Dinner with AK71.

I meant to share these photos but, somehow, I forgot. Sign of old age.

My sister cooked a hearty meal for us. Rojak (with paste my parents bought from Penang) and Bak Kut Teh. Yummy!

Dough fritters used in both dishes. This is a way to improve productivity in the kitchen!

An appeal by AK for funds.

Regular readers know that I believe in being charitable and I have revealed before that I support 6 charities in Singapore. My favourite charity is still "Singapore Children Society" and has, increasingly, taken the lion share of my donations.

I recently received an appeal letter from another charity which I support and there was a little hand written section which moved me and I would like to share it here with you:

We might feel that what we have is not enough but if we have extra money which we are able to invest with, we are fortunate indeed compared to the poor and the needy.

So, if you have a charity that you like, please make a bigger donation this festive season. Just $10 more will make a big difference if everybody thinks the same way.

If we don't yet have a habit of being charitable, why not start today with a donation to the "Singapore Children Society"? We can make an online donation on their website: here.

Let us bring some cheer to the less fortunate in our midst. We can do it and, so, why not? Thank you.

Related post:
Have money must also have a heart.

Becoming a millionaire next door.

A person made $10K a month but spent $9K a month.

A person made $5K a month but spent $2K a month.

Who do you think will become richer faster, all else being equal?





The following chart was posted on my Facebook wall by Matthew Seah:

I am impressed!

Matthew is a "Prodigious accumulator of wealth (PAW)": This type of people are frugal. They save and invest. They become millionaires.





"People sometimes think that high income earners are wealthy people. This might not be true..." STE: The Millionaire Next Door.

Related posts:
1. Think you cannot reduce your spending?
2. A fast track to wealth building.
3. How to tell if you are rich?

Time for AK to be paid $12,750.

Who? Who?

Who is paying AK so much money?

Why? Why?

Make a guess?

Pause.

Pause.

Pause.

Give up?






It is the last quarter of 2013 and I am making my yearly contribution to my SRS account. 

So, I am paying myself $12,750.

Aiyoh, who threw something rotten at me? 

Hey, must have a sense of humour mah. LOL.





Although the contribution cap is S$ 12,750, we do not have to contribute the maximum if we don't need to or are unable to.

Don't need to? 

Well, a person who pays relatively little income tax could be tax free simply by contributing a few thousand dollars to his SRS account.

Unable to? 





Everyone's circumstances are different. $12,750 is quite a bit of money for many. 

If a person could only contribute $5,000 comfortably, then do so. 

Although he would not enjoy the maximum tax savings, he would still enjoy some savings.

I hope you will remember to contribute to yours before the end of the year.

The SRS is part of the Singapore government’s multi-pronged strategy to address the financial needs of a greying population by helping Singaporeans to save more for their old age. 

It began in 2001 and is operated by the private sector. 

Writing out a cheque to myself.

NOTE:
From 2016, the max SRS contribution is $15,300 a year.





Download the SRS Handbook: here.

Related posts:
1. Be rewarded for opening an SRS account.
2. A war chest called "SRS".

Supporting my companies and getting 'paid' in the process.

Recognise these brands?

Or these?

These are brands that belong to QAF Limited.

Today, I was pleasantly surprised to see Cowhead brand's organic rolled oats.

Better still, they were on special offer. S$4.95 for two packets (500 grams each) at NTUC Fairprice.

Pesticides free!

What makes the purchase even more satisfying is that I am a shareholder of QAF Limited (and also NTUC Fairprice).

I like supporting my companies and getting some dividends in the process. Good idea?
------------

Update (18 June 2016):

Money from NTUC Fairprice.
Net of deductions, it is a rebate of 3.35% on my purchases.

This is on top of receiving Link points ($1 spent = 2 pts. Exchange 3,000 points for $20 Fairprice voucher. 1.33% rebate.) and also a 5% cashback from my credit card! 

AK will get more free grocery this month!

Like supporting our companies and being paid for it? I am sure we do!

Related post:
Thank you for investing in INCOME.

Croesus Retail Trust: Motivations and risks........ (Updated on 16 Sep 15 with a video and list of key take-aways.)

I was having a conversation with a friend in a chat box and he asked me what are the risks investing in Croesus Retail Trust. I rattled off a list of risk factors and I am sure it wasn't even exhaustive.

Every investment has risk factors and the important thing for me is to ask if these are acceptable. How do I know if they are acceptable? I would have to know my motivations as an investor.

So, if we are investing for income, then, we should ask which risk factors are more significant to us. What are the things we should be paying more attention to.

If Croesus Retail Trust should consistently produce an 8.5% yield for me as an investor for income, this is one factor that would keep me quite contented. I would have less problem with keeping the status quo.

Over the next two years, with a currency hedge in place, distributable income in S$ terms is more or less predictable. After that, assuming zero growth in distributable income in JPY terms, income received in S$ terms will depend on the prevailing exchange rate. Of course, the manager could continue hedging exchange rate risk and it could be a sensible thing to do at that point in time. It is hard to say anything conclusive about this now.

They might not have to do so since my own experience with the JPY tells me that it is now near its lowest point since I first really visited the country in 1998. The lowest in recent months was S$ 12.20 to JPY 1,000. Although it could go lower, I suspect that it wouldn't go very much lower than that.

As the BOJ has mentioned many times before, Abenomics is not about devaluing the JPY. A devalued JPY would cause immense hardship for the Japanese people and it is not in any government's interest to have hyper inflation.

So, the JPY is likely to strengthen from current levels or stay where it is once Mr. Abe gets the 2% inflation that he wants for the economy. This is all in the realm of reason.

Of course, if Japan should experience a 2% inflation, logically, interest rate should go up. This would translate into a lower level of distributable income in JPY terms, everything else remaining equal.

If the JPY should appreciate against the S$ by then, a higher interest rate could be a non-issue. Otherwise, we could see DPU in S$ terms reducing. How much would interest rate increase to? How much would DPU reduce to in such a case?

Well, if the Trust should pay 1% more in interest on its debt, roughly, we could see a 10% reduction in DPU. What about 2%? Maybe, a 20% reduction. This is the best we can do. Estimates. Then, ask if a 10% to 20% reduction in DPU would still make the Trust an attractive investment for us.

At $1.18, Croesus Retail Trust didn't make my list.

$1.07? Still a "NO".

$0.965? Maybe.

$0.845? Looking attractive but where was the floor?

$0.87? Found a floor, perhaps. Buy some.

Of course, I did consider other risk factors before deciding that Croesus Retail Trust would make a decent investment for income. 

Read related posts and some of the comments generated therein by following the links provided at the end of this blog post, if you are interested.

Once we know our motivations, we know what risks are acceptable and we will know what to do.

Finally, we might not get the best prices but if we could get in at a fairly good price to start with, that is good enough.

Update (16 Sep 15):
Video by PhillipCapital



Key take-aways for me:

- 71.9% leases expiring beyond 2019.

- Mallage Shobu accounts for 20% of GRI.

- Rental reversions upwards of 20%.

- ONE's Mall and Mallage Shobu to contribute to higher income through positive rental reversions.

- Consumption likely to improve due to real wage growth and falling unemployment.

- Shopping habit in Japan changing, preferring large shopping malls.

- Croesus Retail Trust's occupancy cost* is 8 to 9% while CMT is about 17% and FCT is about 15%. Average occupancy cost for sub-urban malls in Japan: 12 to 15%. This means that Croesus Retail Trust has room to increase rent.

*Occupancy cost is the tenant's cost of occupying its space divided by sales.

Thanks to Raymond Ng for the tip off.

Related posts:
1. Invest in Japanese real estate.
2. Added more Croesus Retail Trust.
3. Initiated long position at 87c.

Added more Croesus Retail Trust and reduced Sabana REIT.

I initiated a long position in Croesus Retail Trust earlier this month.

I recently added to this position as I believe that this Trust could do better in the years ahead.

However, I also decided not to increase the size of my investment portfolio as I am close to 75% invested which is not very comfortable for me. So, I had to do some portfolio balancing.

For a while now, I have been thinking of reducing my exposure to industrial properties in Singapore, given the concerns of oversupply.

I have investments in a few industrial properties S-REITs and my two largest are in AIMS AMP Capital Industrial REIT and Sabana REIT.

Of the two, after some thought, I decided to reduce my investment in Sabana REIT because, comparing them, I believe that AIMS AMP Capital Industrial REIT has done a better job of improving value for unit holders in the last two years.

Mr. George Wang regularly buys into AIMS AMP Capital Industrial REIT while in the case of Sabana REIT, the CEO has divested his direct stake completely in recent months. This gives me the impression that the insiders of AIMS AMP Capital Industrial REIT have their interests more aligned with minority unit holders'.



508 Chai Chee Lane

Sabana REIT's recent purchase of a half vacant building in the midst of softening prospects did not inspire much confidence in Mr. Market who has shown his displeasure in the usual way. This compared with AIMS AMP Capital Industrial REIT's development of certain properties to max out plot ratios while securing tenants in advance tells a contrasting story of performance and, perhaps, competence.

Of course, Sabana REIT could still do better in future if they manage to fill up the space left vacant by the non-renewal of 4 master leases as well as the vacant space in the latest property acquired from AMD. I would be very happy if this should happen since I still retain a relatively large position in the REIT, having reduced my investment by about 24% only.

With the partial divestment of Sabana REIT, it means that AIMS AMP Capital Industrial REIT is now my largest investment in S-REITs.

Croesus Retail Trust has become a more significant investment for income in my portfolio but because it is not a REIT, my expected full year income from S-REITs in 2014 will probably see a decline, everything else remaining equal.

Related posts:
1. Croesus Retail Trust: Long position at 87c.
2. Sabana REIT: Initiated long position.

How I earned $9,216 with a mug? (Or $32,000?)

Reader:
I used to buy a Mocha Frap every day at work. About a year ago, after reading your blog, I challenged myself to stop. 

For each day I didn't buy a Mocha Frap, I put aside $10. 





I am pleased to report I have managed to put aside more than $2,000 so far. 

The secret is in your blog. 

I got myself a mug and I will earn more than $32,000 with my mug in 16 years! 





If AK can do it, I can do better!

-----------------------
I was making a cup of hot Milo in the office pantry like I sometimes do and the sight of my mug suddenly gave me a warm fuzzy feeling. 

No, it was not from the hot water or the steam.

Nice? 

Got a bit chipped over the years but still nice.

I bought this not long after I started work. 

I needed a mug to use for my tea breaks.

It must have been 15 or 16 years ago by now. 





How much money have I saved in those years by not buying coffee or tea or Milo from the coffee shop (or from Starbucks) on work days?

Conservatively, $288 x 2 x 16 years? 

$9,216? 

Not bad.





Gives a new flavour to the phrase "old is gold". 

OK, who threw something at me? 

Who? Who?




Related post:
Tea with AK71: Some of my stuff (Part 3).

NeraTel: Added to my long position.

On 22 July 2013, I mentioned that if the 200d MA did not hold, share price could fall to 66c.

The counter closed at 68.5c yesterday.

Could 66c come to pass? Your guess is as good as mine. Remember that TA is about probability, not certainty.

So, I made a smallish addition to my long position.

If price should test 66c support, I will buy more.

Related post:
NeraTel: A voluminous day of fear.

A special chest for emergency funds.

I talked about war chests and I talked about emergency funds before. Now, we might keep the latter in a chest as well but it should be designed differently from a war chest.

The chest we keep our emergency funds in should have double or triple locks compared to a war chest! Since we call it an "emergency fund", then, we must make sure that we only open the chest when there is an emergency.

In the meantime, the money will most probably lie fallow. Well, almost, anyway.

What? Remain in a savings account to make a miserable 0.1% in interest per annum? Why don't I invest it in a REIT and make 7% to 8% per annum? Sure, why not?

Before doing that, please redefine what is an "emergency fund". Maybe, it should be "a fund kept for times of need but it might not be there when needed".

An emergency fund has to be money that is close at hand and it has to have certainty. Certainty in uncertainty doesn't count.

So, where should we park our emergency funds?

The best choice is probably a S$ Fixed Deposit. The Deposit Insurance Scheme we have in Singapore provides us with a peace of mind too. Certainty? Certainly.

Read more about the Deposit Insurance Scheme: here.
The Deposit Insurance Scheme protects depositors in the event a DI Scheme member fails by compensating insured deposits up to a maximum of S$50,000.

Related posts:
1. Why a meaningful emergency fund is important?
2. Emergency fund: How much is enough?

Saizen REIT: A special dividend?

Argyle Street Management, which holds 8.9% of the REIT, said the REIT had 4.86 billion yen (S$61 m) of cash. That figure amounts to 23.5% of the REIT’s market capitalisation as at 29 October 2013. Argyle wants the REIT’s manager, Japan Residential Assets Manager (JRAM), to consider distributing a significant portion of its cash balance to shareholders through a special dividend.
(Source: The Business Times)

Regular readers know that I like Saizen REIT. I got interested in it during the GFC when it was unloved and I have been blogging about it ever since the early days of ASSI. Some might even say that I know the REIT like a friend. Although friends don't give us money regularly, this one does and if Argyle gets its way, I could be getting a bit more.

What do I think of the proposed special dividend?

Well, if it happens, it is a return of capital. Why do I say this? This is not from higher income or earnings. This is to have excess capital returned to unit holders if the REIT's management is unable to find better use for the money.

Actually, for anyone who has been following developments at the REIT, the management had used the money to buy back units from the open market and made a few DPU accretive purchases as well. I like their cautious approach as they don't seem to be buying buildings indiscriminately. Going on a shopping spree would, of course, fatten their pay checks. It is to their credit that they did not do so.

If a capital reduction exercise should happen, Saizen REIT would have less money on hand for any potential DPU accretive purchases. This means that the management would have to use a blend of equity and debt to fund such purchases in future. So, it would be back to square one for unit holders.

However, I should not complain if I am going to be paid money, should I? Better in my bank account than others' or so some would say.

One reason why I am invested in the REIT is because it is grossly undervalued. Depending on the exchange rate we use for the JPY to S$, the REIT was trading at a 20% to 25% discount for much of  2013.

The warrants exercised in the middle of 2012 strengthened the balance sheet of the REIT considerably. The REIT, already undervalued then by some 40%, was made more so because of that.

So, for those who exercised their Saizen REIT warrants back then, they would be taking back some of their own money if a return of capital should happen.

For those who bought into the REIT at a relatively large discount to valuation and who had no warrants to exercise before they expired, they should be grinning broadly as they would be taking some of other people's money with a margin of safety to boot.

Having said this, special dividend or not, Saizen REIT has been a good investment for me and it is likely to get better in the years ahead if Mr. Abe's policies gain traction.

Related posts:
1. Fukushima and investing in Japanese real estate.
2. Saizen REIT: Risk free rate and unit price.
3. 9M 2013 income from S-REITs and more.

Tea with Solace: King Wan Corp. Ltd.

Business Structure

 

King Wan Corporation Limited is a Singapore-based integrated building services Company with principal activities in the provision of mechanical and electrical (M&E) engineering services for the building and construction industry. It also operates in three other business segments, namely Property, Manufacturing and Services.

It operates principally in four business segments:

 

Engineering segment: Provides multi-disciplined M&E engineering services such as the design and installation of electricity distribution systems, fire protection, alarm systems,

communications and security systems, and air-conditioning and mechanical ventilation systems for the building and construction industry;

 

Property segment: Engages in the development, marketing and sale of residential and commercial properties in Singapore, China and Thailand;

 

Services segment: Provides rental and other services for mobile chemical lavatories and other facilities for construction worksites as well as public and nation-wide public events.

 

Vessel owning and chartering segment: Buys suitable vessels for chartering to third

parties.

(Source: King Wan's website.)

 

From M&E Engineering to developing property, providing mobile toilets and even vessel owning, this seems like a Rojak company to me at first glance. However, bearing in mind that a well mixed Rojak can be delicious, I decided to dig further.

 

King Wan's true strength lies in its engineering segments. It has more than 30 years of experience in the building and construction industry and has established a sound and stable foundation. 

 

Within the mechanical & electrical (M&E) space, King Wan is a company that is involved in the fields of electrical, plumbing, air-conditioning and fire protection. Its economies of scale give it a contract-winning cost advantage.

 

Recently, King Wan Corporation won S$26 m worth of new M&E contracts. Total M&E contracts' value stands at S$168.9 million, lasting to 2016. This will keep them busy.  This core segment contributes an estimated S$5 m to S$7 m, which should be sufficient to meet the 1.5 cents of dividends.

 

 

On the property front, King Wan together with TA Corporation, Hock Lian Seng and Far East Distillers Pte Ltd ventured into condo development. They have recently unveiled “The Skywoods” at Dairy Farm Road. Some people believe that Kingwan is late to the party but I believe it is better late than never. I am paying close attention to how this property segment can contribute to their overall performance.

 

In 2013, the company ventured into vessel ownership and chartering business through Gold Hyacinth. The first vessel purchased called “Hai Jin” is a bulk carrier. The vessel has since been chartered to a 3^rd party. This operation should contribute to the group’s results in the new financial year, which I am keeping an eye on to see how it can value add.

 

The rental of mobile toilets contributes about 4% of group's total revenue. It provides a diversified and steady income stream.

 

Perhaps, the biggest reason why the stock jumped this year was the announcement of Share Sale Agreements signed with Kaset Thai Industry Sugar (KTIS). KingWan has agreed to sell to KTIS its entire shareholding in Environment Pulp and Paper Company (EPPCO) and Ekarat Pattana Company Limited (EPC), comprising 5 percent in cash and the rest in listed KTIS shares. Barring unforeseen circumstances, KTIS shares are expected to list on the Stock Exchange of Thailand.

 

This event can unlock shareholder value. In the latest announcement, Kaset Thai Industry Sugar (KTIS) has applied for IPO. The Securities and Exchange Commission (SEC) in Thailand has allowed KTIS to begin marketing its shares. This adds another level of certainty to the anticipated IPO as well as the declaration of the 1.5 c special dividend.

 

 Financials Fundamental

 

Market Cap ~ $103M @ $0.295 per share

EPS ~ $2.35 cents

P/B ~ 1.21

NAV ~ $0.2431

PER ~ 12.55x

Dividend Yield ~ 5% (Based on core 1.5c dividend)

Dividend Distribution ~ Aug/Nov Semi-Annual Distribution

Current Ratio: 1.46

Quick Ratio: 1.43

Gross Debt to Total Equity Ratio: 18.3%

 

Conclusions

 

I like the strong core M&E business. The strong order book can sustain a few years of core 1.5 cents dividends.  I like to be rewarded with dividends while I monitor the company growth. Semi-Annual distribution has been consistent even during the crisis year which is good.

 

With the impending listings of the group’s two Thai associates, EPPCO and EPC, the financial position should be boosted. I will be looking closely whether King Wan can explore new investments that can add value to share holders.

 

Some risks are also on my mind. The risk in property development has increased with more cooling measure introduced. We have yet to see result from Vessel Ownership and Chartering business; profits may get dragged if it does not perform well. Revenue will decrease with a lack of contribution from its Thai associates after sale.

 

I would usually write down the reasons for investing in a company. If the company takes a turn for the worse, I take out the piece of paper and analyse whether the reasons for buying the stock still makes sense.

 

For King Wan, if the competitive edge of the engineering segments gets eroded by competition and if the listing of Kaset Thai Industry Sugar (KTIS) gets into trouble, it will be enough for me to admit I made a mistake. This will be the right reasons for me to sell the stock.

 

Disclaimer: The article is my personal opinion and is not a recommendation to buy or sell. Any increase in popularity of the stock that leads to an increase in share price will benefit Solace in the long run, Haha.

 

Read other guest blogs by Solace: here.

Yongnam: Substantial shareholder increased stake.

Delta Lloyd Asset Management on 31 October 2013 bought 1,231,000 shares.

Price? 24.08c a piece.

They now have a total of 115,089,000 shares or a 9.08% interest.

I first made mention of Delta Lloyd Asset Management in the comments section of my blog in January this year and it seems that they have been a persistent buyer. I have probably missed quite a few instances of buying by them since then.

See my comments on their buying activities as well as their rationale for investing in Yongnam (translated from Dutch to English): here.

Related post:
Yongnam: Profit guidance.

Be rewarded for opening an SRS account!

I have blogged about the benefits of having an SRS account many times before and if you do not yet have an SRS account, you might want to think of starting one.

Click to enlarge.

If you are thinking of starting one before the end of the year to save on income tax payable next year, you might want to consider OCBC's offer.

First 2,000 customers to open a new OCBC SRS account with at least $8,000 will get a $30 Robinsons shopping voucher!

I love a good deal and I love sharing the news too.

Related posts:
1. SRS: A brief analysis.
2. Ways to reduce income tax.
3. Don't see money, won't spend money.

Not an advertorial.

Croesus Retail Trust: Initiated long position at 87c.

I love Japan and with the Japanese Yen so low now, I am planning a trip to the Land of the Rising Sun in December. 

This might have something to do with why I initiated a long position in Croesus Retail Trust. You think so? Nah.

Croesus Retail Trust is a business trust which owns 4 shopping malls in Japan. Its IPO in May priced its units at 93c a piece which meant a slight premium of 3.3% over its NAV of 90c a unit.


Luz Shinsaibashi is a new retail building in Osaka.

The Trust dangled a distribution yield of 8% and investors lapped it up, pushing the unit price to a high of $1.18 on the first day of trading. 

An auspicious number for the Cantonese people perhaps as it sounds like "prosper everyday" but not for those who bought some then. 

Unit price declined over the next 4 months to touch a low of 84.5c on 17 Sep for an almost 29% drop.

Buying at a discount to NAV and getting a relatively high yield is an attractive combination for me. The bug bear is the relatively high gearing level of about 44%. 

Any yield accretive acquisition will probably be funded through a blend of debt and equity. So, for someone who might not have the resources to participate in a rights issue, this is something to bear in mind.

Although trading at a discount to NAV and offering a relatively high distribution yield, there was nothing to prevent unit price from declining further after touching 84.5c on 17 Sep. The good news for unit holders is that it did not.

Indeed, unit price seems to have found a floor with many times tested support at 85.5c. The confluence of the 50d and 20d MAs form the immediate support at 87c. 

With the downtrend broken and unit price moving sideways now, I decided that downside risk has reduced from a technical perspective.

The 180 days lock-up for the sponsor and their strategic partners in the Trust will end sometime this month. Will they sell 50% of their stakes? 

With trading volume so low, it could drive unit price down by quite a few notches if they should do so. Well, I simply don't know.

What I do know is that at 87c per unit, I am buying at a 3.33% discount to NAV and I will receive an estimated 8.5% distribution yield. 

If price action should test the support at 85.5c, I might buy more because there would be a bigger margin of safety then.

Now, I look forward to the Trust's first income distribution which is expected to be paid in March 2014.

Related post:
Invest in Japanese real estate: Croesus Retail Trust.

Have a break!

This is something I have pretty often for my afternoon tea breaks:

Wholemeal bread. So healthy!


So, what's inside? Er... ahem...

So yummy!

To let go or to hold on to a position?

We can either make statements of fact or opinions. They are quite different from one another although sometimes people mix them up. This is just something that happens naturally in daily life.

"Today's temperature is 30 degrees Celcius." This is a statement of fact. It could be either right or wrong.

"This is a nice day." This is an opinion. There is no right or wrong.

How could these be mixed up?

Well, to me, it might be a fact that the weather is nice but to someone else it might not be. We could have a debate until the cows come home on who is right but it would be an exercise in futility because there is simply no right or wrong to this.

Of course, we can make statements of fact or opinions about anything under the Sun, including people.

"This person is 1.7m in height." This is a statement of fact.

"This person is short." This is an opinion.

In the land of the Vikings, 1.7m might be short for a guy but in PNG, 1.7m might be considered tall.

Now, when we start saying things about people, we have to be a bit more careful because it could get sensitive. I know people who are vertically challenged who are very sensitive to being called "short".

So, I try to be careful about what I say about people. I don't want to be hurtful. The best is not to say anything at all. If I have to say something, I try to make sure it is positive. If it is not, I try to be diplomatic.

Sometimes, I might slip up. If the other party should be diplomatic enough to let it go, then, I should be grateful and let it slide. I might even think of how to make it up to the other party in future.

Why force anyone into a corner? When any regular guy with an iota of pride is forced into a corner, what is going to be his natural reaction? Should we be surprised by the answer?

We will very likely save ourselves and others a lot of angst if we are more careful with what we say in the first instance.

Perennial China Retail Trust: Progress in Q3.

In my blog post of 10 August, I mentioned that current DPU is being sustained by earned out deeds which will be exhausted by end 2014. So, we really need to see stronger occupancy and evidence of improved cash flow from operations in the coming quarters.

The latest report shows that the Trust's operations have improved with occupancy in Shengyang Longemont Shopping Mall increasing to 85% and with occupancy in Shenyang Red Star Macalline Furniture Mall at 93%. Shenyang Longemont offices saw occupancy improving from 33% to 41%, quarter on quarter.

Perennial Jihua Mall which opened in August has hit an occupancy of 95% while Perennial Qingyang Mall which is slated for opening in 1Q 2014 saw leasing commitment improving from 67% to 75%.

All in all, it seems that the management have been working hard to secure tenants. However, there is still much to be done. So, I believe that it is still relatively risky investing in PCRT compared to a plain vanilla retail or commercial S-REIT.

Therefore, I would ask to be adequately compensated for the risk that I would be taking on if I were to invest in the Trust.

For now and the next few quarters, the Trust would probably continue to draw on those earned out deeds in order to sustain the income distributions at current level to unit holders.

Will the Trust be able to maintain its current DPU without the earned out deeds from 1Q 2015? It would depend on the progress that they make in the next 15 months. If the Trust keeps up the momentum we see in Q3 and with the opening of a new mall with a relatively high level of leasing commitment in early 2014, it could happen.

Bearing in mind that another mall, Perennial Dongzhan Mall, could open its doors in 1Q 2015, things could further improve if there is, again, a relatively high level of leasing commitment. However, we do not want to count our chicks before they are hatched as the management have just started to market this new mall to prospective tenants.

Assuming that no further improvements are forthcoming which, I believe, is rather unlikely, then, I have estimated in an earlier blog post that DPU could reduce by at least 50% from 1Q 2015.

With an entry price that gives me approximately an 8% yield, a 50% reduction would bring the yield down to 4%. Although this is unlikely to be the case, if it should happen, it is still acceptable to me.

What about anyone who is thinking of buying in at 54c a unit today? Well, that would mean a yield of 7% and a worst case scenario yield, by my reckoning, of 3.5% in 2015.

If distribution yield should decline by 50%, however, it would be optimistic to think that the unit price of the Trust would not decline. This is especially true in an environment of rising risk free rate.

So, before we invest in the Trust, should we not ask ourselves if we are able to stomach what could be the worst case scenario?

Related post:
Perennial China Retail Trust: 1H 2013.

My iPad has died.

Last night, when I tried to switch on my iPad, all I got was a black screen with a faint light glowing from the sides. Reset it and it still didn't work. Charged it overnight and tried it again this morning and it is still dead.

The only thing I have yet to try is to slap it. Maybe, I should slap it (a few times) this evening when I get home. It might be in a deep slumber and hard slaps could be the remedy. You don't think so?

While driving to work, I was thinking of buying a replacement iPad. I am rather partial to the iPad Mini after seeing the one a friend has. The iPad Mini weighs a paltry 308gm. I find that attractive.

Since Apple dropped the price to $408.00 for the old iPad Mini with the new version launched, it is even more attractive to get the old version now. Of course, since I am not in a hurry, I could wait to get a refurbished iPad Mini for only $348.00 direct from Apple Store (and with warranty too)!

My iPad was pre-owned. A friend who was upgrading to the iPad 2 back then gave this to me more than 2 years ago. After using it for a bit, I was so wowed by it that I bought two iPad 2s, one for my mom and one for my niece. Now, we cannot imagine not having an iPad at home.

Rationally, however, I don't think I need an iPad. A friend told me I was under-utilising mine as I use it mostly for games and movies.

An iPad is definitely nice to have but, for me, it is probably not a necessity. Having said this, I suspect that it will still be hard not to have one around because I am so used to watching movies in bed (which is not a good habit, I know). The portability is very attractive.

I was doing quite well with just my PC and notebook before the iPad came into my life more than 2 years ago. Will I suffer withdrawal symptoms from being iPad-less? I guess there is only one way to find out. Wish me luck!

Related posts:
1. Have an iPad?
2. Protect your iPad.
3. I grew up without an iPad.