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Wednesday, November 28, 2018

Bought - Frasers Commercial Trust

Still reeling from the losses realised from my ill-advised venture into Lippo Malls, I have decided to re-invest the sale proceeds plus a bit more into Frasers Commercial Trust.

Reasons:

1) I believe office space rents have bottomed out and recovery is underway. And we should start seeing positive rental reversion from 2019 onwards.

2) I like the asset quality of FCOT. For instance, their Central Park property in Perth counts Rio Tinto, DLA Piper and the Australian Stock Exchange amongst its tenants.  The Caroline Chisholm Centre has the Australian Government as a tenant with a lease expiring only in 2025. There is substantial stability and income visibility.

3) The current share price already takes into account the departure of HP from Alexandra Technopark, which is now undergoing AEI.  Given management track record, I believe they would be able to increase the occupancy rates of their Singapore assets. In particular, any newly executed leases would be concluded under increasingly favorable market conditions.





Accordingly, I have initiated a small position into FCOT, 43000 shares, at $1.37 a share. Fingers crossed and onwards to FI my brethren!

Thursday, November 22, 2018

Bye bye LIPPO MALLS

Looks like luck ran out. After much agonizing, I decided to cut loss at 0.200.

It was a painful exit but I decided to cut my exposure to Lippo Karawaci's increasing likelihood of master lease default.  First REIT has also been pummeled because of LK's credit downgrade. However, I have elected to retain First REIT in light of its quality healthcare assets. 

When I bought into Lippo, I was keenly aware that it was a speculative play, not backed up by fundamentals. Greed propelled me into the purchase, optimistic about making a quick buck off a penny stock flip.



Alas, one does not outsmart Mr Market.

Lippo Malls seems to be sinking quicker than the sinkholes in China at this time. The prospect of its sponsor unloading overpriced properties onto LMIRT to meet its debt obligations is a pretty daunting one.

Whilst it is entirely possible that LK's troubles may ease up in the future, and prompt a re-rating of Lippo Malls, for a peace of mind, I would very much rather take the 6k loss (-23%), and re-invest the capital into something more worthwhile (hopefully).

While all investors know that you can't possibly win all the time, it still sucks major balls to have to swallow a major loss.