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Accordia Golf Trust: A hole in one.

Friday, August 29, 2014

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.

Thursday, August 28, 2014

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?

Wednesday, August 27, 2014

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.

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