Skip to main content

Starhill Global Reit


Starhill Global REIT

Disclaimer:
I am of course not a financial advisor and anything posted in this blog cannot and should not be taken to constitute financial advice of any sort.

Last traded price as of 7 June 2018: $0.68



SG REIT is trading at a huge 26% discount to Net Asset Value ($0.92).

Its DPU has declined consistently since FY 2015/16 from 5.11, to 4.92 and 4.57 (estimated 7% decline for FY17/18).





Have we reached rock bottom for SG REIT in terms of DPU? Perhaps not, but I have a feeling we are quite close. In terms of office space, recovery appears to be on its way.

SG REIT has completed its enhancement works on Plaza Arcade in Perth and its anchor tenant Uniqlo will move in by mid 2018.

While we cannot predict whether the retail sector will rebound in Singapore, my gut feel is that further downside is unlikely, given the robust performance of the SG economy (up 4.3% y-o-y for Q1 2018).

Because it pays to be a hum ji kia, for safety, we may assume a further 7% decline in FY18/19 DPU to 4.25 cents. At that conservative yield,  the current price of $0.68 still provides a 6.25% yield, which is more than respectable.

In other words, I believe the current price provides an attractive safety buffer for entry, even taking into consideration further downside in DPU.

Conversely, if the office space sector and retail sector were to experience any unexpected rebound in 2018/19, you can be sure SG REIT would no longer be trading at a 26% discount to NAV.  A good strategy may be to sit and wait for recovery, while earning a 6.25% yield on your investment.

I am very tempted to enter. Just a matter of sourcing funds. The proceeds from my property sale can't come soon enough. Hopefully the YTL ship has not sailed by that time.







Comments

Popular posts from this blog

As a Dividend Investor - I am having fun staying poor

Recently, there was a self-styled "master" who went around dissing dividend investing, saying things like REITS will chibaboom (his words not mine). Ironically, the master also invested into "growth stocks" like BABA and notably SE before its recent implosion.  Masterstrokes indeed. Dividend/income investors have borne the brunt of "have fun staying poor" taunts since the dawn of time.  Previously from the crypto bros and then from the growth investors. This is nothing new.  Every growth investor likes to talk about Tesla. But where are the ARK ETF investors? Where are the NIO bulls? Where are the BABA fanatics? Even a broken clock is right twice a day.   Good luck to those who retired on a portfolio of "growth stocks", hoping to spend 4% annually on an expected annualized portfolio growth rate of 10%.  Without dividends, one would have no choice but to liquidate part of the portfolio for meeting expenditures.  The damage done might never be reco...

Smoke, mirrors, bungalows and mistresses

People care way too much about a couple of colleagues fucking each other. The only people who should care this much are the aggrieved spouses and the family members who were hurt and embarrassed.  If you are not one of them, then shut the fuck up already. Who cares? The fact that they fucked or are still fucking doesn't affect you in the least bit. So quit the vomit-inducing moralizing.  But do you know what is detrimental to you, the hardworking taxpayer slogging 10-14 hours a day to make ends meet? 1)      That the Government apparently provides a special class of rental properties, one in which only a TINY TINY group of people may afford, in particular, those who can comfortably pay >20k a month in rent. Suffice to say, a real tiny and privileged bunch including people like, say, K Shanmugam and Vivian Balakrishnan. 2)      That the Government is happy to willy-nilly spend close to half a million tax dollars to make these properties "habitab...

FIRE by 2020 has officially failed

Back in 2015, I never thought I would have to work past 2020.   The idea was that I would have accumulated at least 1.7 M by Jan 2021 and would be comfortably returning 110k a year in passive income based on a 6.5% yield.  How laughably naive. The optimism is commendable but misguided.  Covid struck hard.   Several terrible decisions were made. EHT is bankrupt. A 50k write off.  Ouch is right. First REIT is trading around 20% of my cost price. Never again Riady. Never again. Yields have been severely compressed  with "quality" REITS, e.g., MINT, PLife, Ascendas REIT all returning paltry yields of 3-4% or, gasps, less.   With the view of improving portfolio resilience, I made a conscious decision to rebalance my portfolio to go REIT-lite (well, lighter) and increased my holdings in DBS, UOB, OCBC.  The MAS cap on banks' dividends does mean that these companies are returning 3% or less per annum.   Sigh.  All in all, pr...