Accordia Golf Trust: A DPU of 2.32c and still a buy?

I was wondering how badly Accordia Golf Trust's revenue could have been affected by the inclement weather in Japan in recent months. That was really what was holding me back from increasing my exposure to the business trust significantly even as its unit price hovered near its historic low.

In its latest results, it was revealed that performance in 2Q was disappointing. This translated into a DPU of only 0.74c for 2Q. For the 1H, total income available for distribution translated into a DPU of 2.59c.

Personally, I was hoping for a 1H DPU of 2.9c or even 2.95c which would have been possible if DPU for 2Q came in at 1.1c. Investing in golf courses for income, I guess the weather is something I must learn to take into consideration.

Accordia Golf Trust also decided to hold back 10% of the income available for distribution which means that DPU is only 2.32c for the period from 1 April to 30 September. 

So, what is the distribution yield?

I believe that it would be a mistake to annualise the DPU of 2.32c because it would be assuming that the weather would continue to be horrible in Japan for the next six months. 

However, if we like to think of it as a worst case scenario, yes, why not? 4.64c. This, of course, assumes that the management continues to distribute only 90% of distributable income.

At 62c a unit, we are looking at a distribution yield of 7.48%. This, I believe is pretty decent and higher than the 7% distribution yield dangled at Accordia Golf Trust's IPO which was, of course, at 97c a unit (which I thought was pretty much rubbish).

So, the question which I foresee many asking is whether Accordia Golf Trust is still a good investment for income? Well, I think it still is.

I do not believe that Accordia Golf Trust could turn in results which are much worse for the next six months but, of course, one can never be too sure when it comes to the weather. Anyway, chances are that things would improve unless Accordia Golf Trust has really bad luck. It is a matter of probability, really.

Accordia Golf Trust's current gearing level is 28.8% and its stock is trading at a 30% discount to NAV. 

About three quarters of the land the golf courses are sitting on are owned by the business trust. The rest of the land are leased from individuals, corporations or the government.

It is apparent to me that Accordia Golf Trust has ample debt headroom. As the business trust has a pipeline of assets to acquire from its sponsor, with the interest rate in Japan so low, I think it is a matter of time before the business trust makes its acquisitions. Fully debt funded, such acquisitions are likely to be DPU accretive.

If Mr. Market should feel depressed about Accordia Golf Trust's results, I certainly hope that he would show his displeasure in the usual manner which would allow me to accumulate at lower prices.

Related post:
Accordia Golf Trust: A distribution yield of 12.16%?

Is it too late to plan for retirement at age 57?

This is in reply to a reader's comment: here.

Hi hosea,

Welcome to my blog. :)

I am not allowed to give advice to individuals and I don't. ;)

However, if I were 57, I must recognise that I cannot be too adventurous with my money. I need to be more conservative.

Being more conservative, the returns might be lower but there is less chance of a massive or total loss of capital which a senior can ill afford. 




I want to consider investment grade bonds which includes Singapore Savings Bonds and also possibly maxing out my CPF-RA to benefit from a risk free 4% to 6% per annum return. This will provide a guaranteed monthly income in future.

Of course, I would have to make sure that my lifestyle is adjusted according to how much I expect to have coming in at retirement. 

It is not just how much we have coming in that is important. It is also how much is the outflow.

Now, at 57, if I think there is going to be a mismatch in what I need and what I would have coming in, then, postponing retirement to a later age beyond 62, which is only 5 years away from now, might have to be considered. This will also allow my CPF savings to continue growing.




What about investments? 

Well, I could consider blue chips which are less volatile and which have a good dividend paying history. 

I might want to consider ST Engineering, SATS and VICOM, for examples. 

I might have a few REITs which are more conservatively geared in my portfolio but I wouldn't want them to be a major part of my portfolio because I might not have the resources to take part in rights issues if they should happen.




If I have a HDB flat, there are many ways to monetise my flat. I could sell some of the remaining lease to HDB or I could rent out a spare room or two. I could choose to downsize too.

Finally, I remember that I have some savings in my SRS account which I can start drawing from at age 62 over a 10 years period. As long as I must pay income tax, I want to consider continuing to make contributions to my SRS account to pay less in tax.

I don't think it is too late to plan for retirement at age 57 but we have to be realistic with the options which are available. 

Related posts:
1. NDR 2014: Retirement adequacy.
2. Tea with Matthew Seah: Lifelong income with SRS.
3. CPF Life Payout estimator.