My copy of analysis but quite messy haven't tidy up yet.

Actually through leveraging you can see increase in EPS but risk is there. As long as the interest rates and occupancy rates risk is manageable it should be alright. Imagine with additional RM 270 MILLION LOAN at 3.5% interest rates but with yield of around 8% don you think it is possible? Thats why reits EPS can be improve via acquisition or improve in occupancy rates. Correct me if wrong sifus.

This post has been edited by darkknight81: Mar 21 2010, 06:38 PM


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 UOA.pdf ( 43.81k ) Number of downloads: 63

EDITED VERSION


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 UOA.pdf ( 41.28k ) Number of downloads: 106

darkknight81,

Has the company actually announced the rental incomes of the 2 properties?

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Added on March 21, 2010, 8:33 pmdarkknight81,

Your calculation is flawed as you have not taken into account the manager's fees, operating expenses, administrative expenses and other misc expenses.

This post has been edited by Jordy: Mar 21 2010, 08:33 PM

Yes , you are right.

If he does not factor in the costs of running the new buildings, then his investments, I would say is based on Best Case Scenario

Obviously unlikely to happen.

He could be penalised ( by the market ) for doing all the hard works.

Hopefully, I am wrong.

P/S > For those who think their computations are to good to be true , then rethink about the Chinese saying " Frog jumping on the Street" , that possibly able to help you to spot your mistakes. I use this method over and over again.

This post has been edited by SKY 1809: Mar 22 2010, 12:24 AM

Nevermind, he is still learning to fine-tune his analysis. What I hope now is that he has not fallen into the trap of his own mistake.

I get what you meant. Thats y i am saying the dividend should be 16 cents in my previous post (you can refer it back) after deducting all these expenses but in my calculation is actually 17 cents as per attached which is the ideal case. I am lazy to take these exact figures into considerations but i understand what you guys meant so i already deducted 1 cents out from it. I am not an analyst i just want a rough estimations. Eventhough you are analyst you also cannot get the exact figures as occupancy rates do determined the overall returns.

For you guys saying is easy but it took time to compile all this figures so i got to make some assumption on this and that. . Even for the interest rates part i assume it to be 3.5% this year but in actual fact it is 3.25 at the moment.

If you really read their annual report you can see the EPS growth for the past few years. So who say reits don have growth? Its all depends on how you manage it.

Thats why i put a lot of "ASSUME" as this is just a rought estimations. I did not get paid for all these .

As i said earlier, leveraging is very important in reits... The margin between the properties yield and interest rates play a very important role. So i believe it is the right time for UOAREITS to acquire two building blocks before the interest rates raise further. The margin is around 4% and with RM 270 Million loan... it is around RM10.8 million extra you see.

Actually no need to calculate much from here we already know the effect on future EPS. Those with some basic in math can calculate this out.

Total new units after private placements is 422871776. So RM 10,800,000/422,871,776 = 0.025 CENTS extra here. Previous EPS is around 12 cents. So including this 2.5 cents should be added up to 14.5 cents.

But this all depends on UOA REITS TOO, maybe they want to allocate more money to pay off their borrowings.

NOTE : Current borrowings interest is only 3.25 i am assuming 4% interest and properties yield i am assuming 8% here which is quite fair. So there are margin here in actual fact it should be more than 10.8 million.

This post has been edited by darkknight81: Mar 22 2010, 08:28 AM

Wanted to topup on HEKTAR after exiting BJTOTO but the price seems to be moving north.

This post has been edited by whizzer: Mar 22 2010, 09:53 AM

Heard from my broker said Hektar is a potential in term of dividend yield at least 8%-11%. Anything do with Bjtoto affect the Hektar price?

Haha.. No relation. Sorry if misleading .
I was just "rebalancing" my dividend portfolio.

Latest for all you REITers from MB attached below

Looks like M-REIT is waiting to bubble.... buy now while still cheep

This post has been edited by whizzer: Mar 22 2010, 10:42 AM


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 reit.pdf ( 105.17k ) Number of downloads: 177

UOAREITS still no sellers at the moment

Want to buy some more also susah

This post has been edited by darkknight81: Mar 22 2010, 11:21 AM

Eh.. Why I cannot find this M-REIT counter? Sorry. Noob reit investor here.

It stands for Malaysian REITS generally.

Meaning Singapore REITS are not covered here.

darkknight81,

The adjusted previous EPS for UOAREIT is around 7.1 cents, so if the new acquisition would add around 2.5 cents, then the adjusted EPS going forward would be just about 10 cents. Anyhow, I have given you the basic guide to calculate the adjusted future EPS.

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Added on March 22, 2010, 1:28 pmSifu Jordy,

You missed out the contribution from the private placement….Thats why your earnings per unit so low…Let me explain to you more clearly. Is my fault of not explaining properly.

245,948,700 units = (EPS 12 CENTS for 2010) = 29.51 Milliion
RM 230 million raise through private placement ( 176923076 new units) assuming yield of 8% (after deducting all the expenses ) = RM 18.4 MILLION.
RM 270 Million through borrowings at 3.5% interest rates (Assuming yield of 8%) that’s means margin of 4.5% = 12.14 Million
EPU = RM 60 Million / (422871776) = 0.14 CENTS.

In conclusion acquisition will definitely increase future yield with 1 condition below:

1. Acquired properties yield must be higher than interest rates and almost equal with current yielding.

I don think i need to explain further on these. Simple maths will do.

This post has been edited by darkknight81: Mar 22 2010, 01:36 PM

Thanks. No wonder I cannot find the counter.

darkknight81,

Correct, I knew that I have missed out the contribution by the placement, but you can add it into my projected EPS. Plus, remember that your RM18.4 million is the gross income, not net. But I agree with your figure now (which is more reasonable) than your previous estimation of 16-17 cents. You could expect about 13 cents EPS after the acquisition (around 12.4 cents with 95% payout). At the price of 1.30, you would expect 8.6% net distribution. Does my refined estimation sound more realistic?

Yes i admitted my previous figure seems too optimistic however i am not agree on your previous post stated the EPU before and after acquisition are equal.

The 1 cents deducted from the 17 cents net rental was really not enough as we need to deduct property operating expenses + Manager's fees + trustee's fees etc and even tax. But i believe these two blocks of building are quite new so the maintenance cost should be quite low.

This post has been edited by darkknight81: Mar 23 2010, 07:58 AM

One concern that I want to point out is :

First thing first , I am not familiar with commercial properties, so comments quite limited.

However, the present UOA premises are located at the centre of the city . The rental rate of RM 4plus seems to be a bit low as compared to the new buildings of rm 5.5 to 6.
"
Bear in mind, the new buildings at Bangsar or Damansara are not so " centre " as compared to places around Jln Sultan Ismail, where the existing building is located.

The other thing is why the occupancy rate of the existing building is low at 70 plus in the centre of KL, whereas Damansara has 87% or so ?

Where could it go wrong ? That is my question .

Mind to share, anyone ?

This post has been edited by SKY 1809: Mar 23 2010, 06:51 PM

Me too and i am from east malaysia some more. This figures i get it from internet too. I think Master Cherroy can explain on this.

darkknight81,

I would like to reiterate that I left the EPS equal on purpose because I have not factored in the contribution from the placement (was too lazy to calculate it). I will only perform a more in depth estimation on counters which I am going to buy.

To add onto your point regarding the maintenance cost, you would have to consider the costs of security (devices and personnel), insurances, cleaning, minor repairs and also utilities. So, the maintenance cost for a high-rise would be high too even if it's a new building.