Soilbuild Business Space REIT (Soilbuild REIT).

This REIT's full name is a mouthful. Reminds me of Sabana REIT and AA REITs' full names. Maybe, based on that, I should be interested in it.

Soilbuild gave a range of unit prices from S$0.77 to S$0.80 and had to settle for $0.78. This gives me the impression that Mr. Market might not be too keen on the IPO.

"Soilbuild Business Space REIT (Soilbuild REIT), which owns two business parks and five industrial properties, is offering 586.5 million units. The placement tranche comprises 524 million units and the public offer 62.5 million units.

"At S$0.78, the REIT offers a dividend yield of 7.7 per cent based on projections for fiscal 2014.
Soilbuild and founder Lim Chap Huat will hold an interest of about 27 per cent in the REIT post-IPO, the company said.

"The IPO closes on Aug 14, with listing scheduled for Aug 16." (Source: TODAY online)

At $0.78 a unit, it is at a slight discount to NAV of $0.80 a unit and gearing is approximately 30%. The weighted average lease of its portfolio of properties is 50.5 years.

While seasoned investors in REITs might say that it is possible to get a higher distribution yield from Sabana REIT, with Soilbuild REIT, we wouldn't have to worry about expiring tenancies until much later. Also, Sabana REIT's gearing is closer to 40% than 30%.

Of course, the longer weighted average lease of its properties might make Soilbuild REIT a preferred choice for investors worried about land lease renewals.

Is this a buy? Well, investors for income should be attracted to this IPO. I do not see any red flags in the numbers. However, given the current cautious mood towards REITs, if we are expecting big capital gains, we could be disappointed.

Could it not do a 10% price appreciation on its debut like SPH REIT did? Although that would send its distribution yield for 2014 to under 7%, it could happen. Who knows? Frankly, if that should happen, AIMS AMP Capital Industrial REIT, with its redevelopment plans and AEIs, would look more attractive then.

So, I do not see how Soilbuild REIT is significantly more attractive than other industrial S-REITs for Mr. Market to pay much more for it. I feel that the IPO is pricing Soilbuild REIT at a fair price.

STE's story: The Millionaire Next Door.

Thanks to a reader, Sun, who reminded me of the fact that STE is a "millionaire next door", I remember that there is a very good book that shows us how common people can become millionaires.







Generally, there are two types of people:

1. "Under-accumulators of wealth (UAWs)": This type of people spend everything they earn as soon as they get it.

2. "Prodigious accumulators of wealth (PAWs)": This type of people are frugal. They save and invest. They become millionaires.





People sometimes think that high income earners are wealthy people. This might not be true. In fact, in the book, it is revealed that most high income earners are not wealthy. They make a lot of money but they don't keep much of it.

To become wealthy, we have to own income generating assets which will appreciate in value over time.

STE's story shows us, once again, how common people can become millionaires. He has done it and so can you! (You must be tired of hearing "If AK71 can do it, so can you!". So this is a change.)






I have found some bargains for anyone who doesn't mind pre-owned books:


Paperback:
15 copies in Very Good condition at US$ 6.48 each.



Hardcover:
US$8.98 each.



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Related posts:
1. STE's story: Personal finance.
2. STE's story: Investment strategy.