LMIR: More benefits from acquiring 4 malls?

Since its rights issue last year in December, expectation was for LMIR to acquire more shopping malls to improve its DPU which has been rather disappointing, being much lower, post rights issue, than initially expected. With my investment in LMIR some 200% bigger than it was, pre rights issue, I am naturally concerned with its underperformance.

Finally, an announcement to acquire 4 malls at a discount to their respective valuations. The 4 malls are:

1. Palembang Square for S$ 74.8m
(19.9% discount to valuation)

2. Palembang Square Extension for S$ 29.8m
(4.5% discount to valuation)

3. Tamini Square for S$ 30.1m
(23.4% discount to valuation)

4. Kramat Jadi Indah Plaza for S$70.8m
(2.2% discount to valuation)

The acquisitions will be funded fully by debt. Weighted average interest rate: 5.079% per annum. See note at the end of this blog post.

One question now on unit holders' minds is probably how much more are we going to get in DPU, post acquisitions. After all, we are investing for income.

1Q 2012, we received a DPU of 0.69c.
2Q 2012, we received a DPU of 0.79c.

Both distributions were lower than the estimation of 0.815c per quarter, post rights. They were definitely lower than the DPU of approximately 1c per quarter, pre rights.

So, will DPU improve after these latest acquisitions?

Net Property Income (NPI) yields for the 4 properties are: 4.41%, 1.00%, 8.637% and 7.2%. Collectively, the NPI yield of these 4 acquisitions is less than 6.00%.

If I remember correctly, LMIR's portfolio's NPI yield is about 7.5%.  So, these acquisitions are not NPI yield accretive. They are, in fact, regressive.

However, the management of LMIR is going to get a performance fee because in terms of absolute NPI, there will be additional NPI after the acquisitions. Fee? Some 613,158 new units in LMIR will be issued for this purpose. This fee is payable even though the pro forma numbers show that the distributable income will suffer a decline, post acquisitions.

Of the 4 malls being acquired, 2 malls have occupancy rates of under 90%. If the management is able to boost occupancy to above 90% over time, it could make a marginal improvement to the pro forma numbers. It wouldn't be anything to shout about.

It should, therefore, come as no surprise that in the five benefits of the acquisitions listed by the management, none refers to any improvement in income distribution which, probably, matters most to ordinary unit holders like me investing for income.

See announcement: here.

Note: The Manager proposes to finance the Acquisitions from the proceeds raised from the issuance of the S$200,000,000 4.88% Notes due 2015 and S$50,000,000 5.875% Notes due 2017.

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Tea with AK71: Vandals and selfish cyclists.

A few days ago, I was taking an evening walk after dinner and took these photos at an underpass:

Cyclists, get off your bicycles.

Vandals trying to be smart.

Shortly after, a motorised bicyle and three regular bicyles went by me. None of the cyclists got off their bikes as they went through the underpass. These people were being selfish and irresponsible.

The relevant authorities should do more than just put up signs (which are vandalised anyway).

Taken in one of the many public parks in Singapore on a pedestrian walkway. How many cyclists heed the advice?

This world would be a much better place if people all behave more responsibly and show more consideration for others. Is it too much to ask for? I wonder.

Related posts:
1. A moving bathtub and fridge.
2. McDonald's shows us how.

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Seven of my money habits.

This blog post is mainly inspired by a conversation with my mother on some of my habits. 

Recalling a popular book titled "Seven habits of highly effective people", I came up with "Seven money habits of AK's". ;p





Habit No. 1:
I never order canned or bottled drinks when dining out. 

Fresh food needs on site preparation but I can walk to a nearby supermarket to buy the same canned or bottled drink for a much lower price. 

Some might say it is convenient that we buy drinks from the eateries but the premium paid for this convenience is way too high. 

A can of Jia Jia herbal tea costs $0.60 in NTUC Fairprice but could cost $1.50 at a kopitiam! 

A can of Coke could cost $0.55 in NTUC Fairprice but could cost $4.00 (before taxes) in a restaurant!






Habit No. 2:
I always check my bills.

Huh? Can we really save money this way? 

You bet. 

I have lost count of the number of times I have been overcharged by pharmacies, supermarkets and restaurants. 

Very often, the larger bills are the ones we have to be more careful with as overcharging even a few dollars could be hard to spot. 

It is because of this habit that I have avoided being overcharged for many years now. 

Oh, check the receipt just outside the shop, not after getting home!






Habit No. 3
I always compare products on offer between shops.

For the same product, two shops which are side by side could have very different prices. 

Guardian and Watsons are very often found in close proximity to one another. 

Many times, I saved quite a bit of money comparing their prices before deciding who to buy from.






Habit No. 4
I never take for granted that buying more is definitely buying cheaper.

Many times, I stopped friends and family from buying bulk packed products as they actually cost more than buying loose! Huh? 

Of course, they cost more since we are buying more, you might say. 

No, no, that is not what I mean. 

I mean we should check to see how much is the per unit price in bulk packed offers. 

Don't assume that bulk packed products are always cheaper.






Habit No. 5
I always try to get discounts off my bills.

I always get a discount off my bills at Kopitiam and Food Junction. 

Yes, go get the discount cards if you have not done so. 

If I should be in an unfamiliar establishment, I would ask the service staff if they had discount agreements with credit card companies.

Habit No. 6
I never pay in cash.

Well, unless that is the only mode of payment acceptable. 

Often, I see people before me in a queue choosing to pay in cash. 

Some transactions were rather high in value too. 

Imagine the number of reward points they could have accumulated if they had used a credit card, if they had one, or the amount of cash they could have received in rebates!





Habit No. 7
I bring my own food to work.

I always bring some food prepared at home to work and I save quite a bit of money this way. 

Anyway, I enjoy oatmeal regularly and I don't think they sell oatmeal in the coffee shops or food courts.

If we work to increase our income and reduce our expenses, our financial health will improve over time. 






As the saying goes, it is easier to spend money than to make money.

So, if we just put in a little effort, we could be saving some money as we spend money. 

Sounds good, doesn't it?

When I was in primary school, the POSB bank squirrel came to us and taught us how by saving just a little every time, we could have a meaningful sum of money stashed away over time. :)

Related posts:
1. Save money with low prices and free shipping globally.
2. Money management: Needs and wants.
3. Queue for $1 parking fee redemption.
4. A common piece of advice on saving.
5. Inflation hits fried bee hoon.

Tea with AK71: Parting with an old friend.

Would you consider 15 years a relatively long time to be in a relationship? Personally, I think it is. It is longer than the duration of many marriages I know of.

After 15 years, I am finally parting ways with an old friend which has been showing visible signs of ageing. Beginning to fall apart, it still stayed by me, faithfully serving me while I reluctantly looked for a replacement in the past couple of months.

I must admit that it is really hard to find a fitting replacement as the candidates were either too big, too small, too complicated, too sexy, too fake, too simple or just didn't feel right. Finally, I found one that is just about right.

What am I talking about? My wallet, of course.

My old wallet was from Heritage, a company in West Germany. Yes, it was bought during a time when Germany was divided into East and West. I think it cost me a bit more than S$100.00 back then. I bought it when I got my very first pay cheque.



Visible signs of wear and tear as the stitching in the fold unravels.

The replacement wallet is apparently quite branded or so I was told by friends. Braun Buffel is a company in Germany (not West Germany) and this wallet costs me $109.00, after a discount. 

15 years on, it is still roughly the same price to get a good quality German leather wallet. No inflation! A miracle!

Even though it is very similar to my old wallet in design, I feel that my old wallet is still better. I guess I just need time to get used to the new one.

Related post:
Some of my stuff (Part 2)