Sizing my investment in SPH.

When I tell people I am a blogger, some assume that I am IT savvy. 

People who say that are probably not very IT savvy. We only need to know how to use a word processor to blog.

My generation and those who are older would remember that in between typewriters and PCs, we had word processors. Their time on Earth was pretty short, however.

I am really a dinosaur. 

If I were to look for a job today, with my qualifications and skills, I would probably have a hard time getting a job that pays more than $3,000 a month.




From being economically inactive to being unemployed? I shudder at the thought.

I still like hard copies of newspapers, magazines and books. I tried using an e-book reader which someone gave me many years ago. I didn't like it.

I should have sold it when it was still worth $500 but it was a gift. Now, it is just another item collecting dust at home but I can be rather sentimental.

Being sentimental can be a terrible thing for an investor, of course, as we constantly tell ourselves not to fall in love with our investments. Well, I can only try my best as I am only human.

I am lucky that I am also pragmatic. I like to think that being pragmatic helps to temper any sentimentality in me. 




When I spoke with somebody who bought SPH shares recently, I said that I wouldn't buy SPH shares today. It happened so quickly that I surprised myself a little bit.

I have always suspected that there is more than one AK inside me. Spooky!

I have been an SPH shareholder for many years and doing a back of the envelope calculation tells me that, taking in the dividends collected over the years, my earlier investment in SPH is almost free of cost.

However, dividends collected for my later investment in SPH probably managed to do only a bit more than cover the decline in its share price over the same number of years.

Like it or not, media remains the core business of SPH and that business is very much disrupted. 





On hindsight, SPH should have ventured more aggressively into real estate but they didn't. 

I remember Dr. Tony Tan mentioned that selling their land in River Valley was a mistake many years ago. He was right.

Now, we see disruption technology everywhere and our investments could get disrupted one way or another. 

Being rather old fashion could be a problem for an investor like me as I am not always in touch with the changes in technology nor fully aware of the implications of such changes on the ground.




Having said this, until I could find replacement investments for income, I was quite willing to hold on to my investment in SPH. It is still an entity which has a relatively strong balance sheet and is still generating an income for me.

Recently, as things turned out, I added several income producing stocks to my portfolio and I decided to let go of my later investment in SPH.

This effectively reduced one of my larger non-REIT investments by half, boosting my cash level which would allow me to take bigger positions in other income generating investments.




I am retaining my earlier investment in SPH as it is almost free of cost and I still hope to benefit from possibly the sale of Seletar Mall to SPH REIT at a later date.
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Added 18 July 2017:

A journey through time with SPH.



Related post:
Fate of my investment in SPH.

My ARA Asset Management fixed deposit adventure.

When I shared my full year results end of last year, I mentioned ARA Asset Management's offer of $1.78 a share and how it translates to 35% to 78% capital gains for me if the offer is to be accepted.

At the time, I had a fixed deposit maturing and ARA Asset Management's share price was at $1.71. So, I decided to plonk the money from the fixed deposit into their stock. 

It looked like it would be a sure win, an arbitrage opportunity, and I would get a 4% "interest rate" so to speak within half a year or so.

At the time, I knew some shareholders thought $1.78 was too low a price and I knew there was a possibility that the offer would not be accepted. No issues, I thought. I could keep the investment and receive 5c dividend year after year which would give me a yield of around 3%. 

However, at the back of my mind, there was a very small voice which asked if I really want a much larger position in ARA Asset Management and with a yield of only 3% to boot in case the offer is rejected by shareholders?

That voice did not go away

Today, I decided to accept a yield of about 2.6% from Mr. Market. After costs, it would be a bit lesser. I closed my "ARA fixed deposit" and received what is very good "interest income" for a 2 months fixed deposit.

I thought of this position as a "fixed deposit". So, like a fixed deposit it should behave.

I still retain my original investment in ARA Asset Management. What I divested was my more recent "investment".

Related post:
2016 FY passive income non-REITs (Part 2).

AIMS AMP Capital Industrial REIT and free money for AK (3Q FY2017).

Many years ago when I decided to reduce my investment in industrial S-REITs, I was faced with the choice of reducing my stake in either Sabana REIT or AIMS AMP Capital Industrial REIT as both were the largest investments in my S-REITs portfolio. 

Yes, they were both about the same size.  

I decided that AIMS AMP Capital Industrial REIT was better run. 

So, Sabana REIT was given the boot.





Today, AIMS AMP Capital Industrial REIT is my largest investment in the S-REITs universe and a rough back of the envelope calculation tells me that with all the distributions collected over the years, my investment in the REIT is going to be free of cost very soon. 

Free? 

Yes, free!

This is massive for me not only because I like free things but because it is such a massive investment in my portfolio.





If an investment is 2% of our portfolio and it has become free of cost (like Sabana REIT is for me), ho hum. 

If an investment is 20% of our portfolio and it is going to become free of cost soon, it isn't ho hum x 10, is it? 

It is like my position in Sabana REIT x 10 being free of cost. 

OK, somehow, using Sabana REIT as an example doesn't seem very appealing but I am sure you get the idea.





Although doing well now, AIMS AMP Capital Industrial REIT is facing headwinds and things might get tougher in the next year or two but it has a competent manager that is focused on improving value for stakeholders. 

That is very comforting.

On hindsight, I am glad I decided to get on board with Mr. George Wang so many years ago and I look forward to receiving soon to be free money every quarter for many more years to come.

·         DPU of 2.77 cents per unit for the quarter (increase of 0.7 per cent from last quarter);

·         Increased gross revenue and net property income for 3Q FY2017 by 1.5 per cent and 2.7 per cent respectively q-o-q;

·         Executed 19 new and renewal leases in 3Q FY2017, representing 82,149.3 sqm (13.1 per cent of net lettable area);

·         Portfolio occupancy of 94.0 per cent, above the industrial average of 89.5 per cent;

·         Achieved TOP of third redevelopment property at 30 Tuas West Road on 27 December 2016, on time and below budget, delivering better financial returns than previously announced. Partial income contribution from the property will commence in March 2017 quarter, with full quarter income contribution in 1Q FY2018;

·         Increased Net Asset Value per Unit to S$1.48 from S$1.47 in the preceding quarter mainly due to recognition of the development profit of 30 Tuas West Road.

·         84.0 per cent of the portfolio’s interest rate is fixed taking into account interest rate swap contracts and fixed rate notes with weighted average debt maturity of 2.1 years;

·         Reduced overall blended funding cost (including funding of the Australian asset with Australian dollar loan) of 3.7 per cent from 4.2 per cent a year ago;

·         Aggregate leverage as at 31 December 2016 is at 34.6 per cent.

Related posts:
1. AA REIT: A private tour.
2. My history with Sabana REIT.