early birds did quite well but, increasingly, more buyers are resorting to leasing out their properties due to a lack of buying interest. 

This has depressed rentals further in this segment.

When monthly rental income declines to a point where it is unable to cover the mortgage payments, we could see fire sales and there is plenty of anecdotal evidence that this is already happening.





"According to Colliers International’s research, the average monthly gross rents of luxury/super-luxury apartments slid by yet another 1.4% QoQ to $5.20 per sq ft per month as of 2Q 2014, following the 1.9% QoQ fall in 1Q 2014." Source: Colliers International

I have been receiving emails offering discounts on properties in Singapore and some of them are of the high end kind. 

A small one bedroom (shoebox) apartment near Orchard Road for $1.1 million, down from $1.3 million, anyone?

I think that it is a sign of the times and we won't be wrong to expect more discounting both by developers and more marginal buyers of luxury residential properties here.

Buying a residential property in the hope that we could find buyers who would pay a much higher price for it in a short time is no longer a game we can play in Singapore unless the entry price were to be so attractive that even after accounting for the seller stamp duty (payable if the property is sold within 4 years of purchase), we could still make a decent gain.

However, if a developer had to resort to a 20% discount in order to move unsold stock, what makes us think that we would be able to sell at the pre-discounted price to anyone else? What? Not now? Maybe, 4 years later?

Well, with many more projects to be completed in the next few years, if anything, the secondary market will become even more challenging for sellers. 

Indeed, prices are more likely to trend downwards in the next few years than not.





When we take a speculative position, it is important that we understand that it is a speculative position. 

It means that we should be able to exit rapidly, cutting our losses, if required.

With conditions the way they are in Singapore now for the residential property market, this would be extremely difficult and also costly to do. 

For people without deep pockets, it could even be disastrous.

What do I mean by deep pockets?

Sometimes, we look at some companies' numbers and we might wonder why they have debts although they have more than enough cash to repay their debts.

It is because we should always have ample liquidity close at hand to take advantage of opportunities.

Having ample liquidity also means that if things go wrong like they sometimes do, these companies could pay down their debts rapidly.





Take a look at this company's numbers, for example,

So, for the more adventurous ones in our midst, please think again and again before handing over that cheque when temptations find their way into our mailbox.





"Is it a good deal?" is only the first question we must ask.

"Do we have deep pockets?" is an important second question.

"...overleveraging is a situation when people are borrowing money, hoping to make money but do not have enough capital assets to cover any likely future losses." (See related post #5)




Related posts:
1. CCR, RCR or OCR for rental income?
2. How to be rich when the world collapses?
3. Smaller apartments' prices more resilient.
4. Don't think and grow rich!
5. Leverage up and buy investment properties now?