Asian Pay Television Trust (APTT): IPO.

Usually, when people ask me about IPOs and if I would take part, I would answer in the negative.

Subscribing to what Warren Buffett thinks about IPOs and that is IPOs of stocks are almost always bad investments, I have not taken part in IPOs in many years. Warren Buffett is of the opinion that IPOs are rarely undervalued offers.

What about the IPO of APTT? Is this an exception?

Well, APTT will be holding TBC which was a business in MIIF's portfolio and we know that TBC was the crown jewel of MIIF's portfolio of businesses. With TBC removed from its portfolio, MIIF saw its unit price tumbled almost 70% yesterday.

At a unit price of 97c, APTT's distribution yield is estimated to be 7.5% in the first year and this is estimated to increase to 8.5% in the second year. With relatively high yields like these waved around, the IPO has attracted a high level of interest from institutional investors.

Indeed, Dow Jones Newswires reported in an article dated 2 May 2013 that 8 cornerstone investors were secured. These are investors who are willing to commit to holding significant stakes which shows their confidence in the Trust.

In a yield hungry world, investors fed up with a low interest rate environment could push up the unit price of APTT when it starts trading on 29 May 2013. Of course, there is no way of telling if this would happen but look at how Croesus Retail Trust saw its unit price rose 23% on its first day of trading recently and we get an idea of just how things could turn out for APTT. Although not really comparable, it suggests that Mr. Market could be quite happy with distribution yield compressing to just 6.5%.

In case you are wondering about gearing (and you should), APTT's gearing is about 40%, while Croesus Retail Trust's gearing is at 47%.

If a distribution yield of 6.5% is what Mr. Market is willing to accept, APTT could trade at $1.12 per unit. If Mr. Market demands a minimum of 7% yield in the first year, we could see APTT trading at $1.03 to $1.04 per unit. If news that the placement tranche was 3 times oversubscribed by institutional investors is reliable, chances are we will see APTT trading higher.

If you are interested in participating in the IPO, take note to do so by 12 noon, 27 May 2013.

Related posts:
1. MIIF: Asian Pay Television Trust (APTT).
2. MIIF: Lower fair value.

Be a real estate owner the easy way (3).

As a follow up to my last blog post which questioned "Am I trying to be the most popular blogger in Singapore", I decided to Google "Singapore Investment Blogs" to see just how popular my blog might be. Curious, you know.

Well, I saw a link with a pretty face on the first page and, in case you are wondering, no, the face was not mine. Anyway, thanks to that link, this blog post was born. Unexpected, really.

The hyperlink says "Wendy Kwek Official Blog" and, apparently, she is a savvy and well known Singaporean property investor. Well known? I should know her but I don't. I should read up about her and I did.

The first line of the third paragraph in the "About me" section gels with me:

"I like to speak with people to engage and inspire them."

I like that although I am more a writer than a speaker.

"My mission is to help average people create extraordinary wealth through property investments."

Now, this sounds powerful. Pretty attractive too, no doubt.

The archives of her blog show that the blog started in August 2012 but I guess Wendy must have been reaching out to people long before that. She runs the "Property Riches Program" and her last blog post dated 9 April 2013 stated that the program saw its 14th batch of graduates and it was a big group, going by the photograph taken of the class!

Personally, I have not attended any program like this before and decided to do a bit more research online to find out more. I found this:

"Learn How To Own Properties With Little Or NO Money Down From Ms Wendy Kwek"

It was part of an ad on a property related website.

OK, this sounds familiar and I think I blogged about this before.
Read: Be a real estate owner the easy way (2).

Is the claim bona fide? Maybe, I don't know. I have not attended the course by Ms. Wendy Kwek before. So, I have nothing definite to say about it other than the fact that the claim sounds too amazing to be true.

Searching the internet to see if there are ways we can own properties with little or no money down, I came across 4 ways:

1. Borrow money to pay the down-payment
2. Co-Invest with other investors
3. Co-Invest with other investors using Central Provident Fund (CPF)
4. Buy overseas property with no money or little money down

Read the full article at Mr. Propwise: 4 ways to buy properties with no money down.

With even previously sceptical people now thinking that there is only one way for property prices to go which is up because of inflation, it is perhaps no wonder that Ms. Wendy Kwek et. al. are highly sought after by investors.

I took the following from the Facebook of Drizzt, the blogmaster of "Investment Moats":

"A condominium in a good location in Singapore can cost at least a million dollars and with the buyer having to fork out some 30% of the total purchase price, the upfront deposit can be a minimum of $300,000 excluding other miscellaneous charges. $300,000 is a figure that can take quite some time for a person on the street to save up to...

"But with property clubs, with a group of common-minded investors, together pooling a sum of monies for property purchases, the sum of monies an investor needs to fork out will be reduced. Take for example, the same $1 million property, with 20 investors, each investor would just need to fork out $50,000. Should the property price ascend to say $3 million, the $2 million profits would be shared among the 20 investors, this will translate to a profit of $100,000 for each investor! To maximise profits, some of these property clubs will ... purchase overseas properties with prices depressed due to the economic cycle."

 

When I commented that people should consider the possible downside, Drizzt said: "Think there is no downside with inflation the name of the game" which, in his opinion, is what the general public is thinking.

 

If you have owned properties with little or no money down before, perhaps, you could share with us your experience here. I am interested in hearing your experience and I am sure other readers would be interested too especially if we could own an investment property (or a few) with no money down in Singapore.

Related posts:
1. Leverage up and buy investment properties now?
2. Selling a private property just got harder.
3. More cooling measures on the way?
4. Buying a piece of real estate within your means.
5. Rich Dad, Poor Dad: 2 are better than 1.