Hi guys,

Was not aware of this thread's existence til today. I've been lurking in HWZ all these years reading the SREIT threads there. How nice to find a similar community closer to home.

I've been an income-oriented MREIT investor for years but I started diversifying into SREITs over the past two years. I was always attracted to SREITs but resisted from investing there in a big way due to unfamiliarity. Eventually as all the "blue chip" MREITs started to yield no better than Singapore's Parkway life, it made no sense to hold MREITs anymore. Plus the tax free and depreciating RM factors made the divergent returns a lot more obvious. I took the plunge, and converted my portfolio into SGD and started building an income portfolio there.

I've been holding soilbuild, aims amp and viva sinceJan. Generated about 10% in price returns and 4% dividends so far. The price returns have been a lot higher than my expectations, but I'm not complaining. I'm looking to diversify my risk away from the industrial sector but I'm not quite comfortable with retail or hospitality at this point of time. I'm considering adding some "risk-free" parkway life. Just to clarify, I mean "risk-free" in terms of dividend certainty not market certainty.

This post has been edited by Havoc Knightmare: Jun 2 2015, 08:00 AM

Just a friendly reminder to all income investors to be mindful of rising bond yields!

This post has been edited by Havoc Knightmare: Jun 3 2015, 12:15 PM

Picked up Parkway Life at 2.28 today

The bond sell off should be bottoming out soon. I'm accumulating SREITs now

Ive been scooping up Lippo Malls and IREIT since early of the year.. anyone else going high yield? Viva anyone?

Lippo announced strong results. DPU up 2% QoQ or SGD0.009 per share. Looking forward, there is 18% NLA lease renewal in 2H17. Given that their rental reversion has been strong and Indon economy remains resilient.. there is further organic upside to Lippo's DPU. Gearing is around 30%, which means plenty of room for more acquisitions. Their cost of issuing debt has been falling steadily over the past year as well. They issued a perp last year with 7.0% coupon. They issued another perp at 6.6% a couple of months back.

I will be looking to add more tomorrow

If you read IREITs 1Q17 report, you can see that they restructured a small loan tranche from August 2017 to July 2018 with quarterly payments in between. Its likely that the retained earnings will be used to service this short term debt, rather than a long shot attempt by IREIT's management to bring down their gearing ratio.

As a shareholder I very strongly prefer that any DPU accretive acquisition be funded via private placements or even issuances of perpetuals..

I guess I'm just lazy and find the whole process messy. What more if I end up with odd-lots of rights/shares.. I much rather the REIT manager coordinates an acquisition with a private placement so that I enjoy a bump in terms of DPU with minimal hassle and/or drop in share price.

Perps are treated as equity from an accounting perspective, otherwise the REITs wouldn't be issuing so much of them. Issuing perps reduces the gearing, allowing the REIT to issue more senior debt in order to purchase assets. This is probably the least damaging to ordinary shareholders since the cost of debt for a perp is typically lower than ordinary equity, resulting in a higher DPU boost for ordinary shareholders as compared to a rights/private placement issue.

That may be true in the short term, but the resulting boost in DPU usually pushes the stock price higher anyway in the medium term. I suppose its a personal preference as I really dislike rights issue for potential odd lots and hassle of subscribing.

This post has been edited by Havoc Knightmare: Aug 8 2017, 07:55 AM

Congrats.. out or curiosity, are you subject to 30% withholding tax on dividends?

Maybe that is why they chose to list on the SGX.. for a more favourable tax regime. But I'm just speculating here.

So just to confirm.. you receive the dividends as per the gross DPU declared? If so, I will definitely be adding it to my portfolio.

Hmm.. so receiving dividends in SGD will not result in any withholding taxes, but receiving USD will do so? May I know which broker you are using?

I consulted POEMS some time back about this and they said that the withholding taxes will apply, hence why I avoided Manulife all this while.

Thanks for the clarification bro! Will look to pick up some in this selloff.

Haven't had time to assess this yet but it looks promising:

Cromwell REIT Draft Prospectus

I've been picking up unloved and neglected S-REITs such as IREIT, Ascendas India Trust and Sasseur REIT during this sell off.. couldnt be happier

Oops maybe because I've been buying Sasseur at 72.5-73.0... if they exceed their minimum guaranteed rental which is a relatively low hurdle based on the prospectus, we are looking at >9% yield for 2019. Otherwise we are guaranteed 8.5% for the next few years. Such a steal eh...

Admittedly Sasseur is a high risk high return gamble at play here.. its the only China based SREIT that I would dare to invest in other than CRCT. So here's my angle-

The sponsor, Sasseur is backed by very reputable private equity names and also Ping An, the largest Chinese insurance firm. So that should take care of corporate governance.

http://www.sasseur.com/wzszc/info_132.aspx...mid=932&lcid=72

Also, the cornerstone investors are reputable names which is also a very important factor since it tells me that they are confident in the Sponsor and business itself.

The REIT has been structured such that the Sponsor provides a guaranteed yield of 7.5% and 7.8% (based on IPO price of 80 cents) for 2018 and 2019. So long that Sasseur REIT does not generate returns in excess of the minimum income for 2 years in a row, the Sponsor will have to keep topping up to achieve the minimum income. Based on the closing share price of 71.5 today, that works out to a yield of 8.7%.

However, based on my analysis of the prospectus, the guaranteed distributable income for 2018 and 2019 assumes 0% growth from 2017. Given that it's income growth has been double digits over the last few years, the hurdle of crossing the minimum income level is relatively low. Which means that if Sasseur continues to grow at historical levels, REIT holders should get a yield closer to 10% next year at current price levels.

Based on my analysis, these are the 2 likely outcomes:
1. Trade war impacts China's economy severely- I'll collect the minimum yield for the next few years (>8.5%) until the economy recovers.
2. Trade war has minimal impact and Sasseur's revenue growth continues- I'll get >9% yield in 2019. Share price will surge when market recognizes that.

Looking at either case, I can live with either outcome. It still is a risky bet IMO since I'm adding it prior to even its maiden quarterly results but since I consider myself an aggressive REIT investor, it's something I'm willing to bet on.

I'm OK with RMB because in any case it has outperformed the MYR and will likely continue to do so since China is developing rapidly, trade war or otherwise. As a Malaysian it is effectively RMB vs MYR to me, since I view my portfolio in MYR terms.

REITs gearing is usually evaluated using Debt/Assets rather than the Debt/Equity ratio used for stocks. MAS limit of 45% is based on that too. Sasseur wouldn't be able to IPO with a gearing of more than MAS limit of 45%. Sasseur IPO'd with a gearing of 31% which is lower than average. Which means that they can easily acquire more assets from their Sponsor and boost the yield further. I'm not factoring that in because that is a bonus if it happens.

It is a high risk bet no doubt but one that I'm willing to take. Like you I hope to retire by 40

This post has been edited by Havoc Knightmare: Jul 5 2018, 11:10 PM