Cross Timbers Royalty Trust

I had read about Cross Timbers Royalty Trust (listed on the US stock exchange) many years ago and had placed it in my stock watchlist but never got the chance to look at it.  All along, I thought this monthly dividend paying stock was involved in timbers or harvesting of logs.  And so I was a little hesitant to invest in it.

To my surprise, Cross Timbers Royalty Trust (or CRT as per its ticker symbol on NYSE) has nothing to do with timbers.  One wonders why they give such a name to this trust anyway. As I speak, it is currently trading at US$26.37 and pays out a regular monthly dividend.  The last dividend paid out was in October at around 18.62 cents per share.  Of course, as a foreigner, one will probably incur some kind of withholding tax.

A little about CRT.  It is an express trust and the principal asset of the trust is the net profit interests.  I guess this means it does not hold any physical assets and that the only thing it has is derived from the interests in profits it obtains from various royalty interest properties (oil and gas) located in Texas, Oklahoma and New Mexico.  Its website is also pretty simple and sparse with little information.  All the properties are owned by XTO Energy Inc. Bank of America, N.A. is the trustee.

This monthly dividend paying stock is trading near its  52 week low probably because of a steady decline in its dividends.  DPU for the 3rd Quarter of 2012 was $0.544601 as compared to 3Q2011 of  $0.860987.  The lower distributions have been attributed to lower gas prices, decreased oil/gas production and increased development costs.

Not yet vested but watching it closely.

Spending for Yesterday

This is my spending for yesterday:

Breakfast = $2.90
Groceries = $3.40
Lunch (skipped)
Dinner = $150
Household items = $250

Realised that I have been spending quite a bit on food.

Investments and Dividends for November

Made quite a few investments this month.  Bought into a few stocks/REITs:

• 50,000 shares of Thakral
• 10,000 shares of LMIR
• 20,000 shares of Saizen

Dividends/passive income for November was quite okay.  Roughly $250.  Most of it were contributed by Gamco Global Gold and Natural Trust (GGN) and Armour Residential REIT (ARR). ARR is a mortgage REIT.  Both stock prices hve declined quite a fair bit but I will like to think that my strategy is one where I will diversify a bit into other stocks rather than focusing on just these two stocks.

I also bought some shares of the Coca Cola Company (KO).  

Spending for Today

I read a book about real estate investing and it suggested keeping a budget for one month so that one is aware where all your money is going to.  I don't really live by a budget and I will like to think that I spend my money quite carefully.  But having tracked my daily expenditure for this month, I am quite surprised at what I have discovered.  Will probably share a little of my findings when I am comfortable.

Anyway, here is today's spending:

Breakfast (at home) = Nil
Coffee = $2.20
Lunch = $54.00
Dessert+Coffee = $10
Present/Gift = $23
Dinner (at home) = Nil

Reader's Query

A reader read one of my postings and asked whether he could buy some of the stocks that were listed in that posting.

The short answer to his query is "No".

Let me share why I might from time to time share what is on my watchlist or what I have already bought into my portfolio.  It is basically to let readers know what stocks I own and what stocks I am watching so that they know I have vested interest when I am talking about those stocks.  In a sense, I am also trying to get some feedback and thoughts from readers on why they think certain stocks may or may not be good investments.

Spending for Today

Let's take a look at my spending today.

Breakfast = $3.20
Lunch = $4.75
Coffee = $1.50
Dinner (at Home)
Dessert + Tea = $11.60

Total spending for the day is slightly over $20.  Of course, I did not include transportation costs.  But a quick look suggests that all my expenditure went into food.

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]