Thursday, 9 November 2017

Core holdings quarterly reporting (October to December) Part 1 - Reit

Decide to break up my core holdings quarterly reporting to two parts as my 3 REITS have completed reporting and the rest of my holdings are still reporting their results until the end of the month.

Again, my definition of core holdings are counters which I am more familiar with. These are counters which I am more confident of and have a more substantial holding (about 5% of portfolio); hence I am more likely to hold them for a longer period of time.

The tables below summarizes the 3 REITs performances for the latest quarter.

A+
Frasers Centrepoint Trust
As seen from the above table, FCT reported a strong quarter with increase in revenue, net property income, DPU and NAV. This despite the fact that Northpoint City is still about 18% vacant due to AEI. The strong showing comes from increase in occupancy in Changi City Point and Bedok Point, and 8.3% rental reversion for the past quarter.

I expect even better performance for the next two quarters with completion of Northpoint City. Also, with the opening of Downtown line, that will boost the traffic to Changi City Point.

The DPU might not jump in quantum as I think the proportion of management fees to be paid in Units will reduce from the current quarter of 70%. However, I believe that the management will want to continue to increase its DPU for the 12th straight year. Hence, I expect its DPU for next year will grow between 3% to 6%.




Also, with a low gearing of only 29%, acquisition of Punggol Waterway Point within the next few years is definitely a possibility.

The price of the counter has gone up quite a bit before the results is announced. It dipped to $2.17 recently which is not cheap with respect to its NAV of $2.02. However, with its proven track record and my thinking of its next year's DPU, I increased my stake by another 25%. With this increase, my average price is $2.06.

A
ParkwayLife REIT
Parkwaylife continues its stable and strong performance. Even excluding the divestment gain, its DPU has gone up by 2.9% compared to 2016Q3. For this financial year, its DPU has slowly increase too (Q1 3.06, Q2 3.10, Q3 3.15). No complain about it except that its price has really run up too much for me to accumulate further at this point. Might start considering again if yield increases to at least 4.8%.

C
Starhill Global REIT
All metric continues to drop as compared to a year ago but it seems to have stablized over the previous quarters. The key concern still lies with its office occupancy but the bright spot is management has shared that they are finalising the deal for 1/3 of its vacant space.

Going forward, things should look slightly brighter with the above, completion of Australia AEI and stable income from China properties. The price seems to have factored in the outlook as it hardly move after the announcement of the weaker results. I am going to continue to hold on to my current stake (average price of $0.70) which occupies 4.8% of portfolio.

4 comments:

  1. I was expecting FCT to go down and then backup due to the AEI. I was wrong ... as they played with the mgmt fee through units. so they have been taking more cash in the past and this helped to present the DPU in that sense maintained with taking more units instead.

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  2. Yup. Going forward with the AEI completed, I believe they will take more cash again. But I believe they will play with the numbers and report a 12th year of increasing DPU.

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  3. Hi, refer to starhill , any further update on the negotiation of 1/3 vacanted office space. And the remain 2/3 status still remain unvacanted?

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