Ascott REIT Dividends

Ascott REIT has gone cum dividend and will be paying out an advanced distribution or dividends per unit of 0.59 cents to 0.63 cents.  The book closure date is on 5 Feb 2013.  This advance distribution is to account for the private placement of shares.

In addition to the advance distribution, there is its normal distribution with book closure date on 5 Feb 2013 too.  Each unit is entitled to 4.238 cents.

Based on both announcements of the distribution payments, Ascott REIT's dividends should range from 4.828 to 4.868 Singapore cents.  Ascott REIT pays out its dividends on a semi-annual basis.

The yield is roughly around 6.2% if you ignore the dilutive effects of the private placement.  OCBC has a HOLD call on this REIT with a fair value price of $1.36.  Lim & Tan maintains its BUY call on this REIT.

 I sold my entire holdings in Ascott REIT recently.  Ascott REIT's price at closing today was $1.375.

Liquidated Ascott REIT, Sabana REIT and Cross Timbers Royalty Trust

Liquidated my entire holdings in Ascott REIT, Sabana REIT and Cross Timbers Royalty Trust since they have all appreciated. Most of them were sold for a profit though I have held on to some for a few years while others were just bought recently.

• Ascott REIT sold 15 lots at $1.415
• Sabana REIT sold 2 lots at $1.18
• Cross TImbers Royalty Trust sold 100 shares at US$30.789 

My sense is that the REIT market in Singapore is already fairly valued and there are perhaps little opportunities for further increase.  I could be wrong but thought it will be better to sit on some cash and await further opportunities.

Singapore REITs - History and Regulations

Singapore has probably done more than any other Asian country to grow and foster its Real Estate Investment Trust (REIT) market.  Since the first REIT was listed till now in 2012, the number of listed REITs in Singapore has grown and looks set to surpass Japan for the top spot in terms of market capitalisation in the next 5 years.  Its foundation was not without trouble though.

In the beginning....

The first REIT to be listed in Singapore did not take off.  Its public offering took place in November 2001.  The developer was Capitaland and the REIT was SingMall Property Trust.  Offered at S$1.00 each with a forecasted earnings yield of 5.75% for 2002 and 6.05% for 2003, it was scrapped when the issue was only 80% subscribed.  The cause for the weak market sentiment was probably due to the aftermath of Sept 2011  and the uncertainty that was around.  Poor understanding of what a REIT was could also be a contributing factor.

A year later (July 2002), the original three major shopping centres/malls of Junction 8, Tampines Mall and Funan the IT Mall were repackaged into CapitaMall Trust.  The yield offered was 7.1% this time and investors were hooked.  This ushered in the start of the REIT market in Singapore.

The next few REITs to be listed on the Singapore stock exchange (SGX) were Ascendas REIT ( November 2002) and Fortune REIT (October 2003).

Today, there are around 20 REITs listed in Singapore covering various property types like commercial, residential, hospitality, hospitals, industrial, and retails.  Many of these are also cross-border REITs and own properties outside of Singapore.  These include CapitaRetail China Trust, First REIT, Frasers Commerical Trust (previously known as Allco REIT), Ascott REIT, LippoMall Indonesia Retail Trust, etc.

With many sponsors being developers too, it is highly likely that these sponsors will also inject future properties into the trusts already established.

Friendly Regulations played a part

Regulatory changes probably played an important role in fuelling investors' enthusiasm for REITs.  Withholding tax was set at 10% while there was full tax exemption for local and foreign individual investors.

The gearing limit (i.e. amount of debt the REIT could raise), was also increase from 25% to 35% and went up to 60% (on the condition that the trust received a rating from a credit rating agency).  Of course, some analysts have commented that the 60% gearing is not conditional on any rating the trust receives as long as a rating is obtained.  Through borrowing, a trust could potentially fund new purchases using cheap debt while increasing the amount of distributions to unit holders.  And that probably explains the acquisitions that followed for SREITs after the gearing level was increased.

REITs listed on SGX

Do note that some trusts are listed on the SGX too and these are not to be confused with REITs.  REITs are required to pay out 90% of their profit as distribution to enjoy tax incentives. Trusts do not have to do that.  So there is certainly less certainty on the distributions that one obtains from trusts as compared to a REIT.

Most of the REITs (if not all of them) are equity REITs in the sense that they hold real immovable properties unlike some of the mortgage REITs listed in the US stock exchange.

Here is the list of REITs listed on SGX:

1. CapitaMall Trust
2. MapleTree Industrial 
3. Ascendas REIT
4. CapitaCommerical 
5. Suntec REIT
6. Mapletree Logistics
7. Mapletree Commercial
8. Saizen
9. First REIT
10. Cambridge REIT
11. LippoMalls Indonesian Retail Trust
12. Cache
13. Starhill Global
14. CapitaRetail China
15. Sabana
16. Ascott
17. Fortune REIT (HK$)
18. Frasers Centrepoint Trust
19. Frasers Commercial Trust 
20. Keppel REIT

Ascott REIT - Presentation by CEO Tay Boon Hwee

CEO Tay Boon Hwee of Ascott REIT gives a presentation and gives a good detailed explanation of Ascott REIT's business and how it differs from a hotel and a normal condominium.  Here are the few points that were made during the video:

• Sponsor of Ascott REIT is Ascott Limited.  Ascott Ltd is o world's largest serviced residences owner and operator.
• 7260 units across 24 cities in 12 countries in Asia Pacific and Europe
• Operates under the brands of The Ascott Residence, Citadines and Somerset Residence
• $2.9bil portfolio
• Major shareholder is Capitaland which owns 49% of Ascott REIT

What is a serviced residence?

A hybrid between hotel and apartment.  Provides the comforts of an apartment and essential services one will expect to see at a hotel. like laundry, daily housekeeping and limited F&B services.  

Key differences  lies in the lease structure.  Hotels cater for short term stay ranging from one day to one or two weeks.  Target audience is also the leisure market and the corporate market. Apartment for rents on the otherhand are typically rented out for at least one year.  Serviced residence thus are able to capitalise on the gap, focusing on the long stay segment,  looking at between stays of 1 month to 1 year stay.  The focus is also on the corporate market and not the leisure market.

Ascott REIT's weighted average length of stay is 4 to 5 months.  This provides stability to the REIT.  It is also less affected by the seasonal demands one would expect arising from tourists.

Serviced residences also only cater 1-2 F&B facilities to the guests and not to the public.  They also do not include banquet halls or function room.

Serviced residence comprises studio apartments, 1/2/3 bedroom.  This can be from 30 sqm to even 100 over sqm.  All apartment units come with fully equipped kitchen facilities.

Hotel staff to room ratio is around 1:1

Serviced Residence staff to room ration is around 0.3~0.5: 1

Sources of Income for Ascott

Broadly classified into 3 categories.

Firstly, properties under management contract.  Ascott REIT enters into a management contract with the operator (Ascott) to maange and operate the property on its behalf. A property management fee is paid in return to Ascott. which is tied to gross revenue and gross operating profit.  18 of its properties (mainly located in Asia Pacific) are under this arrangement.

Secondly, are properties on master leases.  Ascott REIT enters into a master lease agreement with the lesse regardless of the performance of the property.  A fixed rental income is given and this provides stability.  This is mainly in Europe (France & Germany), Philippines and Singapore.

Thirdly, are properties on management contract with minimum income.  Similar to the first category except that a minimum income is guaranteed.

[Disclaimer:  Writer owns shares in Ascott REIT]

My Favorite S-REIT

 

S-REITs are having their limelight in the recent weeks.  With the announcement of QE3 and the low interest rate environments expected in the near term, many analysts are crying out BUY calls for S-REITs.  Kim Eng expects another 11-14% upside for the S-REIT sector due to the low interest rate environment.  Apparently, many pension, insurance and income funds are switching into the REIT sector which provides better yields than bonds.

Of course, I am cautious when I hear all these positive news.  After all, S-REITs have been featured in the past few weeks in newspapers and I know the saying that goes "Buy when people are fearful".  And if people are so hopeful now, perhaps it is a good time for me to sell.

With the increase in S-REIT stock prices over the past few weeks, I have liquidated almost all my REIT holdings less a few.  One of them is my favorite REIT (yes, I know we are not supposed to fall in love with our investments).  But I have grown this emotional attachment to this REIT which I have held for some time.

This is Ascott REIT which I bought some time back. For my August dividends, most of them came from Ascott REIT.  I have bought in and sold out on First REIT many times and looking at the share price now of around $1, I sort of regret that I exited it too early.  With Ascott REIT, I am not certain whether it can rise any further.  But with good earnings yield and dividend yield, I am probably going to keep this REIT in my portfolio for a long time to come.

August Dividends

Dividends collected for the month of August 2012 is $846.67.  I was kind of disappointed as I thought or had the impression that I would be expecting more for this month.  However, 800 bucks is still a decent sum.    Most of this came from Ascott REIT.

I also sold off Fortune REIT and Cambridge REIT for a tidy profit.

Dividends from Ascott REIT and Gamco Global

Received dividends of $609.45 from Ascott REIT and $31.59 from Gamco Global Gold & Natural Resources Trust.  Not bad for the month of February.

Will probably be looking at reinvesting the dividends into some other REIT.  There are quite a few REITs and I am thinking of diversifying across the various sectors (e.g. industrial, commercial, residential, hospitals, hospitality , etc).

Will probably need to give it further thought.

First REIT and Ascott REIT Declare Dividends

First REIT just declared distribution/dividends of 1.93 cents per share.  A quick look at First REIT's dividend history gives me some sort of confidence to enter this REIT again.  I had previously sold off my entire shareholdings in it but have recently entered into it again buying 10 lots of it recently.  Since the distribution is paid quarterly, it looks like I will be receiving a small bonus every 3 months.  Not too bad for some passive income.  Based on my 10,000 shares, I figure that I will be receiving around $193 for Feb 2012.

Ascott REIT had also declared their semi annual dividends of slightly over 4 cents per share.  I currently hold 15 lots in Ascott REIT so that should also provide me with a neat sum of around $600 for Feb 2012.

I am also still waiting for my dividends from Gamco Global Gold Trust (GGN).  This is a monthly dividend stock and though the dividend is paid on 24 Jan, I figure that I will only receive the cheque in late Jan or early Feb.

Investment Thoughts for 2012

Today is the 10th day into 2012 and I realised that I have not thought out my investment plan, made any resolutions or done anything fruitful in the past 10 days!  And there has been this constant nagging in my head that tells me that I ought to focus my attention on a few things and try not to spread out my efforts too thinly.  So perhaps now is a good time to update on what are some of my thoughts for 2012.  This includes some of my personal reflections and does not constitute any investment advice.

Passive Income - Monthly Dividend Stocks and Real Estate Investment Trusts (REITs)

High on my list is perhaps creating a passive flow of income for myself either through stocks that provide monthly dividends or REITs which either provide quarterly or half-yearly distributions. For monthly dividend stocks, one has to turn to the US market.  One of the monthly dividend stocks that I have bought into is Gamco Global Gold (GGN).  REITs on the other hand are easily available on the Singapore Stock Exchange or SGX.  I am looking at diversifying my REITs holding as I am currently heavily invested in Ascott REIT.

Gold is Money and Nothing Else


For those of you who have been following me, you are perhaps aware that I have been looking towards silver both as a means to hedge against inflation as well as just for collecting purposes.  Buying silver in Singapore is still limited to only a few shops but hopefully this certain industry/sector will slowly develop.

Investing in this Site


I have also decided that I ought to invest a bit more time and money on this site.  This includes some facebook advertising as well as my plan to work on a eBook.

These are all still works in progress but I certainly hope that the perfectionist in me does not cause me to procrastinate or be paralysed such that I do nothing at the end of the year.  It has been my longest desire to write a book and an eBook might just serve that purpose.

Bought Ascott REIT

Bought another 3 lots of Ascott REITs (@$1.065) after I realised that I have not been investing in the stock market a lot.  Thought that it will be good to add to my current portfolio considering the amount of spare cash sitting in the bank that is not earning much interest anyway.  That brings my total exposure to Ascott REITs to 15 lots.  Have been enjoying the dividends over the past few years and hopefully, the dividends that come in will not fail to disappoint me.

August was good in terms of dividends received but September has been pretty quiet.  Other than a Adsense cheque that I received, have not received much passive income.  Can definitely do better for the future.