Cory Diary : iReit Review

During a recent conversation on Telegram, someone asked me about the risks associated with iReit Global, a Singapore-listed Real Estate Investment Trust that invests in income-producing properties in Europe. While I had previously done some due diligence on the investment, I had put it aside and couldn't remember when. However, in today's economic climate, debt management is more critical than ever due to rising interest rates. While not all REITs have felt the full impact yet, those that have will likely need to weather the effects for several more quarters.

Fortunately, iReit Global's management has taken steps to mitigate risks, as shown in a slide shared by the company. They have identified and addressed risks such as interest rate risk, refinancing risk, and concentration risk. However, it's important to note that all investments carry some level of risk, and forex risk, in particular, may impact the REIT's earnings as it is listed on the local exchange and the SGD has appreciated by approximately 7-10%.

The COVID-19 pandemic has also impacted the real estate market, including the office segment where demand has decreased. While this may affect iReit Global's portfolio, it's important to note that their properties are located in Europe, where the situation may differ from other regions. 

Overall, iReit Global may be a suitable investment for those seeking exposure to European real estate, but it's important to consider the risks and monitor the REIT's performance regularly. It may be helpful to seek the advice of a financial professional to determine if this investment aligns with your investment goals and risk tolerance.

Cory

2023-0513

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Cory Diary : iReit Review of Annual Report

One of our building's tenants vacated in December 2022, which caused a drop in vacancy. However, we are currently in advanced discussions with a potential new tenant, so the vacancy period is expected to last another two months.

Another factor affecting our DPU is the currency exchange rate. The Singapore dollar has been strong in recent years and appears to have bottomed out, barring any unforeseen events.

Our DPU has decreased by double digits in the latest quarterly comparison, primarily due to the factors mentioned above, as well as cash retention and management fees.

We have no loan renewal issues until 2026, and our effective loan rate is currently at an incredibly low 1.8%.

Overall, the current stock price already reflects most of these factors. However, with an annualized yield of 7.7% and the possibility of higher returns after the new tenant moves in, we may see another adjustment in the next quarter. Nonetheless, even with a worst-case scenario yield of 7%, the REIT remains an attractive investment option.

Cory

2023-02-25

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Cory Diary : Short History of iReit Global

Timeline

7th Aug'20 - 1H2020 DPU S$2.85 (3.16 bf. ret), NAV €0.55, 641,862,550 Shares, Gearing 39%.

7th Aug'20 - Propose Remaining stake in Spain. Stock price dropped 3 cents from S$0.67 and then slide down to S$0.575 in early Nov. A significant right issue at 39.5% discount. 

22nd Oct'20 - The acquisition was completed.

28th Oct'20 - IREIT also repaid the €32.0m loan provided by CDL.

10th Feb'21 - 2H2020 DPU S$2.18 (2.42 bf. ret), NAV €0.47, 938,963,000 Shares, Gearing 34.8%.

28th Apr'21 - Propose acquisition of 27 properties of Decathlon France.

12th May'21 Completion of acquisition expected in 3Q2021

30th Jun'21 Placement 11,372,868 Units @0.6155. Stock Price @0.635.

2nd Jul'21 Launch of PO 214 for every 1000 existing units. Closed on 14th Jul'21 PO 201,137,870 Units @0.595. Stock Price @0.635

6th Aug'21  - 1H2021 DPU S$2.30 (2.56 bf. ret), NAV €0.50, 952,302,277 Shares, Gearing 33.3%.

Stock Price 0.635.

In Review

If we are to do comparison on 1H2021/1H2020, DPU reduced by -19.3%. Per 1st Rights and 2nd Rights issue if we take the number literally is -8.3% and -2.2%. For both rights issues, they were DPU dilutive and shareholders are compensated through rights discounts and for savvy holders applying for more excess rights. The first Rights discount 39.5% on large amount of shares while the 2nd Rights issue yet include will be typical and much normal.

So If we understand the complexity of the above we would understand the result below on why iReit needs to reinstate 2020 results as this is already expected, to achieve 17.3% YOY increase instead just on larger share base basis, and not considering the discounts.

So to make it simple, how do we value it ?

Year 2020 yield is 7.2%.

Year 2021 YTD 6.9%.

However we have significantly enlarged base excluding Decathlon France exercise. Between the two dates, shareholders gained in discounts, distribution and capital. Win-Win. Now, how will 9th Aug'21 trading day think is anybody guess.

Hope this helps.

Cory

2021-0808

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Cory Diary : Equity Allocation Jul'21

iReit Global

Recent change includes the long awaiting Preferential Offering (PO) finalized. The excess allocation result is kind of surprise yet not. CDP share has more than 2700% excess allocation in term on original rights allocation. This is in consideration that share size is minuscule.

On Custodian account side which is where main bulk of iReit shares are, it is slightly more than 100% excess allocation again in term of original rights given. If we have applied for double the excess, there is likelihood we would have got it as well based on others feedback. This is a surprise. On hindsight, which is a bitch, PP is quite small relative to PO. Well sometimes it takes experience to get through. And then proceed to shade a little off the portfolio to right size the exposure assuming the trading price maintains.

SGX

Is on the tear again. Blogged many times on the significant undervaluation. It has keep growing. Unfortunately we couldn't chase as valuation is an Art especially so when we have sizeable exposure already. It is also one that provides the balance factor on different market sentiment days. It has the potential to grow to join the big 5 of the portfolio allowing more diversification and stability needed to compensate on smaller bond size.

Allocation

Bond investment reduced to 11% but in actual there is expansion in CPF allocation which is not part of this scope. Any interests on Bond/CPF can read ( Here ). Reit allocation lowered to 48% despite recent PO. This is mainly due to reduction of Aims Apac Reit from recent run up. I was second guessing potential rights issue which I have no plan to take up hence the change but on second taught there is possibility of merger which has been rumored for a long time.

We have seen good gains of the portfolio this year. However, there is still room to grow till the end of the year as it has laggards such as Malls and Industrial Reits which will benefit from the recovery of Covid-19 despite hiccups. Maybe we will see 15% allocation if all stars aligned.

Dividend Returns

Dividend generation at sustainable level for the portfolio hits 60k. ( If we leave as it is without injection and say 2% growth, and some dividend growth as well, we will see 4k more dividends each year. This is rough estimate as we need more data with time to get the trend right. The formula will be portfolio value x 2% growth x 5% yield + 2% growth x annual dividend. ) Some injections will push the annual dividend increases to 5k. What this mean is it will take 7 to 8 years for dividend to grow to 100k annual on conservative estimate if we let the portfolio runs on with limited intervention. However, the portfolio which has been living on 7% annualized returns for past decade. So it can be done in 5 years or less. A long stretch goal. Wishful thinking ?

Cory

2021-0722

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Cory Diary : Exercising Rights Allocated and Access Shares Application using Nominee Account through DBST

This is my first time applying to Exercise my Rights and Excess Shares application through Nominee Account. And I want to have this blogged for future reference.

In Investopedia definition " A nominee account is a type of account in which a stockbroker holds shares belonging to clients, making buying and selling those shares easier."

After selling a chunk of my iReit Global Shares. I am left with 23,000 shares in DBST which works like a nominee account that I would like to try out the experience.

First Step

Receive a notification from DBST in the online Wealth Management Notification Icon. 

 Notification

Second Step

Is important step as any mistake may render application erroneous with unintended consequences.  I heard layout can be different between different brokers and ATMs. So do be very careful and consult your banks or brokers. For my case is as follow.

A) Enter how many shares I like to buy of the entitled shares.

For my case is 10,442. Price at 49 cent. Since the stock as that time is trading at about 71 cents, obviously I like to subscribe all of it. This will cost me only $5116.58 which they deduct later. A discount of $1253 ! as share price lowered to 61 cents.

B) Enter how many shares I like to apply for Excess.

For my case is 60,558. The 558 shares are to round it off to the entitled. It may not be necessary from what I heard but I am not sure. So to play safe I have it make whole. In total I applied 2.63 times excess of what I have. And this cost me $29,673.42.

Kiasu me applied on 2nd Oct which I realised is too early and probably risky because we never know how do market react to the rights issue. And there are rules after you have submitted so I am not going to take any risk to change. Fortunately, nothing serious as the stock price  holds up relatively well and close down around 61 cents.

In total $40,115.42 Cash needed just for the shares to be available for both deductions in my trading/wealth account else  may have problem in the application.

Excess Application

Third Step

As below debit date is15th Oct. In my case the entitled 10,442 shares are allocated to my main holding and cash deducted. Does that mean I can trade the share immediately ? Something to find out ....

Debit

Fourth Step

For my excess application, I get to know on 23rd Oct. Excess 5,558 Shares awarded at 49 cents.

Unawarded remaining cash is returned to my account on same day. What this mean is I gained a delta of 12 cents (Stock price 61 cents) per share which equates to $667. Kopi money !

Finally my total shares count at the end of the exercise is 39,000 Shares. That's 70% increase from initial 23,000 shares holding. hmm hmmm. And a total claim of $1920 from entitled and excess application.

Hope you like my sharing. And as usual DYODD. Warning again ! System application may change over time and process/format can be different between different brokers and ATMs.

Cory

2020-1024

Cory Diary : Trading Log 2020-0925

Long time since I last post on Trading Log. In my portfolio when I last did on this log series, I venture a bit far on the risk side for higher dividends. So sometimes I get a little nervous. Next is my build-up in SGX has pulled off in Diary of Trading Log 2020-0814. Often act as counter balance to down trend stocks.

Accordia Trust

As earlier articles, I have reduced my position 40% on this. Is still sizeable but I no longer in "fear mode" :P .  AGT is Golf Trust nevertheless with "sibei" good dividends as we wait for the final offer that since arrived. And soon it will be Ex-dividend and then finally delisted. Good returns and not bad for a stock I know so long and suffer the mental rides of the prices this year as position grew.

Ascendas Reit

Continue to build up on this position which I have cleared some time back. I am waiting for a big gap down if any before willing to average down else I will leave my cash in War chest. At around 4.5% yield, this is one counter I can afford to hold for long term and sleep well. Not sure why but I feel the last dividend seems a little low. Is it just me for an accretive deal to be given a reason that there is now more shares in the market from the last acquisition to have lower DPU ? Interesting to know.

IReit Global

I have decided to take profit 80% (CDP) with remaining 20% remains with another broker for the rights issue. I could use this to try out custodian broker for rights issue and learn something from it.

This sales put a large dent in my dividend returns so I am still in the work on mitigation mode before Year 2020 ends. The concern with this counter is the rights issue is discounted so much that I feel the management has taken investors for a ride. Furthermore the Spanish investment doesn't seem a good deal. I miss the previous CEO. I may still find opportunity to increase my position after as the they will have another chance but just smaller chance in my portfolio. Need to remind myself credibility is very important.

Mapletree Com Tr

Manage to build up some positions past few months. So now we have driven a gap of capital profits. I am still considering whether it worth to expand the allocation. This is Quality Reit in my opinion so unlikely will sell any in mid-long term. Is not everyday we can secure a position in the famous Reits at good price. So hold tight tight ....

Cromwell Reit

When it first listed I am pretty negative on the reit. I still do not have full trust in it. However it has dual currency denomination listed which I want and also act as a hedge being mainly listed in Europe. Small position so far.

With all this, I end up with much more net cash position for War Chest build up at lower theoretical dividend of-course.

Cory

2020-0925

Cory Diary : Equity Allocation Feb'20 - Part 2

This is in continuation of Part 1. (link)

The world is greeted with promising cure for Novel Coronavirus(2019-nCoV) aka Wuhan Virus using the plasma of recovered patients. I thought this piece of news is quite credible and provide hopes for the dying. There are already numerous promising solutions made but the death rate keeps climbing. 

One key statistic is that the death rate outside Wuhan is like 0.1%. What this mean is that the "best cure" is simply to not overwhelm the medical facilities and therefore critical to nip the problem in the bud. However the mix of outbreak with propaganda or to be termed exactly Politics is Toxic. They ends badly. There is large similarity with Chernobyl ( There's a 2019 historical drama television miniseries produced by HBO and Sky UK) which may have speed up the downfall of Soviet Union. 

Just a month before I don't' even know Wuhan is in Hubei. Is sad that thousands of people lives are lost due to possible political reason to delay the communications. Hope WHO do not go through this spiral of joining the political game and just focus on Health. Japan maybe in the brink to fall if WHO and Japan do not get their act together. The risk is Olympic may not happen. And this will be really bad.

As a reminder the blog articles are my learning experience and is on personal perspective and there could be error. I aren't financially trained and is based a lot of commonsense and risk mitigation which may not be effective 😊.

In this part II, I would proceed with remainder of SG portfolio

MAPLETREE IND TR

One of the powerful Reit in Singapore with a boost of recent DC acquisition in US. This is not nice story but real example of having a strong sponsor. With current stock price, further acquisition that is accretive is not hard. We could be seeing further growth. What's more this growth segment in US provides geographical diversification. I have a habit to do trading around my holdings ( usually partials ). This breaks when the market is in over zealous mode and I left with nothing to sell. At one point this year I took profit and end up with zero exposure which is oddward for a dividend player. Glad to have this stock building up again after more than 40% XIRR last year. Hopefully I have chance to further my exposure. MIT does has more alpha. 

AIMS APAC REIT

Small but stable, AA Reit provides a nice niche in the SG Reit segment. The management has been able to continue to keep up with the dpu with continuous development. At near to 7% yield, one cannot have enough till capped by portfolio sizing. Being small also means the price is more volatile to news of the company. I am not supportive for one to have significant exposure even if the story is very good unless we have very high confidence. I am yet reach the level where I can sleep with it. Maybe I could if my net worth is doubled.

IREIT GLOBAL

Another counter of strong yield with exposure to Germany but Singapore dollar denominated. The minor risk for my assumption is the Euro earning. Other than that a large part of their properties are dependent on a single tenant. So this is sized appropriate into the portfolio as part of a group of diversified high yield Reits. Strongly suggest people who are interested to read their presentation report which gives good idea of their properties, tenants and financials. They have been reporting about 5% reduction in DPU past quarter. So I aren't surprise this quarter report the same too. The price continues to creep upwards and is now slightly more than 6% yield. That's more than 2 weeks of daily green to arrive at this point. The current market environment would be able to support this pricing since yield is relative with risk in context but ex-dividend soon.

ACCORDIA GOLF TR

This is a high yield trust. The income is less stable. Back on this portfolio and currently awaiting for it being acquired in which the timing now looks bad. Similar to above two, sized appropriately to the level it will not damage the portfolio badly if there are bad surprises. There is no distribution this quarter as is on half yearly basis. One of the concern I have is that Wuhan Virus containment doesn't look well manage in Japan. This may have an impact on Tokyo Olympic if they do not get their act together. In all my counter I would consider this position riskiest. If one is to look at the radar chart, at 5% point is a little too much. A better allocation will be around 3.5% range. Yes, I am greedy on this one and usually quite bad luck on this one too.

CAPITALAND MALL TR

This Reit continues to be a key workhorse to provide sustainable dividends. It has emerged top position in the portfolio. In last SARs, CMT did well 18 years ago so I think it won't fall too far bad this time. The oil price is quite tamed and this will help manage their cost structure. As long SG is thriving, their malls will play a key role in our local life and grow. Quite hard to imagine most of the locals not to have a lifestyle around malls in tiny Singapore.

On relative valuation wise, a close comparison is FCT which is valued much higher compared to CMT. So there is good opportunity for price appreciation if too large a gap is driven. Having say that I have not been touching FCT for long time .... ... ... .

CMT at almost 5% yield, with stable DPU, chances are this stock can and will provided the much needed cash flow and this kind of support my property loan ie. 2.6%. So this is still quite attractive but I wouldn't  want to solely just depend on CMT. This also support my decision not to pay down my loan proactively and why tapping the maximum amount of home loan even when one could pay if we want to. To get the maths right, we have to actively utilize the cash for relatively safe investment.

SPH REIT

Not much luck on this one. After taking pain to build this up to one of key allocated position, I have to quickly release most of it back to the market. One of the key reason not to hold is due to it is already Ex-div last Dec. ( due to acquisition ). Weakness of AUD is a concern. The Australia economy is not in good shape and probably for years to come. With the slightly higher yield than CMT and much fewer properties, is not hard to pick this one out for needed cash in warchest. The left over is more for some diversification into Australia asset and income. 



For the past few trading days the portfolio seen MIT, Vicom and iReit spiking up while Ascendas and CMT holding well. The counter balance between counters is an Art. Rotating around the holding is Fun. However the baseline is still around the core concept of dividend investing. There is still much to be learned. With that I end my take on the portfolio. 

Hope you have fun in yours !

Cheers

Cory
2020-0218

Sector Allocation

Cory Diary :

Cory Diary : Cory Portfolio Re-balance - aftermath of MNACT sale

Cory Portfolio Re-balance

Mapletree NACT is one of Cory Striker and Dividend producer. One of Cory Core position in the portfolio. However the Black Swan event in Hong Kong provides some jittery to Cory fragile heart. After a black eye, decided to release it for better nights and securing profits. The pain is felt as not only Cory needs to look for growth compensation but also dividend support. At the same time to mitigate the risk.

To cover the gap, four new / add positions are made. Namely,

Sph Reit - Average Dividends Stability
iReit Global - Strong Yield with high level risk. Small position.
Vicom - Average Dividend Stability and Strong Defensive (expanded significantly)
Aims Apac Reit - Good Dividends with slightly higher risk

follow by sale of Sheng Siong. Long time lover who provided 5 years of good returns.

What an exercise ! Thank you Hong Kong ! I will be back when time is ripe.

Further investment is made to further expand existing STI ETF and DBS allocation for longer term investment on lows. This significantly protects the portfolio when dividend stocks slowed down and STI ignited recently.

Lastly, further expanded Ascendas Reit to the right proportion to other Reits lifting the theoretical dividends to $51k for Year 2020 positioning. Yes, is time to prepare. Have you ?


Cory

2019-0914

Cory Diary : Trades - 2019-0829

Early morning today, dear wife lined me .... "Armoured cars rolling into Hong Kong" which kind of shocked me as I find this possibility remote. But after reading in detail, it was a "Routine" so to speak. We both agree .... is more of trying to intimidate. However, this is enough. 

Decided to clear my Mapletree NAC Tr which registered two years of dividends. Could have been three years have it not the riots. We can't win it all can we ? This sale is quite painful because it has hit 6% yield. Decided SPH Reit despite 5% yield is the one I am comfortable to replace with. Obviously larger capital needed if I am to lock in similar dividends size.

The other key trade is I decided to sell my remaining Singtel shares. I took the opportunity when it hit a local spike to offload. One counter less as I decided to try iReit Global. Jio still on the hunt for market shares. Despite Airtel good defense, the battle will be prolonged hence my decision. Frankly, I feel some relief from the sale as I found later there is some mental stress hidden in the background. As I can sleep better, is a Good Choice !

A minor trade on some of my earlier Ascendas Reit shares failed. So I managed to bought back some shares in recent dip therefore boosting my dividends in the counter. I would consider this average up. I do average down on DBS.... which was my plan to align more towards STI for 2nd half of the year to benefit from it rise or rebound.... . Fortunately, the plan aren't so match and so much less impacted by STI Index recent banking segment poor performance.

Other than those key investment decision, I also remember attempting a speculative punt. Wish me luck on this one. Non-bank, non-reits and non-property. Is dangerous feeling rich .... All I could say.


Cory
2019-0829