Following up from my post on REITs here on 20 Aug 2023, where I had named three REITs that I would look to add positions to, and I had managed to buy into them since then, namely:
- Frasers Logistics & Commercial Trust (FLCT) (21 Aug 2023, SGD 1.16)
- Paragon REIT (Paragon) (15 Sep 2023, SGD 0.895)
- Frasers Centrepoint Trust (FCT) (20 Oct 2023, SGD 2.06)
The prices for FLCT and Paragon had since gone further down, due to the foreseeable sustained level of current interest rates spooking the REIT (and in general property) asset class. It is a heartache but as I had mentioned, it is impossible to catch the bottom and low can go lower. For disclosure, as of 25 Oct 2023, our overall position based on price (no dividends) for FLCT, Paragon and FCT stood at -4.83%, -11.3% and +2.76% respectively.
Two main developments had occurred after my 20 Aug 2023 post, and both came from FCT. First is the near-total divestment of their Hektar REIT holdings. The second is the divestment of Changi City Point, in which the latter’s disposal would bring FCT’s aggregate leverage down from 40.2% to 37.1%, improve hedge ratio of fixed interest rates from 63% to 73%, and reduce average cost of borrowings from 3.7% to 3.6%. These are good statistics in the wake of high interest rates.
With prices of FLCT, Paragon and FCT (25 Oct 2023) standing at SGD 1.03, SGD 0.80 and SGD 2.11 respectively, I would be more inclined in adding more Paragon, as FCT is hitting our portfolio’s 12% limit and FLCT’s high exposure to overseas properties.
The Bedokian is vested in FLCT, Paragon and FCT.