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.


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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 www.3foreverfinancialfreedom.com

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:

http://www.3foreverfinancialfreedom.com

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 GoDaddy.com 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.

216.239.32.21
216.239.34.21
216.239.36.21
216.239.38.21

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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Sunday, March 3, 2019

7 Key Highlights From Ho Bee's Q4 & FY18 Results

Ho Bee Land Limited is a property developer and investing company which has developments in various parts of Australia, China and United Kingdom, on top of their home base in Singapore. 

The company recently announced their Q4 FY18 results which continues to be promising. 

In this article, I will expand my thoughts on their results and also share some of the communications I have with their Investor Relations Executive Director, Desmond Woon. 


P.S: The reason why I have only done up from 2013 is because their current business model started evolving from 2013 onwards upon the purchase of The Metropolis.

1.) Rental Income is up by 22.1% year on year and has grown to $179m vs $147m from the previous year. 

This is due to the second full quarterly contribution from Ropemaker Place (25 Ropemaker Street) which they acquired on 15 Jun 2018. 

Extrapolating this to full year, this means that on an annualized basis for FY2019 recurring income would have been at $51.5m x 4 quarters = $206m. 

This translates into an EPS of 31 cents before deducting the corresponding charges relating to this. 

This recurring income continues to be their spearhead earnings going into FY2019, with the 7 buildings in UK and 1 in Singapore leading the fray. 

Singapore: Metropolis 

UK: 1 St Martin’s Lane, 60 St Martin’s Lane, 39 Victoria Street, 110 Park Street, Apollo & Lunar House, Lombard Street, Ropemaker Place 

2.) Residential Sales in Singapore continued to remain subdued due to the sentiments regarding the cooling measures in place and the company has only registered $17m sales throughout the year, which is about flat as compared to last year. 

As of 31 Dec 2018, the company has approximately $184m of properties development that are held for sale in the current assets, so this year they only managed 10% conversion on the sale, which is rather slow. 

Based on the outlook guidance, management continue to be pessimistic in the improvement of the sales development. 

3.) Shares of Profits from Associates continued to do well this year due to its sales from the residential development projects in Shanghai and Zhuhai. 

However, the losses incurred in their jv entities for their residential project in Tangshan in Q4 is causing some concerns. The company has attributed this to the lower profits but I suspect this might have to do with the way they do the revenue and cost recognition model in China. 

The company received $71m as dividends from the $100m profits which was earned from their JVs and Associates. This translates to about 70% payout. 

Based on Desmond, the company continued to focus their residential sales in China market.

4.) The company has continued to put their focuses in Europe when they enter into the European Property Fund II (CS Real Estate SICAV-SIF I) for about EUR 90M back in March 2018. 

This appears as “Financial Asset” in their balance sheet line. 

5.) The company’s Cash and Cash equivalents amount has ballooned to $176m from the previous year of $97m, while borrowings have also increased to $2,467m from $1,354m the year before. 

The increase is mainly due to the funding they’ve undertaken to fund Ropemaker Place and also increase cash balance, which I am expecting they will make another acquisitions in FY19. 

6.) The company has provision for a potential tax liability of $20.3m in Q4, which is related to a sale of Hotel Windsor back in FY13. 

Based on my communication with Desmond, Ho Bee has been operating the hotel since 2000 and held Hotel Windsor as their properties for 13 years before it was sold in FY2013. The management believes this should be treated as capital gain which is exempted under the Singapore Tax Act but IRAS sees this as “trading” motives. '

Having said that, given that the company is already holding this for 13 years of period from 2000 to 2013, the company has already objected to the assessment raised by IRAS and believes under the ground that this should be treated as capital gain. 

Desmond mentioned that the management has assessed the probability to pay for this liability is less than 50% but being prudent they have provision for it anyway. 

If the objection appeal is successful, they would reverse this provision in the following year.

7.) Valuations for Hobee Continued to be attractive.

Their EPS have been very strong in recent times, driven from both the recurring rental and revaluation from their commercial properties.


Dividends are at attractive 4%, so I will treat this as my 4% + 6% play based on my dividend strategy.

The latter 6% is still in doubt unless they can prove on the recycling part well and I'd prefer the other way round of 6% + 4% if it permits.

But I think all in all, it's a decent play for a great assets developer with a great management.



Thanks for reading.

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Friday, March 1, 2019

Shopback Is My Main Source For Savings Rebates Mechanism

Many people distinguish their spending power and savings ability and treat them as two totally different functions. This is especially evident for the middle income group who thinks they must be separated because they serve for different purpose. 

However, the key to a rich mentality is always about having the two important equation balanced out well. 

While it is important that that we strive to improve our savings rate, there are also ways that we can be smart about our day to day spending as well. 

Gone are the days where you scroll newspapers to look for coupon clips in order to get item rebates. 

These days, there are many merchants coming up with new ideas and better offers to entice shoppers to sign up with them to get rebates. 

One of them is Shopback, a merchant me and my wife used almost on a daily basis whenever we shop online. 



It was only about a year ago when we came across a website called Shopback when we purchased a shoes online and we were immediately hooked into using it since then. 

For those who are new to Shopback, they are basically set up as an e-commerce online shopping platform where they allow profit sharing with their customers in the form of cashback. 

The idea is pretty simple. 

You find your stuff and get your normal routine shopping done with the merchants you want to purchase from, and at the end of the purchase you get almost an immediate cashback from them once everything is sorted out. 

Shopback has 300 over merchants they are partnering up with at the moment and some of my favourites I often frequent includes Hotels.com, Bookings.com, Singapore Airlines/Scoot, Klook, Lazada/Shopee, Redmart, IHerb and Taobao. 

Some of the rewards can be as small as 1% with the likes of booking with Singapore Airlines or Scoot and as high as 10% for Lazada, Shopee and Agoda. 

If your spending on higher amounts such as laptop, hotel bookings or air flights, the savings can be quite significant when you accumulate them.


On some days, you might even see them launching promotions on certain vendors where you get an upsized cashback which yields double digit rewards.

For example, this week's upsize edition is a promotion with Qoo10 and Shopee where you can get an upsize cashback of 5% and 10% respectively.



Personally, our household have accumulated quite a bit of cash rebates from using them since a year ago plus. 

To date, we have managed to accumulate an overall earning rebates of $428.80, which is not bad given that we have to spend these expenses anyway. 

Under no circumstances we are pressured into spending onto things that we felt were unnecessary for the sake of obtaining the rebates. 

Thus, we see this as a bonus “free” money that we are able to channel it further to our savings once we have redeemed them.



If you are first-time user and are interested in signing up, you can refer to the Link Here to do your registration. 

Upon successful signing up, you would be entitled straight to a $5 rewards (and I will be rewarded a small $5 referral fee) as well, just for open disclosure. 

You are under no circumstance pressure that forces you to spend on things that you don’t want to purchase even after signing up so the discretion is entirely yours. 

*This post is a collaboration with Shopback, but all views and opinions are purely mine and is a product that I believe will help consumers to save for the better.

Thanks for reading.

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Wednesday, February 27, 2019

Dividend Income Updates - Q1 FY19

With all the earnings announcement done and dusted for the companies I’m vested in, it’s that time of the quarter where I’m ready to tally the amount of dividends that I will be receiving this quarter.

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.

My Dividend Tree :)


For those who are new to dividend investing, this is a good strategy to adopt because it provides a slow mental therapy to your brain to keep you thinking about the long term objective you wanted to achieve and keeps you on the ground when there are big volatility in the market.

Having said that, many think dividend investing is easy work because all you have to do is sit on it.

The reality is that it is a result of the hard work you've built over the years and it compounds to give you higher each year.

Dividend investing is also not as passive as many people think it is because it still requires a good amount of effort to pick the right companies but they are definitely more passive than our full time job as it doesn’t require us to be physically on the site to clock time in time out.

And that’s the part I like most about dividend investing.

It allows me to be flexible on my schedule and possess an autonomy that most full-time job can’t, well.... hopefully.... one day.

It rewards you for years for as long as the company is solvent and it maintains a decent profit to pay out to shareholders.

As shareholders of the company, you are also technically the owner of the company and has the right to vote for or against any resolutions.

Having said that, you should not be blinded by companies which pays high dividend yield as they might be unsustainable and may cut their dividends payout should the business faces a downturn.

Without further ado, the dividend income which I will be receiving this quarter in Q1 FY19 is $9,884.

CountersAmount (S$)Ex-DatePayable Date
Starhill Reit4,260.00 7-Feb28-Feb
Far East Hospitality Trust2,300.00 20-Feb28-Mar
Manulife Reit3,324.00 18-Feb29-Mar
Total 9,884.00

That is almost rewarding myself with another month of extra bonus.

Or I can see it as covering for my 2 months of expenses.

Q1 is usually my weakest quarter as most companies have only finished reporting their full year results this quarter and will need a resolution to approve the final dividends in the agm so I am expecting the next 3 quarters dividends to trend up quite significantly.


I am excited as we head down to another new month soon which gives us ample opportunity to tap in.

Do you like being paid for life? Let me know in the comments below.

Thanks for reading.

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Thursday, February 21, 2019

Is Tenant Concentration A Risk To Your Reits Portfolio?

Following my last article which I wrote on Ireit Global, there’s been a good amount of discussion from readers regarding the concern on tenant concentration that surrounds Ireit’s leasing activity over the past couple of years. 

I am here to provide my own thoughts based on my working knowledge and a good balance discussion of both the advantages and disadvantages which I see and will use several case studies on it.

The tenant concentration concern has been brought up several times during the AGM and the management has also taken steps to abate the concern when they bought the Berlin property in order to “diversify” their tenets of tenants spread across their 5 portfolios. 

But there's more to that reason alone.

Here are my further thoughts:

1.) David vs Goliath 

Ireit Global is a relatively “small” Reit which has a market cap of less than $1b. 

In fact, as of 31 Dec 2018, their 5 portfolios combined has a market appraised valuation of around € 500m, which translates to about S$770m. 

These buildings combined, adds up to less than 1 OUE Downtown which OUE Commercial Reit recently bought for S$908m, which works out to be at $1,713 psf and has a remaining land tenure of 48 years. 

If we compare the size of Ireit against the bigger leader of commercial Reit, e.g Capitaland Commercial Reit (CCT) or OUE Commercial Reit (OUECT), they are similar to the analogy of David vs Goliath.

CCT and OUECT size of assets are at least 4-5x bigger and this lead them to have a capacity to “diverse” their tenants selection at a much larger spread amongst their many buildings.



Another way to look at this is vis the net lettable area.

Ireit’s overall asset portfolio has a net lettable area of 200,609 square meter, which translates to about 2,159,337 square feet. 

If we take bigger MNCs tenant who employs tens of thousands of employees into their premises, such as the likes of Singtel or DBS in our local blue chip analogy, the total lease out area would require almost at around 1.2m square feet, which took up 50% of the overall Ireit’s net lettable area.

This is what happens with the case on Deutsche Telekom and Deutsche Bund, which took up 51.9% and 34% of the overall concentration mix on Ireit’s portfolio, which brings about the concern to investors.

The percentage looks big because the overall net lettable area of Ireit is small. 

When they eventually expands the size of their AUM, the concentration mix of tenants will get lower.

This is natural.

If we think about it, it'll be weird on the other hand if say a big company like Deutsche Telekom comes to you wanting more space for their businesses but the Reits manager declined simply because they want to diversify their tenant mix.

Unlike retail which has reasons to diversify the tenant mix (i.e you cannot possibly have all full F&B concentrated for instance), leasing activity in commercial requires much lesser specifics on tenant requirements.

2.) Quality vs Quantity 

That brings us to the next question and that is quality over quantity.

The quality of the tenants you get would make a big underlying difference to what you are going to get in terms of the risk. 

The idea is to get high quality tenants and diversify as much as possible but if that is not possible, then the next priority would be to quantify quality over quantity.

The biggest underlying risk to a landlord apart from making sure the occupancy level is filled up would be a default on non-payment. 

If the tenant concentration is a small SME that might go bust anytime, then as landlord you might need to even think twice about renting it to them. 

You might have remembered a case back in 2016 and 2017 where NK Ingredients Pte Ltd defaulted on their payment to Soilbuild Business Space Reit. 

NK Ingredients Pte Ltd was the sole tenant for 2 Pioneer Sector building and one of the top tenants (5.8%) for Soilbuild back then. 

In the case of Ireit, while there are still likelihood that Deutsche Bund or Deustche Telekom might default on their payment, the probability is much lower. 

In this regard, the quality of the tenant concentration mix prevails as a solid quality blue chip tenant in Germany.

If they default, chances are we will see much more default occurrence by the smaller companies.

The problem as in the case of Ireit, is when your big tenant wants to reduce their space because of their business needs, for e.g to downsize or streamline certain operations.

The Munster campus is one good example, where they vacated one floor and the occupancy drops to 93%.


The challenge for them now would be to find a tenant who is willing to occupy only one space floor.

This is likely to be smaller tenants with possibly higher risk.

3.) Negotiation during renewal phase

The biggest challenge (and also reward) when you have such a big concentration of tenant is how you negotiate during the renewal phase and I think this is something I have learned quite a bit in my working knowledge handling such cases in the recent months. 

The catch with the Europe and London standard leasing practice is that the lease tends to be signed over a long number of years, usually minimally between 7 to 10 years. 

So once the contract is signed by both parties, the next few years are going to be a breeze in terms of your WALE and occupancy. 

The downside of having such a long lease however is you might miss out on the rental reversion when the rental market picks up, assuming there are no variable rental escalation. 

But this is looking both ways, so you might end up in favorable or unfavorable position.

Typically, during the negotiation process, the landlord would also try to maintain the notional occupancy rates (which includes rent, services and facility management) similar to what the general market offers. 

The negotiation comes in the rent-free period. 

Typically, the standard rent-free period in Singapore is 1 month free for a 1 year long lease. 

I think this is what happens in the HK market as well.

In Europe, the standard rent-free period usually stretches to 24 months free for a 10 years lease. 

In UK, because of Brexit and there's plenty of uncertainties right now, you might even get an option clause to break.

The variable portion in the rent-free period used to be the key driver for landlords to make the negotiation because it is used to be kept secret and confidential but since the introduction of IFRS16, companies are required to account for these off-balance sheet items and report this cashflow difference in their book. 

Take Sabana Reit for instance, in their most recent quarterly results, the management managed to renew their leases with some of the tenants by providing a higher rent-free period. This resulted in a higher occupancy and longer WALE but lower comparable net property income year on year.

At the end of the day, it's a variable that the property manager has to decide.

You either get occupancy or you get your high rental yield but usually it's unlikely to be both, unless you are at the peak of your super cycle.

Final Thoughts

I hope the above gives sufficient perspectives on how to look at tenant mix concentration and the process thought when landlords comes into negotiating their lease renewal with their tenants. 

As much as possible, commercial tenants tend to be sticky for as long as the notional occupancy rates offered are competitive against the market as it will cost companies a huge sum of money for reinstatement and relocation, not to mention relocating all their data centers with them, assuming that is held in the same building. 

Concentrations can bring about as much risk/reward as diversification and it is usually not that straightforward.

Thanks for reading.

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Wednesday, February 20, 2019

IReit Global - NAV Up By 11.6% For FY18

This is a Reit I used to own in the past because of its strong profile then divested them due to the change in the manager and the possibility of an equity call because of its high gearing.

Since then, they have done extremely well to mitigate by lowering their payout from 100% to 90% and use the excess to reduce their gearing over time.



Ireit Global announced their Q4 and FY18 results this evening which I thought continued to impress throughout both financially and operationally.

While they've taken steps to improve their aspects of the portfolio, which clearly shows from the falling revenue, NPI and increased operating expenses, they've managed to improve their distributional income due to the currency swap they've undertaken which swings in their favor.

At 5.8 cents distribution (based on 90% payout), this represents a dividend yield of about 7.5%.

The German market shows their strong resilience which resulted in NAV going up by double digit 11.6% year on year to €0.48.



This has a positive impact too on their gearing as their valuation of the properties has gone up, which resulted in a lower debt to assets ratio. 

Their gearing stands at 36.6% as at year end and has reduced a lot since I've divested them a couple of years ago when their gearing was at 40+%.

The other thing which is probably straight in their favor is the fact that their main borrowings will be due in the next 1 year, so they have started refinancing at a 1.7% (such a low interest rate still in Europe!).

If we compare this across the other Reits in today's circumstances, this probably has one of the lowest effective interest rates and will continue to be for the next few years until Europe starts to recover.

Majority of the leases will also be due for renewal only after 2022 so there's a lot of room to maneuver in respect of that.

For investors, this means there's no major overhang as both debts and lease renewal will not be an issue until a few years later from now.

My head is telling me this is a much better investment than some of the overseas Reits we have today out in the market whose valuation has gone up a lot in recent days/weeks.

I'm just slightly surprised there isn't as much news going on with the sponsor after inheriting them a few years back.

Thanks for reading.

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