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Wednesday, June 26, 2019

The Search is Over - FCOT lands Google

I previously blogged about FCOT being a mixed bag of goodies but perhaps one that is worth the wait. It didn't take that long for the bells of good fortune to start ringing.

From OCBC broker's report:

Good things come to those who wait
Last evening, Frasers Commercial Trust (FCOT) announced that it has entered into a lease agreement with Google Asia Pacific Pte. Ltd. (Google) for the latter to take up space at Alexandra Technopark (ATP). The total leased area will be ~344,100 sqft, or ~33.3% of ATP’s total NLA. As of 25 June, this will bring ATP’s committed occupancy rate to 93.7%. We note that Google will be signing a 5-year term starting from 1QCY20. While the average gross rent was not announced, channel checks suggest that rates could lie modestly north of $4 psf, which would indeed be in-line with recent signing rents, despite the significant amount of space leased.
Main points

5- year deal.
33% of ATP total NLA. (344k sqft)
Commited occupancy now 93.7%
Modest rents of approx. 4+ psf (better than nothing).
FY20 DPU of 9.85 cents  (forecast)
Health Gearing of 29.1%

Awesome balls, FCOT.

Onward to FI friends.

Tuesday, June 25, 2019

Portfolio and Dividend Update Q2 FY19

For the three months Apr 2019 - Jun 2019, the total amount of dividends received was:


Breakdown of Contributors:

Keppel - 750
DBS - 900
FCOT - 5616
First REIT - 1075
Starhill - 990
Cache - 203
AA REIT - 3338.5
Ascendas Htrust - 7567
OCBC - 1150

Performance against Q2 2018:
Dividends received in Q2 2018: 16045
Dividends received in Q2 2019: 21592
Change: +34.6%

For the month ending June 2019, my total assets under management stand at:

S$ 1,354,652

Breakdown of Current Portfolio:

June 2019

AIMSAMP Cap Reit1214001.45$176,030.00
Cache Log Trust136000.79$10,744.00
CapitaR China Trust350001.55$54,250.00
First Reit 500001$50,000.00

Keppel Corp50006.49$32,450.00

StarhillGbl Reit900000.775$69,750.00


Total Portfolio Size



Performance against Q2 2018:
At the end of June 2018, my FUM stood at $1,013,945. So compared to Q2 2018, the FUM has grown +33.6% YoY.

FI is so close I can literally smell it.

It is perhaps poignant to note that my investment journey begun 4.5 years ago.

Yet I remember it like it was yesterday. After being dry of capital for a long time due to my ill-timed condo purchase, I finally accumulated a small pot of 80k in Jan 2015 by living frugally and enduring taunts of being a kiam kanna.

My first stock purchase was 20 lots of Starhill Global at $0.8 a share on 5 Jan 2015.   It last traded at 0.775. LOL so you could say it was not that great a start.  Nevertheless, there will always be a special place in my heart for Starhill for it was my first foray into income investing. Way before I started reading the inspirational blogs of AK, Chris Ng and Brian Halim.

But there I was, bright-eyed and optimistic, proudly proclaiming to a friend that I had put in motion a 6-year plan to gain financial independence, which henceforth became known as my Fuck-You-Money Spreadsheet (FUMS).  By the end of 2020, I beamed, a job shall become unnecessary.

My claims were understandably met with skepticism, cries of disbelief, and occassionally, outright disdain.

I have lost count of how many days I looked pitifully at my FUMS and lamented, wah, why still so far away. As the Drow Ranger puts it most aptly, would it ever end?

But how weirdly time operates.

Before you know it, we are almost at the end. Huffing and puffing away like doing the last 2.4 km lap back in my NS days, I am exhausted beyond words. Perhaps only through sheer force of will, i continue to move one foot in front of the other, robotically and repetitively.  In my mind, I chant incessantly, "almost the end", "almost the end", "almost the end", with intermittent outbursts of "you can fucking do it!".  The parallels are uncanny.

Almost there.

All this toiling and chasing down the billable hour would be worth it eventually. 1.3M cleared in style. 500k more to go. With 1.8M, i estimate I should return 120k a year or 10k a month with a bit of luck and constant portfolio optimization.

And perhaps at that time, I shall smell the roses a bit.

Onward to FI friends.

Wednesday, June 19, 2019

Mitigate the effects of inflation on your passive income


Say the year is 2019, you have accumulated 2M in investible assets and retired at a ripe old age of 40.

Let's further say you are a somewhat conservative but competent investor, returning an average of 6% on your capital, i.e., 120k a year, or 10k a month.

In 40 years time, at a 2% inflation rate, 10k a month would be more or less be equivalent to having around 5k a month in today's value.

As you can see, inflation is a real issue that wipes out the true value of your passive income, and with that, the goods and services you could reasonably purchase with your income.

In order to ensure that you can enjoy substantially the same purchasing power in 40 years time (at age 80), you will need a mechanism to grow your passive income to outpace, if not match, the inflation rate.

In 40 years, @2% inflation rate, the future value of 10k is around 22k.  Thus, to match inflation, you would need to grow your passive income at a rate to achieve 22k a month passive in 40 years time.

After playing around with some excel sheets, I found that to maintain the present day value of your passive income (assuming a steady 2% inflation rate), you need to re-invest at least 33% of your passive income consistently (assuming a steady yield of 6%).

In other words, even if you return 10k a month of passive income, you should save and re-invest at least 3.5k of that income, so that the value of your retirement nest egg does not diminish over time.

Those who attain FIRE early in their life may scoff at the continued need for savings. They may feel that since their income-generating capital is not being drawn down, they are relatively "safe" since their capital is being "preserved".

However, that fact is, even in retirement, you should provision for a lifestyle that is guided by this 33% re-investment rule and be careful not to over-extend your financial obligations.

Indeed, there is something scarier than CPI inflation, and that is, lifestyle inflation. Once a person has gotten used to a particular standard of living, it is unlikely they would be keen to revert to a less lux life.

Onward to FI friends.