Saturday, May 18, 2019

Reits Symposium 2019 - A Full Day Reits Event For Investors

Following my previous post on the Reits Symposium, the day has finally arrived for all Reits investors.

The event was held on level 4 at the MBS Expo Convention which has a good full house crowd they have been raving about.

They give pretty good kits goody bag once you have signed in which includes door gifts and a water bottle, sponsored by Share investor, Money 89.3 and First reit respectively. 

The event kicked off with Sgx Ceo, Loh Boon Chye, addressing the full house crowd on how the Reits sector has come a long way since the listing of the very first Reit in 2002. He particularly mentioned the success was due to Singapore being an early mover in this space, and our government putting in place an effective regulatory and tax framework.

In 2013, SGX has entrenched themselves as a true Reits hub with over 35 listed Reits and property trust and from 2014 onwards, there is on growing demand listing from overseas sponsors.

Over the past 10 years, the market cap from the reits sector has grown at a compounded annual growth rate of 22%, that's just crazy numbers.

He ended off by reminding the crowd that whilst Reits is one of the investment tool, Sgx offers a wider range of other investment tools such as stocks, bonds, etfs, warrants and dlcs.

The lunch sessions break was a good opportunities for people to visit the booth in particular talking to the investors relation of the various Reits. 

I didn't manage to stay too long in one booth as I was just browsing around the different booth at different speed to see what the booths have to offer. 

I can see there are more crowds stationed at Reits for Cromwell, First Reits and the Capitaland Group, while the rest were quieter. Perhaps it has to do with the sentiments of the Reits status itself. 

After lunch break, Uob Asset Management presented their slides which promotes their active asset funds in particular the Japan Sumitomo asset funds. This is one particular which I find it rather interesting to find out what UOB Asset funds have to offer.

They are overweight on the Japanese market due to accommodative monetary policy. They are also bullish in the Singapore sectors. 

They are underweight Hongkong and Australia. 

You can also see from the third slide below on the various property outlook they are bullish or bearish on their positioning.

The funds gave an annualized dividend yield of about 5% which they pay out on a monthly basis.

Unfortunately, I didn't stay too long as I left right after the Ascott Reit presentation.

But this was a pretty insightful event for Reits investors in a heavy-weight Reits day.

Thanks for reading.

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Tuesday, May 14, 2019

Dividend Income Updates - Q2 FY19

With all the earnings announcement finally done and underway (Netlink was the last to report yesterday), it's my favorite time of the year where I get to tally the amount of dividends I will be receiving this quarter.

Please do note that this 2nd quarter covered the period of the dividend cashflow from the period 1st April 2019 to 30 June 2019.

For readers who are new to this blog, this is a sequence of exercise that I've been doing for the past few years usually after the earnings season ended. 

This tracking not only allows me to keep abreast of any development in the payout dates and the quantum amount but also more importantly reminds me of how far I’ve come since I embarked on this journey of dividend investing which is coming to almost a decade now. 

Since we are a household of 4, the incoming dividend also comes much handy when dealing with our increased household day to day spending, especially with the current situation now that income will be bare in the next quarter due to unemployment/sabbatical period.

For those who are new to the dividend investing strategy, I'd encourage you to try it out.

Singapore has a plethora of dividend investing companies that has not only good fundamentals but also pays out good dividend yields at a decent valuation. We are also a country where dividends are exempt in the hands of shareholders because of the 1-tiered tax system.

From a shareholder's point of view, this means you get directly whatever the company announces and good companies are usually pretty generous at that.

Dividend investing also possesses an autonomy that will allow us to retire from our job one day because they replaces the cashflow from our job. This is in contrast to growth investing where you need to time your exit in order to "take the profit" eventually and find an alternative.

Without further ado, here's the dividend income I will be receiving this quarter.

The dividend income this quarter in Q2 FY19 amounted to $23,172.

I see this as a good cover for our next 4-5 months worth of expenses, and then we'll be having an income again in the next quarter and this keeps rolling on.

With Q1 being the weakest of all the quarter, this Q2 appears to be the strongest of the quarter as we have companies paying out their final dividends after resolution was approved.

With the Trade War going on and equities look like there will be a bargain once more, it will be a great time to scoop up some good companies once again.

How has your quarter been for you?

Thanks for reading.

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Thursday, May 9, 2019

Genting Singapore Ltd Q1 FY19 Results - Higher Capex & Lower FCF This Quarter

This will be just a quick update on their latest quarterly results since my last article on them which I wrote in March (here) and April (here) recently.

Genting Singapore Ltd reported its Q1 FY2019 results yesterday evening which saw topline revenue and gross profit dropped by 5% and 16% respectively to $640m and $289m.

Net profit as a result dropped year on year by 5% to $205m, which was arguably their weakest quarter.

Whilst the non-gaming business registered its eight consecutive quarter of year on year growth with higher occupancy and higher spend, the gaming business continued to struggle once again as revenue dropped by 8% year on year and 3% quarter on quarter.

The gaming business took up 2/3 of the overall business so it is imperative that this drop will impact the overall earnings for Genting.

Balance sheet continues to remain strong as the company continues to pare down their borrowings from the excess cashflow they generate and ending cash balance has increased to $4.36m. Net Cash balance has increased by about $130m quarter on quarter to $3.42b.

We know the company generates good amount of cashflow up to $1b a year and but free cash flow are coming in a bit lower this quarter at $130m, out of which $100m goes to repaying the borrowings. It seems like they are starting to put some capex for development of the new IR 2.0.

The management gave quite a bit of qualitative outlook on both the expansion of IR 2.0 as well as the competitive RFQ bid preparation for the Japan integrated resort. This is very much in anticipation of the bid proposal.

In terms of valuation, share price has dropped to 94 cents, while free cash flow has also slowed down in preparation for a higher capex, so there is no easy way to evaluate this. If we are valuing this via the earnings multiple, it will not be attractive either as it stands in the high mid teens.

In this regard, I stand by my earlier call that I think it will be attractive at the 84 cents level when TTM FCF is at 10% level. With trade war on the brink, you might just see this coming.

Thanks for reading.

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Monday, May 6, 2019

The Stock Market Crashed Today!! Admit If You Shit In The Pants Today

It’s been a while since we last hear of something negative in the markets which sent markets across the globe plunging which most investors have to face in their routine battle against the market. 

With the infamous Trump’s Trade Tariffs back with more vengeance this time, this escalation has sent markets across the globe spiralling down and dropped heavily in today’s trading with Dow Futures down as much as -450, SSE down by 5% and STI down by about 3.3%. 

The media will always use scary-sounding headlines in order to catch everyone’s attention. Bombarded by negative headlines, investors may be nervous and tempted to do something in reaction to the news. 

The first and foremost reaction for most investors on the street is to panic because it’s not something they experience often in the market and it’s never a nice feeling to see your portfolio account balance drop massively in one day’s worth of trading in the market. If you are buying part or most of your equities under the margin account, you might get a bit more unsettling than your usual self because this drop could prolong for a longer period of time while you have to bear the interest costs while waiting for your counters to recover. 

On the other side of the spectrum, there are investors who have been waiting for a pullback and they are likely to rejoice because they can finally put their capital to use after waiting for a period of time. Since they were forgoing opportunity costs all these while waiting, the issues these investors might have is when to market time it nicely such that their capital is allocated to the most optimal situation. 

But your best move is probably to keep calm and carry on with your usual activities as these kinds of market panics are usually short-lived and investing is usually a long-term pursuit. 

If you find yourself somewhat panicking a little during market’s bloodbath today, you may want to review the following checklist: 

Risk Appetite 

This is probably going to be the most basic but important exercise everyone has to assess regularly. 

Gauging the degree of risk appetite at any given point in time is highly relevant from a risk awareness perspective because hindsight episodes of decline in markets can spike general interests in assessing risk appetite and tolerance. 

Ask yourself if you are panicking because you have too much of your portfolio allocation invested in the equity market, which can generally be more volatile than the bonds or fixed income sector. If this bothers you too much at night that it disturbs your sleeping routine, then it is likely that you have vested too much interests and it is probably a good time to scale down your vested interests to a lower allocation. 

Company’s Fundamentals

This is probably also a good opportunity to do reviews on the company’s fundamentals to ensure that they are still sound. 

Depending on the event of the macro news that happen during the week, this may potentially impact the future earnings of the company as the company’s valuation may depend on it. 

For instance, the tariffs imposed on Chinese goods means that it will cost more to import Chinese shipment to the US which will impact the profitability margin as well as demand for the goods. 

Stick To Your Game Plan 

The general rule of thumb in investing is always to look at it from a long term view. 

Thus, it is imperative that investors continue to look at downturn as an opportunity to add to their positions and not succumb to fear because good companies will always recover when the market eventually rebounds back. 

For instance, if my goal is to ultimately amass an annual dividend income of $100k/year, then it makes sense for me to focus primarily on the cashflow earnings of the company and ignore the daily gyration of market prices. Even better, if the company gives out the same distributional payout but is now cheaper in price, then it makes more sense to add on to the portfolio in view of the longer term advantage. This becomes a problem and will always be if market timing is a factor to consider. 


While most investors say they’ll continue to hold on to their investments when there’s a sharp downturn and many even say they’ll add money when their investments go down, data often tells a different story. As the market downturn escalates, you’ll see more people selling in order to “get back in” later at a cheaper price. This behavioural bias has and will continue to be around for as long as there are volatility in the market. 

In any case, I think that it is good that we have a stress test like what we have today in preparation for a bigger meltdown in the future. If this prolongs for longer period of time, then this could become real interesting to assess.

Thanks for reading.

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Wednesday, May 1, 2019

Why I Am Delighted With The Revised DBS Multiplier Changes

Savings have been an integral part of our approach towards financial freedom since we started working 12 years ago. 

There are many competitive savings accounts in the market that are giving out decent interest rates and meeting various needs of the consumers. 

When DBS Multiplier Account was first introduced in 2014, I quickly made the switch to park most of my emergency funds and investment warchest into the account.  

Back then, my criteria was simple. 

I needed a savings account that can reward me with the best return yet was flexible with the criteria such that I could easily meet them. 

In 2017, they changed their criterion with regards to the salary credit with no minimum requirement. This means regardless of how much you are earning, you are eligible to satisfy this criteria for as long as you have a salary credited as an employee. I like this because it caters to those who’ve started working and the bank wants you to stick with them and grow together as you progress in your career later on. 

Their next criterion hinges upon the number of categories that you can hit depending on your stage in life. The bank’s strategy is to have you to grow your life journey with them. The more bundled package you sign up with them, the higher interest return you will be able to get on your savings.

P.S: For more information on the specific terms and conditions, please read on the FAQ on the DBS Multiplier website which explains what works and what does not.

My Own (3Fs) Experience

For myself, this fits perfectly into my plan at this stage of my life as I am able to satisfy the majority of the categories. 

Other than the salary credit which I have it with them, I also own the DBS Altitude card for my miles accumulation project as well as the POSB Everyday Card for our day to day spending which gives decent cashback and rebates. 

For my investments, I also opened a Vickers account to transact some of my bigger trades that require a CDP account. I have to admit that I do have multiple brokerage accounts with Lim&Tan and Standard Chartered Bank as a preventive measure in case I needed to sell some positions urgently.

Last but not least, I have changed my current home loan to DBS home loan which gives me the best rate so far among the many others I’ve investigated. 

With that, I have unlocked the “Salary + 3 Categories” on my savings account which yields me 3.5% on the first $50k savings I have with them. 

While I am happy that I am able to earn 3.5% risk free on my savings, the $50k amount that caps the bonus interests means that I am only able to earn a maximum of $1,750 interests in a year while anything above $50k will be based on base rate. 

I have problem with this because my emergency funds and warchest combined usually exceeds $50k so I have to source for an alternative to park my savings.

The New Changes (effective 1st May 2019)

With the new changes effective 1st May 2019, the Multiplier account will increase the account balance to $100k, which spike interest I am so happy about. 

The new step-up interest comes with a stricter requirement as they want consumers to take on more lateral interests in satisfying 3 or more categories to earn the higher step-up interest. 

I have no issues with that because I have already satisfied that requirement even prior to the changes. 

Obviously, as a bank in their position, they also want consumers to step up the volume transactions so the reward is staggered in such a way that yields the most returns if consumers can transact $30k or more in a month. 

The maximum effective interest rates on the new revised multiplier changes is now 3.65% on the first $100k, which means if you have $100k balance in your account and meet all the criteria, you stand to gain an interest of $3,650 per annum.

Do You Know?

You may think that it’s near impossible task to be transacting more than $30k per month but let me give an idea or two on how you can increase your transactions with the strategy I did.

The first is by strategizing your investment category through crediting of your CDP dividends into the Multiplier account. For someone who’s receiving an annual dividend income of about $30k per annum based on 5% yield on a $600k capital, this can add up to about $2,500 per month.

If you are one of those who regularly allocate capital into the market to purchase equities every month, this would also qualify your purchase into the total transactions assuming you are using DBS Vickers online trading platform.

If you are looking for a life insurance coverage to supplement your other insurance policies on hand, you can also consider purchasing them from DBS/POSB and the premium you pay every month will be counted towards the total transactions.

The Multiplier account is also one of the more rare savings accounts that recognizes joint salary credits. That means if you and your spouse open a joint account and have both your salary credited into the joint account, the total combined would count for the total transactions.

Adding all of the above strategies, your total transactions would likely hit above the $30k requirement. In my case, this is how it usually adds up (range):


The main reason why I am using the DBS Multiplier is because their requirements fit into my plan at this stage of my life. 

That doesn’t mean the other products are worse when compared to the Multiplier but they weren’t a good fit to my lifestyle at this stage. 

For instance, the UOB One Savings Account has less stricter requirements with only credit card spend above $500 and 3 GIRO payment but rewards consumer with lower effective interest rate of 2.44% on their first $75k (staggered every $15k). 

On the other hand, while the BOC Smart Saver (effective 1st April 2019) has high effective interest rate return of 3.55% on the first $60k, their requirement on the salary credit needs to be above $6k and credit card spend to be above $1.5k per month to qualify for the higher bonus interests. This is clearly catered to the middle income class who’s earning above the median and are heavy spenders on their cards. 

It is best to review each of the requirement holistically because they cater to different needs of different people who are in different stages of their lives. 

For me, I’ll stick with it for now because the revised Multiplier plan just makes it more attractive for me to stay on.

This post is written in collaboration with DBS but all opinions are solely mine.

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Monday, April 29, 2019

Manulife Reit Makes An Acquisition of Centerpointe

Barely a few days after Manulife Reit announces their Q1FY19 quarterly results which I covered here, they announces an M&A for two towers of Centerpointe I & II, which is South of Virginia (about 30 minutes from Washington DC).

The acquisition of these freehold properties is at the implied cap rate of 7.55% for a Class A commercial, which makes it an easy accretive target deal for them based on their current valuation.

The purchase price is $122m, which is about a tenth of their current market cap, so they didn't really need a lot of funding to buy this. 

The properties are leased at 94% occupancy rate at a nice long WALE of 6.9 years but we already know that deals typically in the US are based on long term, then subject to annual escalation.

Management is looking to raise approximately $94m by issuing 114m unit shares private placement, so that works out to be approximately based on 81.8 cents, which is about 6% discount based on last closing price.

What is good about this deal is that they not only managed to do a yield accretive acquisition with pro-forma post acquisition at 6.21 cents (2.6% increase in DPU), but gearing will also reduce marginally from 37.6% to 36.8%. This shows you how good a deal is with a 7.55% cap rate does to a portfolio and is surely an envy to most reits managers out there.

There will be an advance distribution for existing unitholders that will be in the range of 2.03 to 2.23 cents for the past quarterly performance + the current month until book close so look out for that one.

Meanwhile, I like this deal and am looking to get back in a position with this deal should there be a knee jerk reaction off the next couple of days.

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ARA Hospitality Trust - Preliminary Prospectus IPO

After my previous article on Eagle Hospitality Trust (EHT), this would be another prospecting on a US hospitality trust which is slated to go public upon approval of listing from MAS. 

Like EHT, ARA-HT is claiming to be the very first US pure-play hospitality to be listed in SGX. I guess we’ll have to see who has the claim of rights to say this first depending on the timeline they go public. 

I’ll try to make this a narrative comparison against EHT as much as possible, so if you have not read the previous article on EHT, I’d recommend you read them first here

Hotel’s Portfolio

The initial portfolio of ARA-HT comprises of 38 properties, which further broken down into 27 Hyatt Place Hotels and 11 Hyatt House Hotels located in the US, with a total of 4,950 hotel rooms. 

The Reit’s portfolio is valued at US$719.5 million, so that’s one-third smaller than the US$1.27b we have when comparing with EHT. 

Unlike EHT which has most of their hotels concentrated on the West coast of the region, ARA-HT has a nice balance spread across the entire US states.

Out of the 38 properties, 27 of them are Hyatt hotels, which are upscale hotels with full services catered to both business and leisure travellers both domestic and foreign tourists. 

The rest of the 11 are Hyatt houses, which are typically known as service apartment as it caters to extended stay travellers which offers more communal spaces such as kitchenette and bigger living rooms to cater for families. These are typically located in suburban and airport areas. 

Like EHT, most of the properties are freehold in nature, which is common in the US, with exception to the 2 properties. 

Hyatt Place Secaucus Meadowlands is one of them, with leasehold expiring in Jun 2071 and Hyatt Place Lakeland Center is another, with leasehold expiring in Jul 2073. 

Sponsor & Management Fees Structure 

The sponsor is a global integrated real assets fund manager, ARA Group, which manage assets over $80b across 23 countries. 

Cornerstone investors include Bank of Singapore (BOS), DBS Bank, UOB and Credit Suisse. They also include SingHaiyi’s controlling shareholders Gordon Tang and Celine Tang, and investment firm ICH Capital. 

The cornerstone tranche makes up around 25% of the total offering so this is clearly stronger than what EHT has on their cornerstone investors. 

The management fees structure is similar to what we have for EHT. The management fees structure is a base fee of 10% of the distributional income and an annual performance fee of 25% of growth in DPS over the preceding financial year. 

The distributional income should be easy to hit for as long as they keep on growing and adding properties into the portfolio but the 25% could be difficult to hit in an uprising year. Still, the fact that the nature of the lumpiness in the hospitality industry means they could have 1 very bad year as a base and the following year they could already see the “growth” in DPS.

Investment Thesis

The investment thesis is not different from what was already discussed in the EHT’s article so I am not going to repeat it too much again. 

Basically, management is optimistic about the arrivals of international tourists in the next 2 to 3 years given the weaker US dollars and demand from both domestic and international to trump over the existing supply, so they are expecting their Revenue Per Available (Revpar) rate to increase. Still, looking at the average occupancy rate over the last 10 years should give enough indication that there are rooms to maneuver for capacity play.

The one interesting thing to note here is that there are no indications for Revenue Generation Index (RGI) for the 38 properties in comparison against the average market out there. 

Since both EHT and ARA-HT are using Jones Lang LaSalle (JLL) as their independent market research, it doesn’t make sense that EHT provides this information in their prospectus and ARA-HT does not. 

My guess is the RGI for the properties could be lower than 100, hence it is better not to disclose it or they are excluding it because of competitive reasons. 

Still, I find that the EHT prospectus is much more transparent on how they are providing information, including how the properties performed during the GFC in 2009, which ARA-HT did not provide. 

Capital Structure and Prospective Yield (%)

As at the listing date, ARA-HT is expected to have an aggregate leverage of 33.4%. 

In terms of gearing, ARA-HT will have a higher debt headroom to grow as compared to EHT. 

The effective interest rates on the loans, including upfront debt establishment costs is approximately at 4.6% per annum. This is not low given the environment of the US credit market over there. 

The Reit is likely to debut with an indicative yield of about 7.8%, which is rather similar to what EHT yield would be. 


The profile for ARA-HT is very similar to EHT, given the prospective yield they will be prospecting in the next 2 to 3 years. 

With the yield of 8% and a freehold nature of properties, one might think that all it takes is 9 years (72/8) to breakeven on your capital. It’s hard to think that they will no longer be around after 9 years. 

Still, the key to watch is the amount of capex they will spend in order to renovate and refurbish the buildings and rooms, this will play a big part in computing the properties on a roi basis. 

Again, due to nature of the industry they are operating, I’m likely to give this a miss on it’s debut and is likely to get interested only on higher grounds of safety when there are bad news priced in.

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Thursday, April 25, 2019

Eagle Hospitality Trust - Preliminary Prospectus IPO

Eagle Hospitality Trust (EHT) is currently preparing for their public offering issuance and has lodged their prospectus with MAS.

If you want to read their prospectus in detail, you can find them here.

If successful, it will be the very first US pure-play hospitality Reit we have in SGX. 

It's interesting to see the various pure play breed choosing to list their Reit vehicle here in Singapore but I guess that's a clear sentiment of how far the Reits industry have come so far.

Hotel's Portfolio

The Reit's portfolio is valued at US$1.27b which comprises of 18 full service hotels under the various different brands - Marriot, Hilton and InterContinental brands with a total of 5,420 rooms.

Out of the 18 hotel properties, 9 of them belongs to the "Upper Upscale" hotels, 5 belongs to "Upscale" hotels and 4 belongs to "Upper Midscale" hotels.

The way I see it it's easier to think of them as 5 stars, 4.5 stars, and 4 stars hotel.

The location of the hotels are spread across mostly on the West side of the country, with only two (New Jersey and Connecticut) at the East side and two (Atlanta and Orlando) at the Central.

All except one of the properties are freehold in nature, which is common in the US, so this compares differently to the pure hospitality play we have here in Singapore which are mostly at 60 years leases.

The only non-freehold asset in the portfolio is the Queen Mary Long Beach in California which has a balance lease tenure of 63 years.

Regardless whether or not the assets are freehold, the properties still need to undergo asset enhancement (AEI) from time to time on maintenance repair work for wear and tear, so that will work out to be similar.

Since 2013, the management has spent a total of $174m capex on these properties mainly on renovation and refurbishment to improve the working function of the properties.

Sponsor & Management Fees Structure

The sponsor of EHT is Urban Commons LLC, a privately held real estate investment and development firm which managed the USHI portfolio and has a focus on the US Lodging market.

The sponsor was co-founded by Howard Wu and Taylor Woods, both prominent figures in the real estate hospitality industry.

The sponsor will own 18.3% of the stapled security with a lock-up agreement 12 months after the listing date.

The management fees structure is a base fee of 10% of the distributional income and an annual performance fee of 25% of the growth of DPS over the preceding financial year.

This seems pretty high if you compare it across the local hospitality reits.

Tax Structure

This works out a bit differently to the recent case with Manulife Reit and Keppel KBS Reit on the Section 267 hybrid tax issues.

Although the interest income received by Cayman Corp is not subject to an entity level tax in the Cayman Island, the non-inclusion is not the result of hybridity but rather a result of the Cayman Island not imposing any direct taxes under the existing legislation.

The Managers believe that the interest rate on the loan from Cayman Corp is on an arm's length basis and as such the interest payments are expected to be fully deductible for US tax purpose.

The interest payment from the US vehicle to Cayman Corp will be free from US Federal Income Tax and 30% withholding requirement.

Investment Thesis

This is an interesting independent market research that shows the demand and supply for the US lodging accommodation dynamics in the past 10 years and the next 3 years forecast.

Apart from the obvious demand drop during the GFC in 2009, the demand growth has actually exceeded the supply growth in 2013 and they are expecting the trend to widen in the next few years.

One of the reason cited is due to the rapid growth of construction and material costs, which means there are lesser incentives to build for new lodgings in the area, thus supply for hotels is expected to be moderate.

As for demand, the lower US Dollars should help to attract incoming foreign tourists into the country while domestic tourists demand is also expected to trend up with a correlation with the low unemployment rate.

Being a very much spending play, this will be dependent on the strength of the US economy in the next few years and how a recession could mitigate the drop to what we've seen back in 2009.

We often talk about Revenue per Available Room (RevPar) when we talk about hospitality industry, which is essentially the hotel's Average Daily Rate (ADR) multiplied by the factor of occupancy rate.

The management can play out a simulation of optimally balancing ADR in order to maximize the occupancy, usually a strategy taken to balance out off-peak and peak demand since the industry is so cyclical in nature.

From the graph below, you can see how strongly correlated is the RevPar to the US economy, so the question will still be how they can cope when the US economy takes a dive under at some stage.

Forecast Uptick on RevPar is dependent upon the strength of US economy expectation

Master Lease Agreement Structure

Unlike other industry like retail or commercials, most hotels, if not all are under a master lease agreement structure.

You can imagine how difficult it is to work out over 5,000 rooms of hotels if they are being structured individually under direct operated assets.

The Master Lease Agreement is catered specific to each of the 18 hotels in the portfolio and under each Master Lease Agreement , EH-Reit will receive rental payments with fixed and variable rent components.

The Fixed Rent comprises of 66% of EH-Reit total rent which provides downside protection while the Variable Rent is pegged to the Gross Operating Revenue and Gross Operating Profit which provides the organic growth.

Capital Structure and Prospective Yield (%)

As at listing, EHT is expected to have an aggregate leverage gearing of 38%.

This gives them a debt headroom of about $170m to fund their next acquisitions or AEI before they reach the statutory limit of 45%.

The weighted average debt maturity profile stands at 4.2 years and 75% of the borrowings are fixed, given the current climate of the low interest rate.

They are also expected to list at a forecasted 2019 annualized yield of around 8%, which is way higher than the hospitality reit we have here in Singapore because of the higher cap rate and more advantage tax structure in the US (via Cayman Island).


Overall, I think 8% is a decent yield to have for a US pure-play hospitality Reit because of the savings they can get from the US Federal Income and Withholding Taxes.

By listing it in the US, they might be subject to the Federal taxes which can add up quite a bit.

Still, I think being very cyclical and dependent on the US economy, this is a play on the macro-side. If you think the US economy will continue to do well over the next few years, then the 8% yield might provide some good returns in the next 3 to 4 years.

For me, I'm a bit on the wary side and if I wanted a US exposure, I'd rather get Manulife Reit for a commercial play at 7% yield where the lease reversion outlook are more clearer so likely I will sit this one out.

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Starhill Global Reit - Q3FY19 Results and Thoughts

Starhill Global Reit posted their Q3FY19 results yesterday evening which saw their revenue and NPI dropped slightly by 0.9% and 1.8% YoY.

As a result, this brings a lower income available for distributional from the previous year quarter of $25.4m to $25m, a marginal drop. What is interesting is they decide to retain less for this quarter, citing lesser tax expense for this quarter and as such decided to distribute more payout to shareholders. As such, DPU has marginally increased from 1.09 cents the previous year to 1.10 cents this quarter.

Based on the current share price of 75 cents, this brings about an annualized yield of about 6%.

If we look at the details, the occupancy for the Adelaide Myer Center actually went higher this quarter, up from 84.4% to 89.9% while contributions from the rest of the office sectors are up year on year.

Still, the retail component takes up the majority of the revenue stream so it still very much depends on them.

While Ngee Ann retail continues to be fully occupied, Wisma retail continues to see changes in tenants as management continues to reshuffle the portfolio of the tenants coming in and out. Commenced leases as of 31 Mar 2019 stands at 91.7%, which most likely explains the drop in revenue and NPI this quarter, but they have committed leases up to 99% occupancy which is slated to commence in next quarter, so technically we should see better NPI in the upcoming quarters to come once they operate optimally.

There's also the Toshin review coming up in Jun 2019 later this year for the Ngee Ann retail side, so there's a prospect the agreement might come up to be better.

The Reit has also convened for a special agm on the new master lease agreement on their Malaysian properties, Starhill Gallery and Lot 10 Property which I previously blogged here.

There will be rent rebates during the AEI so there will be minimal impact during the interim.

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

Overall, I think performance is still soft while the Reit is in the midst of transition into many things.

Still a hold for me at current valuation while waiting for a better tomorrow to come.

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Manulife Reit - Decent Q1FY19 Result Start To The Year

Manulife Reit announced their Q1 FY19 results this morning which saw a 27.7% increase in Net Property Income (NPI) year on year due to the 2018 acquisitions of two buildings – Penn in Washington DC and Phipps in Atlanta. 

This trickles down to bottomline DPU performance which grows slightly by 0.7% year on year to 1.51 cents (up 0.01 cent from last year same quarter).

If we compare this across quarter on quarter (Q4FY18 vs Q1FY19), NPI has actually slightly declined from US$25,491k in previous quarter to US$25,084k this quarter. There is a slight dip in the Gross Revenue by roughly the same amount, so there must be some small movement in the occupancy during the period. 

The net income is also not comparable quarter on quarter because there’s a fair value adjustment in Q4FY2019 (end year) which results in a higher fair value gain. But this does not affect the cashflow so you can see distributional income remains comparatively possible to compare. 

DPU is also lower this quarter at 1.51 cents as compared to last quarter at 1.54 cents.

If we have it annualized based on current DPU quarter, we’ll get a conservative 6.06 cents full year, which translates to about 6.9% yield at the share price of 87 cents. 

I say this conservatively because there’s a few passing rents that are below the market rate that are up for lease renewal soon. 

Apart from Michelson in Irvine, which I highlighted in my previous Manulife Management meeting (Link here) they are above the market rent, and Hyundai leases renewed back in Jan is one of them, the rest seems to be under-rented, in particular Buckhead and Midtown Peach Atlanta which has potential for positive rental reversion in the next coming lease renewal. 

This is the organic boost the management is looking to bring value to their trophy class properties.

In terms of balance sheet gearing and growth strategy, they remain in line to purchase another acquisitions which is yield accretive that can boost their overall AUM. These are likely in Dallas, Houston or Pittsburgh area where the cap rates are slightly higher, making it easier for yield accretive target. 

Management has also reiterated that interests cost will drop in the following quarter upon the refinancing of the Figueroa’s loan due to the delay in interest rate hike in the US, so the Reits should also benefit from the lower cost of borrowing. 

The management has also put up an interesting slide on the tax structure in the presentation that highlighted the tax benefit structure they have on the Barbados partnership which tax interest income on intercompany loans in Barbados and principal repayment not subjected to tax. The Reits structure is also such that they are not subjected to 30% withholding tax on the interest and principal on shareholder’s loan.

Overall, I think a decent quarter. 

I like the fact that management has also been transparent and provided a lot of operational updates information such as the upcoming AEI taken to upgrade Figuera's lobby and also their coming growth plans.

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Monday, April 22, 2019

REITs Symposium 2019 - Your Information Guide To Most Reits You Need To Know (Updated)

This is a quick update on my previous post on the upcoming Reits Symposium which will take place on the 18th May 2019 at the Marina Bay Sands Convention Center.

Shareinvestor has updated me on the agenda details which includes the interesting panel discussion which includes several veterans from the Reits industry which I think is the more interesting part of the event as you get to hear views right from the horse's mouth themselves. 

There will be 2 panel discussions during the event itself strategically conducted in the afternoon:

Panel Discussion 1: Is Reits Still A Viable Investment In Today’s Climate? (2.10 - 2.40pm)

Cham Kum Kong (SGX) 
Kenny Loh (Trainer with Adam Khoo Learning Technologies) 
Chia Nam Toon, ARA 
Moderator: Nupur (REITAS) 

Panel Discussion 2: Insights to Best Performing Singapore Reits (5.00 - 5.30pm)

Anthony Ang (Sasseur Reit) 
Paul Chew (Phillip Capital) 
David Kuo (The Motley Fool) 
Calvin Neo (Nikko AM) 
Moderator: Dinesh (Dollar & Sense) 

Apart from the panel discussions, there will be other interesting sharing from Kenny Loh who will share his insight of some of the basic fundamentals of what to look out for when you are selecting Reits. 

Kenny is someone I’ve shared a stage with together before during the InvestFair back in 2017 so he’s someone who knows stuff on what he's doing.

If you have not signed up but would like to attend, the sign up link is here if you are interested.

If you use my referral link (3fs), you are able to get an additional gift with the same cost if you purchased it online directly.

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Thursday, April 18, 2019

Apr 19 - Portfolio & Networth Update

No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
Starhill Reit
Netlink Trust
First Reit
The Hour Glass
Far East Hospitality Trust
Ho Bee Land


Greetings from JB!!

We are on a long weekend for the Easter week so I decide to bring my family to a nearby getaway to our neighbouring countries for some quick hit shopping, eating and playing time.

I was just catching up with fellow bloggers Thomas from 15 Hour Work Week and Chris from Tree of Prosperity two days ago over lunch and we talked about M Bison from the Street Fighter series and look what I've got in our Airbnb apartment! A Game Console!

Muahaha, I am surprised I still remember the special moves by all the character, including the famous M Bison
Back to the portfolio updates now.

April has been a very good month for investors because the stock market continues to go up and most if not all my portfolio has benefited from the upward trend moves.

Two of my biggest holdings, Starhill and Vicom, have been doing superbly well this year so they are the main contributor to the increase again this month.

I have divested Manulife Reit at USD 86.5 cents because I think the general valuation overall is rather fair and I wanted to reduce my over-dependence on Reits which is taking the majority of the portfolio before the divestment. Looking at how Kep KBS reported good Q1 results and outlook recently, it seems like there are still room for the US commercials to go up.

With the proceeds, I took an interesting position at The Hour Glass, which I averaged a couple of times from 70 cents all the way to 74 cents, accumulating a total of 106,900 shares in the process. This is after the big move which seen big institutional play coming in on this stock a few weeks ago.

This is a relatively short term play because YTD results have been doing really well with margins marginally up to 25% from 24% last year but revenue line also increases. My estimation for FY earnings is THG will end the year with EPS around 9.3 cents which if we give a valuation of 10x PER, the target price will be around 90+ cents. 

The share price has been up a few good times this week so my position is already up around 9% as it closes at 80 cents today, but between now and FY results I suspect there is another 10% upside.

On a smaller update, I took the DRIP for my Far East Hospitality Trust last quarter dividend which is priced decently att 63 cents. This is the reason why you see I have 3,000 shares in my portfolio. Since the amount is too small to make any action, I'll just leave it there for now.

Networth Update

The portfolio continued to do well this year, which is up again from the previous month of $900,096 to $932,505 this month (+3.4% month on month; 29.8% year on year).

This is the 16th consecutive record month that the portfolio has broken a new record high.

I am coming due soon for my sabbatical D-day in May so I've got to make every returns count now while the bull lasts.

The hardest part being involved in the bull market is the expectation as investors we are giving ourselves to be performing better than the index.

To date, the return has been satisfactory as it is performing better than the index so I can't ask for much more (i.e, if the stockscafe statistic is correct. I've had friends in my chatgroup who disputed the ES3 returns to date to be incorrect).

Next month will be interesting because we are in for a "Sell in May and Go Away" period so we don't know if the market will fall for that legendary trap but we'll have to cope and see.

Meanwhile, have a great long weekend and enjoy and celebrate the Easter this weekend.

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