First REIT: Bought more at 73c.

On 26 March, I mentioned that "In a change of plan, I would increase exposure to this REIT on any weakness and this would be at 73c (100dMA), 72c (lower Bollinger) and 71.5c (the recent low of 17 Mar)." Today, I bought more units of First REIT at 73c a piece. With an expected DPU of 6.4c for 2011, this latest purchase would have a distribution yield of about 8.77%.

Today's selling down was somewhat aggressive as volume was very high, the highest since 14 Feb 2011. A long black candle was also formed. The lower shadow on the black candle suggests that there is support for this REIT. I also like how the MACD has been slowly rising even as price touched a recent low of 71.5c.

The REIT's price action looks rangebound and if we believe that there is no trend, we should pay attention to the Stochastics which suggests that the REIT is correcting from an almost overbought position. So, more weakness to be expected? Possibly and I am waiting to accumulate on any further weakness.

Related post:
First REIT: Accumulate on weakness.

Sabana REIT: Initiated long position.

Initiated a long position in Sabana REIT at 93c and 92.5c today. 93c was, of course, a hedge, while 92.5c was the price I have been waiting for since late last year shortly after the REIT's IPO.

The IPO price was at $1.05/unit. So, getting in at the prices that I did today represents a discount of more than 11% from the IPO price. The NAV per unit is 99c and my entry prices today represent a discount of more than 6% to NAV. With an estimated DPU of 8.63c for 2011, my investment today will enjoy a distribution yield of about 9.3%. With a gearing level of 26.5%, I believe this REIT is a fairly safe investment in the next couple of years.

Technically, the REIT looks rather weak and is suffering from some heavy selling which saw its price touch a low of 92c today. A single sell order at 9.42AM accounted for 1,215 lots sold down at 92.1c per unit. It seems that someone is selling down the REIT and we see 100 lots being sold down regularly throughout the day at 93c per unit. Volume was really heavy. More downside seems likely.

What's next? Fundamentally, any further price weakness would make this REIT even more attractive to me. However, I am not in a hurry to accumulate. After all, I have gotten my foot in the door today. I will now monitor the technicals until there are more favourable signs to add to my initial long position. 91c next? Possibly. Keep an eye on the MACD and see if a higher low forms as price forms a lower low. We are on the lookout for a potential positive divergence.

After all, given the fact that Sabana REIT should be announcing its first income distribution soon, could we not see a reversal of its downtrend in the near future? The REIT, as per its prospectus, "will make distributions to Unitholders on a quarterly basis, with the amount calculated as at 31 March, 30 June, 30 September and 31 December each year for the three-month period ending on each of the said dates."

Good luck, mon ami.


Related post:
Sabana REIT: Being stubborn?