Sex for grades case: Guilty!

On so many occasions, I was simply amazed by how shameless some people are. Take the instance of Tey Tsun Hang, the disgraced NUS law professor. To any reasonable person, what Tey did was quite obviously wrong but instead of showing some shame and admitting his guilt, he insisted that he was innocent which resulted in a trial spanning 5 months.

For someone who knows the law but chose to break it, there can be no leniency. He should be given the maximum sentence of five years in jail and the maximum fine of S$100,000 on each charge, especially when he has shown no remorse.

Read: Sex for grades case.

SPH: A REIT investment.

It was almost a year ago when I mentioned in a blog post that investing in SPH could be better than investing in a retail S-REIT. Then, in March this year, news that SPH could establish a REIT sent its share price rocketing. Yesterday, more details were released and we could see a SPH sponsored REIT by July 2013.

From what is available in the news, SPH will hold 70% of the REIT. This is good news for the future REIT unit holders because a sponsor with a big share of units is more likely to have its interests aligned with those of smaller unit holders.

So, how will SPH shareholders benefit from this? The most obvious benefit is a special dividend of 18c per share, post IPO. A longer lasting benefit is ownership of an SPH with an even stronger balance sheet with NAV increasing and net gearing reducing, both significantly.

In terms of income, post IPO, SPH will receive a 70% share of income distributions from the proposed REIT and will also collect a fee as the manager of the REIT.

For me, as a shareholder, apart from doing nothing and collecting dividends which is pretty much what I have been doing for so many years, I will also look at possibly making an application at the IPO of the REIT.

I like the assets (i.e. Paragon and Clementi Mall). I like the sponsor. I like how the sponsor will retain a 70% stake in the REIT. Next, I will need to know the estimated distribution yield and gearing. If they compare favourably to established retail S-REITs, then, I will be making a beeline for the nearest ATM.

The last I checked, the distribution yield of established retail S-REITs ranges from 4.5% for CMT to 5.2% for FraserCT. Gearing ranges from 30.5% for Starhill Global to 40.9% for Mapletree Commercial.

So, if SPH REIT were to offer a distribution yield closer to 6% and with a gearing closer to 30%, Mr. Market should respond more favourably.

It seems that boring SPH has become a more exciting investment.

Related post:
SPH: Better investment than retail S-REITs.