Monday, March 18, 2019

Starhill Reit - New Master Tenancy Agreements & Asset Enhancement Initiatives For Starhill Gallery

Starhill Reit announces two news today which I have earlier anticipated after management hinted at the need for an AEI on their Malaysia properties.

The first is the renewal of the Master Tenancy Agreements for both the Malaysian properties - Starhill Gallery and Lot 10 Property.

The 2 properties were acquired in 2010 and were leased for 9 years to master tenant, Katagreen Development Sdn Bhd, an indirect wholly-owned subsidiary of YTL Corporation Berhad, which is the sponsor for Starhill Reit.

The tenancy agreement expire is in 2019 this year.

The new master tenancy agreement includes a long tenures of 19.5 years for the Starhill Gallery and 9 years for the Lot 10 Property, with a rental step-ups every 3 years from the 4th year till lease expiry.

This represents an annual weighted average increase of about 1.5% per annum if we spread it across.

The new WALE will improve from 5.7 years and 4.2 years respectively to 9.8 years and 6.4 years.

This will provide the much needed stability over the next course of years to come.

The above agreement is contingent upon the Asset Enhancement Initiatives (AEI) works required to be done on their Starhill Gallery, which includes conversion of integrated development on their retail and hotel concept of the upper three floors to develop it into hotel rooms.

The AEI works will take approximately 2 years to complete at an approximate costs of RM 175m (SGD 58m) and will be borne by Starhill Reit.

This is not a very big amount spread across the 2 years and Starhill is funding this via debt, which will increase their gearing post AEI works from 35.5% to 36.7%.

I was initially worried about the loss of income during the AEI but turns out the management will bear the disruption during this period via a rental income support and partial payment in management units.

The rent rebates will be given 6 months per year during the AEI period to mitigate the disruption, which works out to be around RM 26m per annum. Management has cited that rent rebates will continue to be given should there be delay in AEI works beyond the 2 years.

Pro-forma pre and post AEI works DPU, including taking the new master agreement is expected to remain at 4.55 cents, so the IRR looks to be offsetting one another with the lease agreement.

Overall, what investors get is a slightly higher gearing, a newer asset building and renovation and a longer lease expiry profile. 

I was initially expecting a better IRR return with a slightly lesser WALE but in all I think it works out better in our favor for longer term investors.

At the current share price of 70 cents, this works out to be 6.5% yield.

Thanks for reading.

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Mini-Retirement [Series 2]: How My Friends / Colleagues / Families React To My Decision To Take A Break

Apologies for some of the late replies for those who messaged me last week as I just got back from our family holiday trip at Hoi An late hours last night and I am still recovering today from the late night flight.

After my decision to take a temporary break away from a corporate work rat race which includes my submission for a resignation last week, I received mixed overwhelming responses from friends, colleagues and acquaintances.

Most of the responses were congratulatory messages, which resembles how rewarding this journey has turned into and a good respiratory break is well deserved after a long decade of hard slogging and saving. I think the general consensus would agree that life isn't just about getting on top one after another without having a pause about where the direction of life is going to move towards to.

As one of the quotes in the Sun Tzu Art of War advocates, the strategy may be to retreat a few steps back in order to move bigger steps ahead. That way, it gives a clearer picture onto how we want to steer our life's direction and I think it was necessary.

There were also some people who were envious of the situation.

My first immediate thought was that I hope it gives them a good motivation for them to continue carrying out and executing their plans because if they do it is a matter of time before they get to their own stages of financial independence. They should never take this as the wrong smell of envy because that's not the whole intention and neither would it benefit them in any way if they choose to think it that way.

There were also some friends who've started messaging me to discuss on a potential business collaboration in the future.

I'm humbled by the approach because like I said the whole intention of this break is to explore so I'll try to keep my mindset open to any potential good working collaboration.

For my family members, apart from my wife who knows about this, we have not really told anybody about this including our parents as we wanted to keep this a low profile information and we wanted for them to learn about this as naturally as they can.

There are two reasons for this.

First, our parents still exhibit the traditional mindset where for one to be productive, a person needs to be physically going to office in the morning and coming back home in the evening. I think this is normal because a fixed stable income is most important to the family.

Being a digital nomad typing in the computer all day without any instructions, deadlines or bosses just won't work and convince them yet.

Second, they are probably unaware of our financial situation as well as we are and we also don't want to get into the details exactly with them because we wanted to maintain a certain level of privacy.

Hence, the key here is to let time shows that we can survive these 6 months period and still doing on just fine.

So thank you once again for all the blessings that we've received from friends and colleagues and we hope to put this to a good use and update our progress further as we go and experience what's out there in the real world.

Thanks for reading.

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Monday, March 11, 2019

Mini-Retirement [Series 1]: Taking The First Leap On Sabbatical

I took a deep breath, straightened my chest, walked up to my boss and asked if he could spare me a few minutes. 

“I promise it won’t take long” I said to him as he nodded agreeing to my request. 

We couldn’t find an empty meeting rooms as we walked past a few of them and finally we had to settle down at one open empty area. 

We sat down and braced ourselves for the discussion. 

I started off by thanking him for giving me the opportunity to work in a company as one of the best bank in the world. 

However, I felt a disconnect from working at the role I am currently in, perhaps due to the nature of the tasks and hence I would like to take a break and explore other opportunities outside. 

I didn’t elaborate to him what these other opportunities outside meant because I didn’t see the need to explain the details, though in my mind I had some ideas that I am in the midst of exploring (I am not ready to reveal right now but hopefully in due time). 

My boss tried to talk me out of it but my decision was already made. 

He accepted my resignation. 

Since I have no jobs waiting for me (since my intention is to explore something outside the corporate work), we agreed that I would only leave after my replacement is onboard and after I hand over my task to the new person. 

That would roughly be over the next 2 to 3 months. 

I have no issues with that. 

If you have read my recent prelude series of articles written in the past few weeks, you would have probably guessed that I am up to something. 

I’ve made several important decisions in my life but this probably ranks as one of the top few important up there. 

Scary, bold but a necessary one at this point of my life, in my opinion. 

Yes, I’m officially taking a sabbatical from my work, with an indefinite timeline to return to corporate work. 

After working for 11 years straight in the corporate world of this rat race cycle, I decided that there needs to be a path out of this eight hour day (minimally), five days a week work cycle. 

I had experienced first-hand myself and seen some of my co-workers working in these soul-draining corporations until their 60’s and 70’s because they trusted the system we were all taught to believe in.  
At the end of their lives, what they get is a sequence accumulation of their unhappy experiences, lesser lifestyle choices, more debts and binges of complaints about how their lives are wasted. 

Knowing that, I wanted to at least give myself a chance to explore alternative options. 

Even if it turns out to be a "failure" at the end, I have at least tried and given it a shot in my life. 

This is the whole intention I had since this blog was started a decade ago – to be accountable for our own actions through the articles we write and I had to account to myself (and readers) for having skin in the game. 

The reasons why I am titling this as ‘Mini-Retirement” instead of “Retirement” are two folds. 

First, this is not a traditional retirement that many people think I will be shaking leg, couch-surfing or binge Netflix watching all day long. I am expecting to do a lot of work all many fronts – from exploring personal commitment to work to family to health to self-improvement. 

These are free roaming opportunities period I have given myself a chance to explore things I’ve been wanting to accomplish but never had the chances to do in the past. 

I am prioritizing things based on the scale of what I think as important so if I think exercise is something I’ve been lacking the time to do in the past, I wanted to use this opportunity to devote more time to it now. The same goes for my own self-improvement (for instance public speaking and communication skills, etc). 

Second, I am not na├»ve enough to think this might work out. 

I am giving myself a 6 months grace period until the end of the year to see how things progress from here. If it doesn’t work out as well as we expect or if there’s a sudden plunge in our financial conditions (though highly unlikely because we’ve done the sums!), then the decision would most likely be for me to return back to the corporate work. 

The key here is having that availability of options at the end of the day to choose to return should there be a need to, though I can understand it might be difficult to re-enter the same workforce at the same level and pay. 

So that’s the latest updates I have for now. 

I know it may sound a bit sudden, but this is a decision me and my wife have discussed and agreed and this is something we have been pondering for quite a while now. 

At some point we just have to give it a go. 

P.S: I’d be creating an exclusive page-tab on this “Mini-Retirement” articles with links here so it’s easier to navigate the articles in chronological order.

In the next few series, I would be sharing about how my families/friends/readers react to this news, how we would be funding our expenses day to day, how we intend to grow our portfolio in the next few months, the progress of my work in this “free-roaming” period, our travel explorations outside our comfort zones and many more to come. 

I'm excited to explore where this tunnel would leads us to.

Thanks for reading.

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I Had To Change My Domain Name to

Just a quick update on my new domain website, which I had to forcefully update after 10 years of using blogspot.

The new link is now:

It all started when I was recently constantly attacked by a group of spammers for my existing blogspot domain that would disallow me to post content on several social media sites such as facebook.

Blogging at blogspot has never failed to give me major problems in the past. It was only until recently when I started receiving quite a lot of bots spams on my comment pages daily which prompts social media such as facebook to regard it as violations to its community standards. 

Thanks to JR for spotting this too

To get a new domain name, I proceeded to head over to to select my preferred available domain link and ended up settling for 3foreverfinancialfreedom on a .com. 

I’ve read somewhere that .com domains are superior to others such as .org or .info but has no experience to discuss in details myself. 

Once I bought over the domain link, which costs me about $20/year, I had to register and set up in my existing blogspot. 

Here’s the step by step guide which I did: 

Step 1 - login to your BlogSpot dashboard, and head over to Settings > Basics and you will see an option which says Publishing >Blog address > + Setup a 3rd party URL for your blog.

Step 2 – Next, you need to add the domain name that you have purchased with a www prefix, and after adding the domain name, it will give two CNAME records which we will be needing in the next step.

Note: Once you have added the domain name and saved, you will see an error saying “We have not been able to verify your authority to this domain. Error 12..” and you will get the CNAME record that you need to configure.

Step 3 - Once you have these CNAME details, you will need to logon to your GoDaddy Dashboard -> Manage DNS, and input to link the 2 CNAME.

Step 4 – The first CNAME is a default which everyone is using, while the second CNAME is unique to each individual.

Key the 2 CNAME into the following fields:

Step 5 - You will also need to add the 4 IP Address into your GoDaddy DNS which is standard.

Do note to choose your record type as A when selecting.

Step 6 - Once all the updates are done, go back to your blogspot dashboard and click on "save" changes. By now, you should be able to save successfully.

Google will take care of the redirection portion, so all previous articles and links will also be redirected.

Thanks for reading.

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Friday, March 8, 2019

How I Was Sold On The Idea of Financial Independence

Since I am coming up close to a decade of investing since I started my financial independence journey in 2009, I thought I’ll do a trilogy of articles on the “rewinding back to history” to remind myself how far the journey has been, and hopefully this can also inspire others who are keen to take on this journey. 

For the longest time I can remember, the sequence of a life’s journey is designated to be like this.

First, you attend school, study hard for your exams, get into the top 3 rank in your class, listen to your teachers, then subsequently get into a good tertiary school. 

Once you have graduated, look out for a good role at a multinational company, work for 8-12 hours a day, get promoted, and then stay there until retirement age comes calling for you. 

You work there all your life, build up your pension fund and you are all set for a comfortable retirement life. 

For the upper scale of the greater population, they work even harder, longer, climb the corporate ladder at a faster pace, increase time commitment and take on bigger responsibilities. 

Some goes to work unprecedentedly soulless without direction if this is what they wanted in life.

F.I.R.E - Financial Independence Retire Early

Over the last decade, this unwritten pact has been shredded by the FIRE movement community who thinks that going through life in this structured manner was an insane proposition. 

The FIRE movement thrives on the idea of financial stability and freedom autonomy and sells it to the people who falls under the radar of a failed designed regime system in our society. 

If you are a scholar and work in an organization where you thrive, look away because the FIRE movement is not suited for you. 

But for the larger part of the population who struggles to keep up, and are always constantly demanding for higher pay and more attention, the FIRE social movement pounces straight on your weakness, turning them into an upward spiral of beliefs and successes. 

They make them believe that financial stability has nothing to do most of the time with a person’s scale of intelligence nor purchasing power. 

The movement believes that financial independence is a stone step away within everyone’s reach if they want to believe. 

Sure, you do need some form of basic income to tide over your expenses and make some good judgement call, but the key is still discipline, sacrifices and some delayed gratifications and with expanding knowledge accumulated over time, you can venture to grow your money via the various investment tools. 

My Personal Experience 

I was sold to the idea of financial independence because the FIRE movement promises something that a lot of things back then were in doubt to me. 

Back then, I wasn’t sure if I had what it takes to survive living in Singapore. 

This is one of the best developed fast growing nation in the world that is famous for her great territory of building landscape and fast pace of lifestyle, not to mention the stress level bemoaning on the high cost of living. 

Even when I was undergoing my education phases here, I was struggling to keep up with my peers for the sheer amount of homework and words to memorize and that stress that everyone was talking about lived up to its name real quickly. 

I had to settle for a score of 186 for my PSLE when everyone of my classmates were celebrating theirs’ and I had to enter the normal stream in the next phase of my secondary school.

What's my future like with this bleak outlook of 186 score, I wonder

Growing up here keeps me in the toes all the time, relentlessly trying to play catch up with fellow peers and classmates who are always steps ahead of me. 

On the good side, it forces me to step up my game (coming from a low base) and improve myself as a whole. 

Thankfully, the FIRE movement gave people like me chances to outperform my peers on a different scale. 

It is not entirely about wits because otherwise I would have fallen off the pack long ago.

One of the FIRE success criteria is to have perseverance and discipline and I had to work on my character build up over the years to get nowhere close to perfect.

But I know I have to give it a try.

And slowly over the years it is a soft-skills that can be nurtured and improved over time.

Thankfully it worked and I managed get a little better of myself as each day passes.

I continue my pursuit of financial independence since, and believe this is a movement for the people who believes in themselves, regardless of how the rest of the world sees you and discard your presence in this world.

This is a path worth taking, because even for the non-believers this is something they would have to take on someday in their lives.

Thanks for reading.

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Tuesday, March 5, 2019

Recent Action - Frasers Logistic Trust (FLT)

I wanted to take this time to quickly update on my latest position. 

After the recent run-up to most of the S-Reits which I believe is near valuation peak over the past 10 years (apart from 2015), I have decided to lock in my gains and divested Frasers Logistic Trust (FLT) yesterday at a price of $1.14. 

This divestment gave me a very decent return in terms of both dividend and capital appreciation for the past couple of years I had them. Other than the dividends I have been getting over these years, I have also participated in their rights last year which brings down my average price further.

At $1.14, and assuming 1.78 cents/quarter annualized for the full year, it represents a dividend yield of 6.2% currently, which I think is a bit heavy (expensive) from a valuation perspective. Still, in a yield hungry world, the yield may continue to compress further, but I think as investors our role is to always assess if the risk of valuation is running ahead than fundamentals.

Operationally, their AUD is performing better so if AUD appreciates this year, we should be looking at higher yield than what it was in 2018.

Do also note that this is one of FLT’s running peak post rights adjustments which they did last year. 

If we were to adjust this to pre-rights adjustment, the back then peak of $1.19 would have translated into $1.14 of today [(1,520,617,000 x $1.14) + (345,800,000 x $0.987) + (152,200,000 x $0.967) divided by 2,018,617,000]. 

I believe this is the level where the management gets an easier job looking for yield accretive acquisitions.

Having a pile of cash from this divestment, I needed to find a place to park these funds with a similar profile yields and it is not easy to find them in today’s rising bullish environment. 

My criteria is straightforward. 

I needed to find a 6% yielder that the company can pay out of their free cash flow, some levels of cashflow predictability and a low semi-variance profile that can ride against the market tide. 

The focus doesn’t have to be long term because they are just funds that I can park when the general valuations are getting higher and these will be rotated/rebalanced once the market shows some vulnerability. 

The 6% yield is my criteria for having to wait in the game and be in the market.

Vicom would have been a perfect example in this case and I would have put more stake in Vicom if not because I have already plenty of it in my portfolio, so I tend to digress to diversify a little bit further. 

Some of the corporate bonds such as the Astrea Bond would have been a solid alternative, but their yield to maturity have dropped significantly since they initially launched. 

The Singapore savings bond at the moment is a bit too conservative for my portfolio and I would consider them to be a drag if timing is not done correctly to rebalance them. 

I'll continue to keep a lookout on any opportunities and welcome any views on suggestion ideas.

Thanks for reading.

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Monday, March 4, 2019

Dividend Investing Is Actually Growth Investing In Disguise

Even though I spend a lot of time writing and circulating about my dividend focused strategies, I am not entirely opposed to anyone who focuses on profit growth strategies that meet the needs of their own portfolios.

Both dividend investing and growth investing have their own merits.

I mean, if we look at the classic example of folks who invested in Berkshire for the past 30 years, without having received a single dividend paid to them, who am I to critic the success of growth investing, which can be very successful in its own rights.

There are 2 basic criterias required for growth investing.

First, the company needs to have a certain level of business moat in order to have the opportunity to expand, both vertically and horizontally. With ubiquitous of massive competitions these days for certain industries, there are doubts on whether companies can survive the following year, let alone thrive in the next 10 years.

F&B business is one of them where competitions for new entrance are high up to the neck as we see many F&B come and go everyday.

Even for industry leaders such as Apple, there are much more competitions in recent years with the introduction of a cheaper, more affordable and better specs phone in the market.

This makes the "Growth" aspect in growth investing a very difficult decision to make.

Second, you need to have a good capital allocator in the company who is able to look out and spot for good opportunities and reinvest the proceeds of the retained earnings for further growth.

The second point is actually not much different from us, except that we have management whom we trust will do the right job to steer the company and propel its' next growth.

These management are not immune to making mistakes, like all of human being, so they are not all saints-free from mistakes.

Some of these management may also move to other companies, or retire so there are huge reliance on human personnel in this case to get the work done.

Dividend investing, on the other hand, is similar to the second point I have raised, except this time that personnel is us, ourselves.

That makes us accountable for our own money.

We learn, groom and develop our own strategies so we can have a better knowledge tomorrow.

We leveraged on our past mistakes to become a better investor today and face the task of tomorrow.

Through many years of dividend investing myself, I do think there's an appeal in having cash come your way on a regular basis, organically through the profit sharing structure of dividends at the high-grade quality companies.

If you are vested $100,000 in a company that pays you 6% dividend a year, you are technically getting back $6,000 in dividends a year while keeping the number of shares in the company intact.

As a capital allocator yourself, you are then free to either reinvest the $6,000 back into the company by buying more shares or if you prefer, you can invest the money into other companies that you are interested in.

Either way, that looks like growth investing to me because you are increasing the number of shares in the company you are vested in, with the main difference through capital injection rather than internal allocation within the company.

If you want to spend your life being a capital allocator, it seems to me that income investing is the way to go.

Income investing also has more options in a way that you can actually choose to 1.) save the dividend received as part of your warchest or 2.) spend it away as you wish.

The basic assumption of this is that the company will adjust its pricing to its product based on inflation rates so if inflation rates rise at 3%, the company will adjust their pricing to be higher and hence bottomline is higher and your dividends would follow the same suit.

That is of course all well in theory but plenty of moving variable parts in real life.

At the end of the day, I think my argument for dividend investing is that we can see it as a growth play too through the increasing of vested position through dividend reinvested but it has also a variety of options available too that an investor can take.

You get to choose what kind of path appeals to you better.

Thanks for reading.

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