March 2025 Updates

First dividend season of the year. Received dividends from the following: 

1) Ascendas REIT

2) Mapletree Logistics Trust

3) Mapletree Industrial Trust

4) CapitaLand Integrated Commercial Trust

5) CapitaLand China Trust

 

Total dividends received for this 1st quarter amounted to S$2,258.04.

 

Pretty satisfied as this is slightly higher YoY. Figure for same quarter last year is S$2,003.27.

 

Per usual practice, all dividends + 50% of my side income are invested back to the portfolio for compounding: the 8th wonder of the world.

 

This month I've added OCBC @ $16.57 and Venture @ $12.45 to my existing positions.

 

The OCBC purchase comes with a 5.1% dividend yield excluding special dividend.  The group has released a pretty solid FY24 with a 8% increase in net profit and EPS. Final dividend was reduced by $0.01 YoY while CEO Helen's pay when up instead. Not much to complain anyway, just an observation on my part.

The Venture purchase comes with a 6% dividend yield. This was done partly to average down, partly to reduce my REITs concentration and partly as a recovery bet in the company. Their recent results haven't been very encouraging although they are maintaining their dividend amount and they are consistently generating positive free cash flow. Hence I am keeping this counter to a small portion of my portfolio. In fact this is the smallest position at 3.2%.

Interesting bit, after I made the Venture purchase, another counter which I have been eyeing actually fell to my TP. Alas I have already expended my bullets this month so guess this has to wait. If another opportunity arises in April this will probably take precedent. Let's see.

Another important news is regarding OCBC 360 Account. There will be a revision to the interest rates on 1st May 2025. Based on the revised terms, I can probably earn 2.65 - 3.85%. Not fantastic but not too shabby either. Moving forward this will probably be the trend across the banking sector so I won't be in a hurry to move funds around yet.

Revised terms from 1st May 2025 onwards:

 

Summary of January 2024

 

Blink of an eye and last day of January is here. 11 more months to end of the year. Lol..

 

Home. Kids have been falling sick one after another. Can't help but feel worried. On the other hand, got to find time to start on the spring cleaning. 10 more days to Lunar New Year.

 

Accidentally broke the handle of my metal gate recently. Damn. Didn't know a wrought iron gate handle can break so easily. Nevertheless I always believe things happen for a reason.

 

Taking this chance to change to digital lock for both gate and main door. Installation on next Wednesday.

 

Work-wise, have completed some of the projects on hand and the remaining in various stages of completion. New ones are coming in. I look forward to another great year after last year's record-breaking results.

 

For my sideline, most clients have came back from their holiday and income for this month is higher than projected. I look forward to another record-breaking year for this stream too.

 

School-wise, have finally submitted my dissertation today. That's a huge load off my shoulders. 18,000+ words, 82 pages. Don't think I have ever written such a long paper before. One of the best thing I came to realise from this Masters programme is that it re-ignited the joy of learning in me. I am even contemplating the possibility of a PhD if there is a topic that interests me enough to undergo the rigours in my 40s.

 

Investments-wise, made my first purchase of the year in Mapletree Logistics Trust at $1.53. MLT has released a good set of results recently of which I have written a review here.

 

Excluding RHT Health Trust which is going to be delisted anyway, I have 9 counters in my SGD portfolio. I am comfortable though no rush, to hold a portfolio of up to 12 counters.

 

Keppel Infrastructure Trust, Frasers Centrepoint Trust and Frasers Logistics & Commercial Trust are the counters being considered though each has its own areas of concern in my opinion.

 

Have also went through the latest results of CapitaLand China Trust and the above three counters. No time to write my thoughts on these yet. See if I can do it in the coming week.

 

Moving forward will continue my strategy of adding monthly using funds from my sideline and incoming dividends. Focus will be on:

 

1) Selected REITs whenever price weakness is present

 

2) Local banks which might present opportunities to add in 2H / 3Q this year when rate cuts happen, or even earlier since market is forward-looking. Stay nimble and monitor. If prices are attractive enough, would not mind deploying extra cash.

 

3) Non-REIT income counters as diversification

 

Till next time. Cheers.

Updates for Oct 2023

Have been adding Mapletree Industrial Trust @ 2.23 & 2.30, CapitaLand China Trust @ 0.90 and Mapletree Logistics Trust @ 1.47 in September and October.

 

These are incremental purchases added to existing positions. Nothing has changed among my top four positions.

 

Have been planning to add Ascendas Reit too but price has ran up abit today so will hold on first. However any price below 2.70 remains attractive for this counter. 

 

 

 

Reason for adding the above is simple. I have confidence in the business of MIT and MLT in a timeline that is aligned with my portfolio.

Obviously a major concern now is finance cost which if continue to rise, would have an impact on coming DPUs. Since my respective yield against cost should remain higher than the present risk-free rate with some buffer to go, it is something I am willing to bear for now.

For CLCT, it is mainly to lower my cost. For this counter, one parameter I will follow closely on would be its gearing which is getting uncomfortable for me. It is for this reason that I have reservation on bigger purchase.

Also, more than half of the business park assets lease would be due for renewal in the coming two years. It would be interesting to see how the management handle this and at the same time improve on the occupancy at the Singapore-Hangzhou Science Technology Park asset.

The macro environment including China's projected economy and weakening of Yuan against SGD is important monitoring factor for this counter as well.

 

At point of writing, my local SGD portfolio is down 6.16%.

 

Will continue to make use of the market volatility to add in batches. As usual, time in the market for me, not timing the market.

Review of CapitaLand China Trust FY2021 Results

CapitaLand China Trust (CLCT) is another counter of mine which has released their full year financial results last week. 

This is one counter whose result I am keen in following closer as I have high expectation for it in terms of growth due to the expanded mandate approved by unit holders last year.

I have ran through the results and made some observations and views as follows.

 

Summary

 

Overall great results with huge jump in incomes YoY which is expected with the expanded mandate.

 

Distribution announced is 1.80 cents per unit and will be paid out on 7th March 2022, Monday.

 

This is on top of the 2.70 cents per unit of advance distribution paid in November 2021.

Total DPU for FY2021 is 8.73 cents per unit.

Based on today's close price, yield is 7.28%.

 

The Good

 

Diversified asset class of the traditional retail malls and the new economy - business parks and logistics parks located in Tier 1 and 2 cities.

 

Clear plan laid out by the management with their 5-year acquisition growth roadmap which resonates pretty well with what I had in mind.

 

 

Record high revenue and NPI.

 

Huge jump in DI and DPU YoY (though base unit is also enlarged).

 

NAV increased to $1.54 from $1.48 YoY.

 

Interest coverage increased to 4.9 times from 3.9 times YoY.

 

With interest rates expected to rise this year, it is good to see 77% of borrowings on fixed rate.

  

Portfolio WALE by GRI of 2.2 years and 2.6 years by NLA.

This is similar to CLCT's WALE historically even when they were a pure retail play.

A short WALE can be a double edge sword but in this case, it is beneficial for CLCT as more than 80% of the logistics park leases have rental escalation of 3% - 5% built in.

 

The relatively short WALE also allows the Reit to be more nimble in handling the market dynamics of the retail segment.

All three asset classes reported higher occupancy.

 

96.3% occupancy for retail portfolio.

 

96.2% occupancy for business park portfolio with 7% positive rental reversion.

 

97.4% occupancy for logistics park portfolio with 2.7% positive rental reversion.

 

As mentioned, I particularly like that >80% of the logistics park leases have rental escalation of 3% - 5% built in. 

It is also a big plus point when the Reit manager's interest is aligned with the unit holders'.

 

The manager's management fee comprises of two components - base fee and performance fee.

 

The base fee is 0.25% per annum of the deposited properties value while the performance fee is 4% per annum of the NPI.

The manager may elect to receive the fees in cash or units or a combination of both.

 

For this FY, the manager has elected to receive $14.3 million (out of $21 million payable) in new units. In other words they share the same confidence in the prospects of the Reit as the other common unit holders.

 

Also, since the bulk of the management fees is tied to the NPI, it would do them and us good to grow the income year on year.

 

The Not So Good

 

Gearing increased from 31.8% to 37.7% YoY.

 

This is not surprising given the borrowings for the acquisitions from the past year.

 

 

Cost of debt of 2.62%. Could have been lower.

 

Negative rental reversion (-3.4%) for the retail portfolio points to the continual pressure faced in this segment.

 

This would be a major cause of concern in the past but is now somewhat mitigated by the diversification of the Reit into other asset classes which provided positive rental reversions.

This is the power of diversification - to reduce concentration risks.

Management has guided that the leasing environment for retail to continue to be competitive.

Other than that, the main risk I can see here is the political environment in China which is somewhat unpredictable and the danger is often not visible until it hits you.

Conclusion

CLCT is a Reit that has been growing organically (through AEIs) and inorganically (new acquisitions) aggressively over the past year.

 

This is the first full financial year after the mandate to diversify into other asset classes was approved by unit holders.

 

Subsequently, CLCT invested into 5 business parks and 4 logistics parks located in 12 cities in China.

 

Together with the 11 retail malls, it is not surprising that this enlarged portfolio with diversified asset classes achieved the highest gross revenue and NPI for CLCT since listing.

In fact anything less would be a damper isn't it?

Based on the closing share price of $1.20 today, CLCT is still trading at a 22% discount to its NAV.

 

With a more than 7% yield and a solid growth plan ahead, I would say this is a no brainer addition for serious income investors.

 

I last added to my holdings in August 2021 and depending on the share price, I am looking to add some in the coming days.

Quick Review of My Portfolio (Oct 2021)

Found time to do some quick glancing and do a quick review for the counters in my portfolio since this is reporting season.

Mapletree Logistics Trust

 

 

MLT has always performed admirably since I first bought into them four years ago. The management is a forward-looking one with a record of shrewed yield-accretive acquisitions over the years.

 

This quarter is again an excellent one in my opinion.

 

Apart from the low 38.2% leverage which means much room for further acquisition and growth, I like that their average interest rate is low at 2.2% and their 5.2x ICR.

Mapletree NAC Trust

 

 

Results have improved over 1H last year.

 

I also like their low interest rate of 1.84% and their 4.1x ICR.

 

Yield is still above 6% against cost. 

Festival Walk's contribution to revenue and NPI remains below 50% which is good but can be better. A figure of ~25% would be more ideal.

This can be achieved with future acquisitions though investors ought to keep a close eye on the leverage which is pretty high at 41.4% currently.

 

One thing I noticed is that Festival Walk and Gateway Plaza continue to have negative rental reversions which no doubt will be a drag to coming results. 

Furthermore there is a possibility that a major tenant of Gateway Plaza might not extend the lease beyond December 2023.

 

With the visible hurdles ahead, i will probably maintain my existing holdings and not add further.

CapitaLand Integrated Commercial Trust

 

 

 

All metrics - revenue, NPI, portfolio occupancy & WALE, leverage, ICR, cost of debt, look healthy.

 

Clarke Quay's occupancy suffered due to government's regulations on nightlife. However I'm not too worried about this since this should be a passing phase.

 

Six Battery Road's relatively low occupancy rate is due to the ongoing AEI which I have covered in previous review. Again nothing to worry about as the AEI should be completed by end of this year.

 

CapitaSpring has achieved TOP for the office component. More importantly, they have achieved committed occupancy of 83.1% with another 7.2% under negotiation.

 

This is good to see as I was having some concerns on the occupancy rate of this property back in my May 2021 review.

 

CapitaLand China Trust

 

 

As mentioned previously, I like that Minzhongleyuan has finally been disposed. Though it's a small portion of the portfolio, it has been a drag for long.

 

I like that CLCT has gone into logistics and business parks right after getting the expanded mandate from unitholders.

 

The WALE by GRI and NLA for the business parks is relatively short at 1.9 to 2 years. This can be a double edge sword though if positive rental reversion can be achieved.

Yield is still above 6% against cost.

 

Upcoming quarters should see even better results with the addition of the 4 logistics assets.

ESR Reit

 

 

Performance this quarter is a good improvement over the last.

However if there is one metric that I don't like, it is their cost of debt which is high at 3.41%.

Another thing to take note of is the continual negative rental reversions (-2.2%).

 

It has been a busy quarter for ESR Reit with the divestment of non-core asset, a round of equity fundraising and inclusion into the FTSE EPRA NAREIT Global Real Estate Index.

 

The addition to the index last month is good news to existing unitholders as this will makes the Reit more relevant to funds and more visible to investors.

 

Of course the latest big news is the proposed merger with ARA LOGOS Logistics Trust. Honestly I have expected this ever since ESR Cayman acquired ARA Asset Management.

 

Overall I would say this merger makes sense considering the synergy and potential advantages from the enlarged Reit.

Suntec Reit

 

 

 

  

Good set of results driven mainly by their overseas portfolio with maiden contributions from Minster Building in UK.

 

Leverage is high at 44.3% which means less room for growth through acquisitions with borrowings.

Suntec City Mall continues to have negative rental reversions.

Suntec Convention continues to be a drag though quarterly loss has decreased.

Ascendas Reit

 

 

Continues to be one of the most well-run Reit in Singapore with constant portfolio rejuvenation through asset disposals and acquisitions.

 

Well diversified in terms of geography and asset type.

 

Good portfolio WALE of 3.8 years.

Netlink NBN Trust

Results will be announced on 3rd Nov 2021 after trading hours.

SingTel

 

Results will be announced on 11th Nov 2021 before trading hours.

Suntec Reit vs Ascendas Reit vs CLCT

With the recent dip in share price of the various counters in my local watch list, I began to monitor more closely and started to plan my funds around in case the opportunity to add arises.

There are plenty of counters that I would love to add such as Mapletree Commercial Trust, Keppel DC Reit and ParkwayLife Reit. Unfortunately these are over valued at the moment.

And there are plenty which I would love to accumulate more such as Mapletree Logistics Trust, CapitaLand Integrated Commercial Trust, DBS, OCBC, Mapletree NAC Trust, Netlink NBN Trust, Suntec Reit, Ascendas Reit and CapitaLand China Trust (CLCT).

 

All these are solid counters for a portfolio in an ideal world. Unfortunately in the real world, I am an ordinary person with limited funds so due diligence is extra important in my case.

 

Furthermore I have diverted a five figure sum to the US and HK markets recently so that left me with not much to take advantage of the dips in STI.

Of the above-mentioned counters, three of them have been inching towards my interested price points hence I decided to take a closer look and did some comparison as follows.

 

Note the data is garnered from the 1Q 2021 report of the respective counters and various sources found online.

 

 

Distribution Yield

 

Of the three, Suntec Reit appears to have the highest yield on paper. However notwithstanding last year's Covid-19, its distribution has been falling for the past three years and not without reason.

Ascendas Reit's dividend yield appears low at 3.9%. However that is excluded the advanced distribution which will be announced at a later date. Therefore the actual distribution should be higher or close to last year's figure.

If assessed purely based on distribution yield, I actually feel CLCT has the highest potential.

 

CLCT's distribution in this table is based on last year's figure since the distribution for this year has not been announced yet.

However during pre-Covid times, it has consistently hit 7% and above. Along with the new mandate, it has huge potential to go higher.

 

Gearing and Debt

 

Suntec Reit's gearing is the highest and is at a level which I'm not really comfortable with. As such it is also more likely to have rights issue in future.

 

Its financing cost is acceptable but its interest coverage is the lowest among the 3 counters.

 

Ascendas Reit performed the best in this area. Its gearing is only 38% with lowest financing cost and highest interest coverage.

 

CLCT has the lowest gearing among the three. Its financing cost is the highest but at an acceptable level. Furthermore its high interest coverage means no worries on the interests servicing.

Outlook

 

Suntec Reit's jewel in the crown has always been the office and mall segments where it achieved consecutive quarters of positive rental reversion.

For 1Q 2021, the office segment again proved its resilience.

Its venture into Australia seems to be an excellent move as well and has started to reap the rewards.

Unfortunately the good stuff ends here.

Contribution from the retail segment has fallen by 24.1%. The convention segment is worse at 47.1%.

For Suntec Reit, moving forward, a lot depends on how well and fast the retail and convention segments recover. Otherwise they will continue to be a drag on the overall performance with its effect cushioned by the Australian assets.

Recently it has been announced that Suntec Reit will be shifted from the MSCI Singapore Index to the MSCI Global Small Cap Indexes.

Frankly, I have no idea what the effect will be but I will continue to monitor this counter.

Ascendas Reit has always been a well-run business with high overall occupancy rate and well diversified tenant base.

With its recent addition of the European data centres and remaining 75% of Galaxis, it's exciting to see the future of this Reit especially these certainly won't be the last of their acquisitions.

Having said that, the diminishing demand for industrial space and overly supply might be a double whammy for all industrial Reits including Ascendas.

However the geographical and asset class diversification should soften any possible blow.

 

CLCT has a well balanced performance in terms of the various metrics.

 

On the macro front, its shopper traffic and tenant sales have improved tremendously YoY. Also, it has gotten rid of its most under-performing mall in its portfolio.

 

And all these are for the retail malls only which will eventually be reduced to 30% of CLCT overall asset mix in the future.

 

At the same time the most exciting development in my opinion is their new mandate of exploring other asset classes like business parks, logistics and data centres. The latter two are among my favourite asset classes by the way.

This is akin to unleash the rope that binds the feet of a fast runner. Suddenly he can run much faster and further.

Already, CLCT has taken a first step of adding business parks into its portfolio.

On the down side (and possibly up side), the portfolio WALE be it by NLA or GRI, is rather short ranging at 2 to 3.5 years.

If I remember correctly, this is by choice for flexibility in rental reversions.

Valuation and Growth 

 

In terms of valuation, P/E ratio is not really relevant so I gave it a miss.

Based on P/B ratio, Suntec Reit and CLCT are both trading below their NAV.

 

Ascendas Reit is currently trading at around 1.368 times P/NAV (NAV based on latest FY results) which is slightly higher than its 5 year average of 1.284.

All three counters are currently trading below their 20- and 50 DMA with a death cross forming recently for Suntec Reit and CLCT.

 

For potential growth, I did not use the DYG calculation this time unlike before.

 

But judging purely from the macro factors, asset mix and results of the respective 1Q 2021 metrics, here is my verdict.

Suntec Reit: To add only when extra funds are available

 

Ascendas Reit: To add with slightly more safety factor

 

CLCT: To add with slightly more safety factor