Why First REIT and why worry?

I get asked from time to time why I invest in First REIT and not Parkway Life REIT?

Actually, more accurately, people should ask why did I invest in First REIT and not Parkway Life REIT?

Yes, asking when a decision was made matters.






When I was deciding between First REIT and Parkway Life REIT, the choice was a much simpler one.

First REIT was trading at a big discount to NAV and its distribution yield was much higher compared to Parkway Life REIT.

Money should go to where it is treated best, I told myself then.






So, if you guess my entry prices were very low, you are right.

Actually, no need to guess because I have blogged about this before.

As First REIT's unit price has been declining, many readers have asked me if it is a good time to buy more.

My response was rather predictable.






"I don't know if it is a good time to buy more for you.

"I only know it is not a good time to buy more for me.

"Have a plan, your own plan."

It does not fit into my plan to buy more First REIT but I am more than happy to hold on to what I have.








Even if First REIT should see a 20% decline in unit price or even a 30% in unit price today, it would still be higher than my entry prices.

However, for someone who decides to invest in First REIT today, surely, he would not feel indifferent if such big declines in the REIT's unit price should happen.

A big decline in unit price could happen if First REIT's largest tenant, LPKR, which is feeling the strain of a falling Rupiah, should default on rental payment

For sure, I do not know if this is going to happen.




I do know that investing in First REIT, more than ever, investors have to be ready for rights issues with a new pipeline of assets in Japan, China and Malaysia from OUE Lippo Healthcare which is taking over the management of the REIT.

If we believe that First REIT's income stream is in peril and if we do not like the idea of a big rights issue, then, we should not be investing in First REIT.

Why worry?





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