1Q 2017 passive income from S-REITs.

"What is the interest rate risk of REIT investments? Interest rates only represent a portion of the overall equation."

Time flies. It is time for another quarterly update.

In 1Q 2017, I received income from the following S-REITs:

1. AA REIT

2. First REIT

3. IREIT 

4. CRCT

5. Soilbuild REIT

6. Cache Log Trust

7. K-REIT

8. FCOT

9. Suntec REIT

10. LMIR

11. CIT

12. Sabana REIT

My largest investments in the S-REITs universe are still in AA REIT and First REIT. The others are relatively small investments with IREIT and Soilbuild REIT being slightly larger.

In 1Q 2017, I made the following changes to my S-REITs portfolio:

1. Invested in Frasers L&I Trust (FLT).

2. Invested in CapitaRetail China Trust (CRCT).

See: FLT & CRCT added.

3. Took part in Sabana REIT's rights issue.

See: History with Sabana REIT.

4. Invested in Starhill Global REIT (SGR).

See: Online shopping and SGR.

5. Added to my investment in IREIT.

See: Would AK invest in IREIT?

Everything remaining equal, I don't think I will be making new investments or adding to any investment in the S-REITs space. I am pretty comfortable with what I have now.

So, how much income did I receive in 1Q 2017?

$ 21,477.10

This gives me about $7,159.00 a month which is a big reduction from a year ago.

Of course, what is missing is the income distribution from Saizen REIT.

Full year income, although reduced, from S-REITs should still be quite comfortable due to expected contributions from new investments in FLT, CRCT and SGR as well as a larger investment in IREIT.

I will be sharing the numbers for investments in non-REITs in my next blog.

Related post:
1Q 2016 income from S-REITs.

An opinion of Soilbuild REIT.

This came about because of my comment on Facebook that "There are sponsors who are mainly interested to use their REITs to sell their assets to. REITs are their ATMs."

Reader:
Soilbuild owner also use the REIT to sell property right?

AK:
Must see how it is done. 😉
If sponsor sells property with rental support, usually, it is a sign that the property is overpriced.

Reader:
hmmm
Because I haven't heard many favourable talk about soilbuild owner

AK:
Oh, neither have I 😜
But if we are on the same side, it is OK.
LOL
If he hurts me, he hurts himself. 😉

Reader:
Haha I thinking just buy in those with solid management
at good prices
Less headache

AK:
Now, difficult.
So, I settle for good management at OK prices.
Or OK management at good prices. 😜
OK management at OK prices, I also take a bit.

Reader:
Because what I read so far is similar to OUE, soilbuild owner treat the reit as dumping ground to unlock cash

AK:
Eh... I dun see it leh... They do sell but they dun dump. No financial engineering as compared to OUE or Keppel.
Selling does not equal dumping.

Reader:
Sponsor is weak also

AK:
OK. If you say that, OUE and Keppel are strong sponsors. 😉
I like to see what they do and decide.
Saizen REIT didn't have strong sponsor.

Reader:
(Some concerns with valuations of assets.)

AK:
Book value and market value har?
The best way of looking at whether valuations are realistic is to look at market prices.
When a property like XXXXXX was delisted (together with Soilbuild) many years ago, it was undervalued. Of course, when relisted, they want to list at market value.

Reader:
haha I more conservative just worried owner play punk
if own also carry small position only

AK:
I think Soilbuild towkay has business savvy but not crooked.

Reader:
me KIV until better, I also don't like the heavy exposure to O&G

AK:
I remember the towkay has a 25% stake in the REIT. That is not a small stake.

Note:
Although Soilbuild REIT's business parks are attractive assets to own, it is true that their exposure to the O&G sector is a cause for concern. 

With Technics going bust, I estimated that 10% of their income is affected. I believe that Mr. Market has priced this in. 

If the entire O&G sector goes kaput, I guess that is when we might see Soilbuild REIT being punished by Mr. Market and its unit price could decline another 20%, maybe. This is improbable but possible.

Related post:
AA REIT, Soilbuild REIT and VIT.