First REIT: Revelation. (Part 2- DPU increased 16.4%).

Now, many readers are curious to know how much have I invested in REITs but I have always been reserved for good reasons, as you can imagine. That has not stopped some readers from becoming more creative in their questions.

A reader lately suggested that I could reveal details for a small portion of my portfolio which might not cause too much personal discomfort and I think this is acceptable. 

Personally, I think it will also serve another purpose which is to show that I do not have as much invested in REITs as some might think.

So, let us start with when was the last time I did something to my investment in First REIT. It might come as a surprise but I haven't done anything to my investment in First REIT in a long time. 

The last time I bought more was in March 2011 at 73c a unit. It has been pretty much a buy and hold strategy for me although I did trade around my investment from time to time.

I have never bothered to really keep track of exact numbers but a back of the envelope calculation shows that I received more than $15,000.00 in income from First REIT in the last 12 months. I estimate the distribution yield to be about 10% on cost. 

At the moment, although it is not as important a consideration to me, there is also a paper gain of more than 70%.

So, you might agree that this has been a pretty good investment for income for me.

Some might wonder why I invest for income? 

Well, a big purpose of investing for income is so that our investments could help to pay for some of our expenses in life. 

Of course, the ideal situation is for them to pay for all our expenses in life.

For example, the largest expense item in my life really is my car and the income I receive from First REIT more or less pays for this including the car's depreciation which is more than $500 a month.

So, imagine if I did not put my money to work by investing in First REIT or some other investments which generate income, that money would probably have sat in my bank account collecting 0.125% per annum in interest in the last few years. 

Utterly miserable and the interest payments would probably not even be enough to pay for transportation by bus and the MRT for a year!

It is, therefore, not surprising that I still feel my investment in First REIT is for keeps although some might say that I should sell to lock in capital gains. Well, maybe if future conditions suggest that it could be a good idea to do so. 

For now, I will just sit back and relax.

Related posts:

1. First REIT: DPU increased 16.4% (Part 1).
2. First REIT: This one is for keeps.
3. The mystical art of wealth accumulation.
4. Secrets of millionaire investors.
5. Little Book of Value Investing.
(Patience is sometimes the hardest part...)

First REIT: DPU increased 16.4% (Part 1).

First REIT declared a DPU of 0.86c. This is for the period of 22 May to 30 June 2013. This will be paid on 29 August 2013.

Including 0.99c paid for the period of 1 April to 21 May 2013, the total DPU for the quarter is 1.85c.

Gearing ratio: 33.4%

No debt will be due until 2016 once a fixed rate loan is finalised next month.

NAV/unit: 89.65c

Unit holders have to be prepared for more private placements as the REIT's managers have stated their intention to keep gearing at 30% even as they embark on future acquisitions and AEIs.

With unit price way above the NAV/unit, it is less expensive for the REIT to raise funds through issuing more equity now. As long as they are able to grow DPU in spite of a larger number of units in issue, I don't have a big issue (pardon the pun).

Like what the management has stated, despite a larger number of units in issue, DPU has grown 16.4% year on year. This means that without me having to invest more money, I am getting significantly more income from my investment in First REIT now.

Therefore, it would not be wrong to say that my investment in the REIT has been quietly growing a passive income stream for me without additional cost to me. 

This makes me happy.

See presentation slides: here.