Accordia Golf Trust: A hole in one.

I bought more this morning when the counter broke out of resistance:



In the afternoon, I closed my positions:

What if the unit price were to go higher? 

I would congratulate those who are still holding.




Won't I feel any regret? 

I might complain about it a bit but it would probably be in jest. 

What? 

Why won't I feel any remorse?




I always try to remember my motivation whenever I initiate a position. 

If the outcome matches my motivation, that is good enough for me.

Why should we feel sad if things turned out well in the way we had hoped they would?




Related posts:
1. Accordia Golf Trust: Blood in the golf course.
2. Motivations and methods in investing.

Accordia Golf Trust: Blood in the golf course.

Regular readers know that I do a bit of trading and that I like to look when there is blood in the streets. What about blood in golf courses? I am impartial.

Just a dash of technical analysis and a dose of luck.

Immediate resistance is at 80c. If that should break, the next resistance levels are at 82c and 84c.

Croesus Retail Trust: 4Q FY2014 DPU improved as expected.

In May this year, I made an estimate on Croesus Retail Trust's possible forward yield. That was when DPU seemingly took a dip after the purchase of 2 malls.

At the time, I said that:

In the quarter April to June 2014, the 2 newly acquired malls will contribute a full quarter of income. This will bump up quarterly DPU. Annualising that DPU will more accurately reflect the annual DPU and hence the distribution yield of the Trust.

Of course, I was really staring hard into my schizophrenic bowling ball and hoping that it would cooperate when I also said:

With distribution income for January to March 2014 at JPY 619.78 million which gives us a DPU of 1.76c, an additional NPI of JPY 144.4 million (JPY 72.2 million x 2) will have some positive impact on DPU for the quarter April to June 2014. Even assuming that costs go up by some JPY 50 million (additional management fees and financial costs), we would still be looking at some additional JPY 94 million which can be distributed to unit holders. This is an increase of about 15%. So, we are looking at a DPU of possibly 2.024c.

Well, 4Q FY2014 DPU came in at 2.00c. My bowling ball was a bit off by about 1.2%. OK, no spa treatment (i.e. polishing) for it for the next two months!

To be fair, the two newly acquired properties began contributing their first full quarter of income when higher consumption taxes were introduced in Japan on 1 April 2014. Overall, consumers in Japan cut back on spending somewhat country wide. So, a DPU of 2.00c is, I believe, commendable.

So, what is the distribution yield now?

Of course, since my blog post in May, Croesus Retail Trust's unit price has gone up a fair bit, from 93c a unit to $1.02. This is an appreciation of 9.68% in 3 months.

So, yield has compressed. Annualising a quarterly DPU of 2.00c gives us 8c or a forward yield of 7.84% at a unit price of $1.02. For those who got in at 87c, yield on cost is almost 9.2%.

Would yield improve in future?

Distributable income looks set to improve in the next 12 months as tenants accounting for 20% of Croesus Retail Trust's total revenue will see their leases coming up for renewal. Positive rental reversions could also surprise on the high side as some leases have not seen any increase in rents for many years. This will result in a higher distribution yield for unit holders, all else remaining equal.

What to look out for?

The management of Croesus Retail Trust are still on the prowl for quality properties to acquire. However, with gearing rather high, some form of equity fund raising is probably required to either fully or partially fund future purchases. Whether they are able to do this in a way that would add value for existing unit holders would tell us something about the management.

See: Media Release.

Related posts:
1. Croesus Retail Trust: What is the forward yield?
2. Croesus Retail Trust: Motivations and risks.

Saizen REIT: Still a good investment for income?

Saizen REIT is now one of my top 3 investments in S-REITs and in a recent talk, I said the same thing. I also explained why I invested in Saizen REIT and why I quadrupled my long position in the REIT when I did.

Anyway, Saizen REIT's latest presentation is now available for viewing and I have attached the link: here.

DPU: 3.1c.

While I believe that the weakness in the Japanese Yen is likely to continue for many more years, residential properties' occupancy and rental rates should start to pick up in the next couple of years if Abenomics gain even more traction.

Having said this, remember that Saizen REIT is distributing income in an amount that pretends that its loans are non-amortising in nature. What is the effect? Amortisation of loans cost 1.46c per unit which means if the REIT did not have the cash resources to pay for this and if the money were taken from income generated by the REIT's portfolio of properties, only 1.64c would have been available for distribution to unit holders this time.

See related post #1 at the end of this blog post.

NAV/unit: $1.22

In JPY terms, the valuation of properties in the REIT's portfolio seems to be rising and in one of my earlier blog posts, I shared that Saizen REIT's real estate assets could be more undervalued than we think.

See related post #2 at the end of this blog post.

Gearing: 37%.

Although Saizen REIT published their net gearing as 31%, I will take 37% for a more conservative guidance. I also want to remind myself that Saizen REIT uses its cash resources to offset amortisation cost. See earlier point on DPU above.

Weighted Average Loan Interest Rate: Less than 3%.

Debt profile: Earliest loan maturity in 2020.

Unlike most other S-REITs, Saizen REIT is able to secure loans with relatively long tenures which makes a lot of sense since real estate investment is essentially a long term commitment. The inability to refinance when loans mature was a reason why many S-REITs were caught in a bind during the GFC only a few years ago. Some of Saizen REIT's loans actually only mature in years falling in between 2031 to 2044.

Occupancy: 91%

There is still room to bump up income by getting more tenants but this would really depend on whether the Japanese economy improves meaningfully but with plans to allow more foreigners to join the economy, things could start looking up.

See related posts #3 and #4 to hear me talk to myself a bit more about the REIT. For me, Saizen REIT is still a great investment for income.

Related posts:
1. Saizen REIT: Is the DPU sustainable?
2. Undervalued and possibly more so.
3. Rewarding patient investors.
4. Saizen REIT: A foreign talent.

Two blog posts I would like the "recovery group" to read.

Earlier this month, I shared that I was going to give a talk and that talk happened last night. After the talk, I went home and thought about it and only fell asleep at 2am, maybe, 3am. Not too sure. I am terrible, I know, but that's me. Insomnia is nothing new.



Insomnia? Banana...

Anyway, in case participants of last night's session should visit my blog, here are the two other blog posts I would like for them to read:

1. How to make recovering from investment losses easier?

2. Managing exposure in AK's investment portfolio: Examples.

Of course, anyone is welcome to read them too. No bias here. I nice or not?

Find out who invited me to give a talk and also read the review: here.

How to earn 6.30% interest after 4 years?

Someone tried to interest me in this not too long ago:

I have forgotten about it until I saw an email advertisement recently.

Any interest in this "interest"? Well, I blogged about why it did not interest me before and if you are interested, please read related post number 1 at the end of this blog post.

What I find objectionable about this advertisement is the use of the word "interest". What do we think of when a bank promises us a certain interest rate? What do we understand by the word "interest"?

Definition of "interest":
Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

When a bank promises an interest rate of 6.3% after 4 years to us, most people would interpret it as a fixed deposit with a total of 6.3% in interest paid after 4 years (or about 1.575% per annum). If we asked any reasonable person, that would be the view. Then, if the product is not what any reasonable person think it is, we have a problem, don't we?

Read the small print:
"Because the Structured Deposit is structured with the objective of returning your initial investment amount only at maturity, repayment of your initial investment amount does not apply if you terminate the structured product prior to maturity. You may potentially lose the principal sum invested if the investment is not held to maturity. There is no unconditional guarantee of repayment as repayment is subject to the creditworthiness of the (bank) i.e. if (bank) defaults, you may lose your initial investment amount."

This is a structured deposit, not a fixed deposit. It is an investment product and not a savings product. It is very different from what any reasonable person would have thought it was looking at the advertisement.

And the disclaimer:
"You must seek your own independent advice from a licensed or an exempt financial adviser regarding the appropriateness of investing in this product, before making a commitment to purchase this product. In the event that you choose not to seek your own independent advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you. (bank) has no fiduciary duty towards you, nor does it assume any responsibility to advise on, or make any representation as to the appropriateness, suitability or possible consequences of investing in this product."

The person who served me was quite pushy and I had to give her a piece of my mind. I was there to start a 15 months fixed deposit which promised to pay an interest of 1.25% per annum.

Now, this is not the point of this blog post but, theoretically, over 4 years, if I could get paid 5% in interest by putting my funds in a fixed deposit that pays 1.25% per annum, why would I bother taking on greater risk for another paltry 1.3% "interest"?

I don't like it when advertisements are worded in ways which could mislead and this advertisement ranks highly on the AK Dislike Scale.

Related posts:
1. Why fixed deposits over structured deposits?
2. Nobody cares more about our money than we do.

Save money: Frank Card, Signature Card & Dividend Card.

My sister brings my niece to buy textbooks and other school supplies every year. It is a ritual and some of us will remember doing the same when we were school children.

One of the places that we would visit was Popular Bookshop. Over the years, they have established themselves as the most sought after school textbooks supplier in Singapore.

This is probably one reason why they have managed to survive in an industry which is so plagued by online competition that names like MPH went the way of the Dodo.

Well, I was talking to my sister about buying some Popular Bookshop vouchers online because I am able to get a 6% rebate for all online shopping with my new and funky looking OCBC Frank Card (which I got because of the OCBC 360 account). Buying $300 worth of vouchers would mean saving $18.



Click to enlarge.
https://www.popular.com.sg/jsp/gv/gv_order.jsp

My sister could then use these vouchers to buy school textbooks and other school supplies for my niece end of this year. She could also use her Popular Bookshop membership to get discounts, where allowed, before paying with these vouchers. Then, we would be getting a discount on top of a discount. Sounds good? I might buy the vouchers next month.

Then, recently, I received advice from UOB saying that I have reward points (known as UNI$) expiring next month. The thing I thought of doing right away was to exchange them for CapitaMalls vouchers simply because there are so many CapitaMalls around. So, there is always a good chance of being able to use the vouchers. There are Popular Bookshops in CapitaMalls too.

However, since Popular Bookshop have vouchers of their own, I decided to check if I could exchange UNI$ for Popular Bookshop vouchers instead. What did I find?

Wow! That is a big difference! I am glad I checked.

There is a catch with these "free" Popular Bookshop vouchers. They cannot be used with membership discounts and they cannot be used for the purchase of school textbooks. However, we can still use them for the purchase of stationery.

So, still a great deal being able to get 25% more in value for the same amount of UNI$ used. So, if you are a parent with school going kids and if you are a UOB credit card holder, you might want to take note of this.

Having said this, if your UOB card is a VISA Signature card and if you have accumulated UNI$ 4,000, there is an even better deal! What is it?

You could get a S$ 100 cash rebate (which translates to S$20 for every UNI$ 800)! This is much better than the rate for getting a S$20 voucher from Popular Bookshop or CapitaMalls.

Happy!

However, this is probably the last time I am getting any reward from my UOB Signature card as my credit card of choice now is the OCBC Frank card. I still use my Citibank Dividend card for the purchase of petrol because of the 5% cash rebate (for fuel purchases of above $50 per visit) but not much else.

Save some money if we have to spend some money? Yes, I like this.

Related posts:
1. Getting value out of everything.
2. OCBC 360 and CIMB Star Saver.
3. 7 ways AK saves money.