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Friday, May 31, 2019

FI is good; RE - not so much

This is not going to be one of those insipid articles telling you to pursue your passion after you FI. Or to warn you about the perils of the paralyzing boredom. Oh please no.

You know, because I understand perfectly that we are all wired differently, and not every one has a calling to save dolphins, write novels, build schools in Cambodia, start a music band, etc.

Some of us simply have no (great) passion for anything in particular. Like ASSI, i reckon my retirement would consist mostly of MMORPG-ing and trying out yet another build in Skyrim (only to end up as a stealth archer yet again).

It is worth repeating that, no matter how fervent one's passion might be, if you have to do it five times a week, 8 hours a day, you'd tire of it soon enough. All a job does is to kill whatever passion you might have once held for that type of work.

But nuff said about jobs. Summary: Jobs are bad. Sloth is good. But yet, it seems that the modern society will always require one to hold a job. It might not be the high paying job that you so loathe, but a job is needed nonetheless.

Chris of Tree of Prosperity recently wrote about his first world problem of having to jump through bureaucratic hoops just to engage domestic help. I had no idea (nor do i understand the rationale for it) that you needed an IRAS statement or proof of a FD account with 50k just to engage domestic help.

It got me thinking about the other things that one might find difficult to do as a retiree, aka, unemployed person.

1) Buying a home

As Singaporean as it sounds, renting is not a long term solution to one's housing needs. However, to purchase a home, a loan is inevitable unless you belong to the aristocratic 1% class (in which case, why are you reading a FIRE blog, to laugh at us peasants?). I am not optimistic on the bank's willingness to loan to an unemployed person. Even if said unemployed person could produce a yearly dividend statement from CDP showing substantial dividend income.  I am not familiar with this issue, but assuming a loan could be successfully procured, how would the TDSR be calculated? If any retiree has experience in this aspect, please feel free to share in the comments.

2) Refinancing a mortgage

Some people have told me that the solution to the first problem is to buy the home before you throw the letter. Fair enough. But what about when you need to refinance? Don't the same issues crop up?

3) Buying a car

Okay, I suppose this is almost a non-issue compared to having a roof over your head. But the fact remains that for someone who is retired, you probably have to stump up the entire car value on purchase, and foregoing the "discounts" usually applied by smooth-talking car salesman when you take up a loan with one of their financial institution bed fellows.

4) Applying for a credit card

So some bank introduces this new fantastic miles card, with 5% cashback on all purchases and auto-waived annual fees?!?! OMFG. Shut up and take my money application.  Oooooh sorry, but there is a qualifying income criteria.

5) Taking advantage of stock market corrections

This is perhaps the most salient issue to FIRE adherents. When you were working, you could rely on active income to keep a warchest that routinely increases/replenishes itself.  As a retiree, even if you manage to run a surplus on your passive income, chances are the rate of the warchest accumulation is going to be substantially impaired.  The end result is that you can't take advantage of irrational market dips (like the current one).

For instance, right now, I am accumulating my earned salary in preparation for a full scale assault on DBS at my target entry price. 5% yield on a blue chip SG bank? SAY NO MORE FAM.

In the absence of active income, I may have to resort to selling some of my other holdings to recycle capital.  The problem with that is if DBS is sinking, chances are the rest of the market is also tanking. Are you prepared to sell when the market is lao-sai-ing? Didn't think so.

Hence, while reaching FI as soon as possible is good, it is much less clear as to whether one should RE upon FI.

Luckily for those who have not reached FI (myself included), this is a consideration that only needs mulling over at a much later stage.

Onward to FI friends!

Thursday, May 23, 2019

DBS - a song of ice and FIRE

Oh how suddenly the mood has turned. Around one month ago, I had contemplated selling DBS. Before you know it, the window has closed and the tide has turned.

I am still up around 11% including the dividends, so it is not entirely doom and gloom. If DBS sinks further below the $24 mark, it might be a chance to accumulate more. The $24 mark is where DBS's $1.20 per share yield makes it a 5% yielding local SG bank. And history suggests that such occurrences are rare and one should never squander opportunities like these (thanks Trump!) to improve portfolio resilience.

Then again, you can never predict how much further Trump will take this trade war.  And whether the STI will end up looking like King's Landing after the Dragon Queen's wrath. Like Jon Snow, i know absolutely nothing. So do your own due diligence.

Onward to FI!  

Friday, May 10, 2019

Frasers Commercial Trust - Mixed Bag but with potential candies?

FCOT released results late April, which appears to be a mixed bag. The share price has been dented slightly, retreating below its 1.5+ level, and also partly due to the share going XD.


1) Microsoft is preterminating its lease at ATP 2 years  ahead of the original expiry date. The microsoft lease is 3.1% of gross rental income of FCOT.

2) The limp AUD continues to be a revenue drag for its Australian properties. FCOT has three AU properties, which represents around 50% of FCOT's NPI. See factsheet here.

3) FCOT 2QFY19 NPI decreased 10% from 22M to 20M compared to same period last year. The biggest contributor of the drop is ATP, whose NPI dropped 26% from 6.3M to 4.7M in the same period.

4) FCOT maintained a 2.4cents a share payout, which amounted to a total dividend payout of 21.6M, which exceeded the NPI for that period. This means that the payout comprised a capital distribution component. Ewwww. It is preferred for managers to recycle capital to boost portfolio returns, instead of deploying precious capital to cosmetically sustain a dividend payout number.

5) Brexit effects on its UK property (Farnborough business park - 11% of NPI) remains an unknown and potentially volatile factor.


1) Improvement in occupancy at Central Park (AU) from 71% to 83%. WeWork is taking up 86000 sqft (12% of Net Lettable Area).

2) Share price continues to trade at a discount to NAV, which stands at 1.54.

3) Comparatively low gearing at 29.1% provides substantial debt headroom for FCOT to acquire yield-accretive properties without diluting existing shareholders.

4) It does appear that the interest rate environment is now in reverse mode (cuts expected?). This may stem the AUD/SGD FX bleeding or at least prevent its further downward spiral.

5) Office rents in both SG and AU appear to be on a rising trend, albeit on a gentle gradient. CBRE reports that office rents have gone up 3.5% q-o-q in Singapore. Knight Frank projects rent to rise by 9% in 2019 (fingers crossed).

6) Prospective tenants in play at ATP. There remains no announcement from FCOT regarding the progress of talks with potential tenants (Google). I can only hope that the managers don't fuck this one up.  At at embarrassing 59% committed occupancy, ATP has a lot of catching up to do with rival business parks.

Overall, i think I am sticking with this investment for now. The investment thesis remains intact. You don't want to buy a REIT that has already performed phenomenally because chances are the share price has priced in such performance. You want to catch something on a rut, but has a fair chance of pulling itself out of said rut.

Basically, FCOT is now Randy of South Park. On the surface, it appears to be quite evidently crappy and quite frankly, possibly a steaming pile of manure. But deep down, you know he always has more to offer and may have more surprises in store.

I have always been a fan of Randy. Who can forget his heart wrenching performance in Make Love Not Warcraft. Highly recommended.

Onward to FI friends!