Elite Commercial REIT Part 2

The prospectus for Elite Commercial REIT (the REIT) was registered with the Monetary Authority of Singapore’s OPERA site on 28 Jan 2020, along with the Product Highlights Sheet. Let us take a look on top of what we had covered previously here.

The Numbers And Figures

The offering price of the IPO is Sterling Pound (GBP) 0.68, or in Singapore Dollar (SGD) terms 1.21, based on the exchange rate of GBP 1 = SGD 1.7794. The yield (over the IPO price) is forecasted to be 7.1% for the year 2020 and projected to be 7.2% for the year 2021. 

The aggregate leverage (which I assume it to be gearing) as at the listing date will be approximately 33.6%. Most of the other figures remained the same as per my previous post for this REIT, such as the number of properties (97) and the weighted average lease expiry (8.6 years).

The application for the IPO had started on 28 Jan 2020, and will close at 4 Feb 2020, 12pm. The REIT will be listed on the Singapore Exchange on 6 Feb 2020, 2pm.

Calculating The Net Asset Value

Though there is no indication of the REIT’s net asset value (NAV) in the prospectus (or I could have missed it from among the 700-plus pages), we can calculate it based on the information provided, with some assumptions.

Asset = Liability + Shareholder Equity, therefore Shareholder Equity (or NAV) = Asset – Liability, and NAV per share = NAV / Number of shares (units) outstanding.

Hence, with the numbers from pages 61 and 66 of the prospectus, the NAV per unit is:

GBP 196,201,000 (unitholders’ fund as at 31 Aug 2019) / 334,933,000 (number of units issued and issuable by the end of 2020) = GBP 0.586.

Thus, the price-to-book value is at 0.68 / 0.586 = 1.16, meaning the IPO price is 16% above the rough NAV calculated.

The Tax Question

A big disclaimer from me: I am no tax expert. But there might be some tax implications with regards to the distribution of this REIT, positive and negative. Under the sensitivity analysis (page 124), it was indicated that should the corporate tax rate is reduced from 19% to 17% from 1 Apr 2020, the yield for the forecast year of 2020 and projection year of 2021 would be 7.2% and 7.3%, instead of 7.1% and 7.2% respectively. On the flip side, subject to the United Kingdom’s CIR / Anti-hybrid rules, the yield could be at 6.8% and 6.9% for the same said years of 2020 and 2021 respectively.

The Bedokian’s Second Take

My take from the previous post still stands. The big plus point for this REIT will be the high yield (between 6.8% to 7.2%), but this will be compromised by forex fluctuations which is directly related to the outcome of the U.K. economy after Brexit (officially tomorrow). With the IPO price being 16% above its rough NAV, it is overvalued somewhat. However, if you want to have a slice of a relatively stable British pie in your portfolio, then this would be a good start.

Thing is, only 5,734,300 units are open for the public offering, so even if you are interested, it may get a little difficult to be balloted more than 1,000 units, or you may get none at all.

Disclaimer

Reference

Monetary Authority of Singapore. OPERA. Elite Commercial REIT Prospectus and Product Highlights Sheet. 28 Jan 2020. https://eservices.mas.gov.sg/opera/Public/CIS/ViewSchemeDetail.aspx?schemeID=500c7153fce646909d1eaf414599d9d8 (accessed 30 Jan 2020)

Elite Commercial REIT

A new REIT is coming to town; Elite Commercial REIT (the REIT) had lodged its prospectus with the Monetary Authority of Singapore on Friday (17 Jan 2020) and it is likely going to be the first listing on the Singapore Exchange (SGX) for the year 2020. It is also the first Sterling Pound (GBP) denominated REIT on the SGX. Let us have a brief look on it.

Brief Overview

There is a total of 97 properties in the REIT, scattered across the entirety of Great Britain (England, Scotland and Wales), out of which 96 are freehold, and the remaining one is on leasehold up to the year (get this) 2255. Over 99% of the gross rental income comes from the government of the United Kingdom (U.K.), specifically from the Department of Work and Pensions (DWP), which is the largest public service department and it administers the State Pension and benefits for 20 million claimants and customers.

The majority of properties are well located in city centres, town centres and city suburbs, and all have close proximity to train stations, bus stops and other amenities such as supermarkets and schools. This is due to the DWP’s stringent requirements for its locations, as they need to serve the public. The leases are triple net, which in this case the repairs and insurance expenses are covered by the tenant. Rental escalations are every five years based on the U.K. Consumer Price Index, subject to an annual increase of 1% to 5%.

The weighted average lease expiry of the REIT is about 8.6 years, and the aggregate leverage (which I take it as the gearing) is about 32%. It provides a net property income yield of 7.1% based on forecast for the year 2020. Other information such as the IPO price, the number of units to be issued, the net asset value and the use of proceeds are not available from the prospectus as at the time of my writing of this blog post.

Risk Factors

The prospectus covered almost 30 pages of risk factors, which is fair considering that investors should know the risks involved in investing into this REIT. Short of a total collapse of the British government (which I think it is very, very low in probability), in my view, I would be concerned on three risk areas, specifically macroeconomic and geo-political, that are somewhat related to one another.

Forex Risk: Forex risk is unavoidable when investing in overseas assets. For the past 10 years the GBPSGD exchange rate had fluctuated between the 2.2x and 1.6x regions (see Figure 1). The big drop came during the Brexit vote back in June 2016, after which the exchange rate never recovered to the pre-Brexit vote levels…

Fig. 1¹

Brexit: Which leads me to the second area, and that is Brexit. The plunge of the GBPSGD exchange rate immediately after the Brexit vote was explained by the grave uncertainty felt on what would happen to the U.K. after it leaves the European Union. I believe this uncertainty had somewhat tapered off nowadays since the new government is adamant on a set date to break off, as compared to the previous one with lots of opposition to the exit terms (thus the see-saw of the exchange rate between 2016 and now). However, whether economically the U.K. would be better or worse off after that set date would be anybody’s guess. Still, there is another thing to consider…

Independence of Scotland: And yes, the independence of Scotland. The Scots are asking the U.K. government for a second independence referendum and should this go through (at the moment not likely from news reports), there is a high chance that they may break from the union. 20 of the REIT’s properties, or about 20.6%, are in Scotland, and with the break, there might be some changes in laws and regulations regarding the properties.

The Bedokian’s Take

One highlight of this REIT is that the prospectus had mentioned that the DWP is a “uniquely counter-cyclical occupier”, which meant that DWP services would increase in times of unemployment due to the increased number of claimants for its services. This shows that in good times or bad, the DWP as a government department (and policy) is here to stay, and this translates to constant rental income. Though there is tenant concentration risk, the lease for each property is separately negotiated.

The next point (which was brought up in other blogs) was the origins of the 97 properties: Elite Partners Capital (EPC), a subsidiary of Elite Partners Holdings Pte Ltd, one of the sponsors of the REIT, had acquired 97 properties (which is presumed to be the same 97 for this REIT) back in November 2018 for GBP 282.15 million². Based on the prospectus, the properties are now worth about GBP 319 million. As EPC is a private equity firm, and as with all other private equity firms, one of the natural methods of realising the profits is to release their investments through IPO. 

Considering the above points, my take would be mixed: there is a lot of potential in the properties as they are very conveniently located. Should DWP vacates them, all or in part, it would attract the likes of small and medium businesses, but this meant that rentals may be impacted. Furthermore, the take-up rate of these spaces would depend on the future outlook of the U.K. macroeconomy as it affects commercial leases.

In the prospectus, it was stated that neither the REIT nor the REIT manager has a long established history, which in other words, the term “inexperienced” comes into mind. This is a typical “make-or-break” reason for investors, who would then decide on whether to give this REIT an opportunity to grow themselves (and the investors’ distributions) or to forego it. 

I shall see when more information is available from the prospectus.

Disclaimer

Reference

Monetary Authority of Singapore. OPERA. Elite Commercial REIT Prospectus. 17 Jan 2020. https://eservices.mas.gov.sg/opera/Public/CIS/ViewSchemeDetail.aspx?schemeID=500c7153fce646909d1eaf414599d9d8 (accessed 23 Jan 2020)

1 – XE Currency Charts: GBP to SGD. 10 years. https://www.xe.com/currencycharts/?from=GBP&to=SGD&view=10Y (accessed 23 Jan 2020)

2 – Lai, Leila. Elite Partners Capital buys 97 freehold UK offices for £282.15m. The Business Times. 26 Nov 2018. https://www.businesstimes.com.sg/real-estate/elite-partners-capital-buys-97-freehold-uk-offices-for-£28215m (accessed 23 Jan 2020)

Asset Class Correlation 2019

Now that it is 2020, we shall look back at 2019 to see how the various asset classes had performed for the whole year, using data from the Portfolio Visualizer site and respective ETFs representing the various asset classes. I also added the iShares MSCI Singapore Capped ETF (EWS) to show how our local equities fair against the rest.

Name	Ticker	VTI	VNQ	BND	GLD	CASHX	EWS	Return
Vanguard Total Stock Market ETF	VTI	-	0.38	-0.39	0.02	-0.05	0.88	30.67%
Vanguard Real Estate ETF	VNQ	0.38	-	0.38	0.25	0.39	0.25	28.87%
Vanguard Total Bond Market ETF	BND	-0.39	0.38	-	0.59	0.26	-0.33	8.83%
SPDR Gold Shares	GLD	0.02	0.25	0.59	-	-0.05	0.16	17.86%
Cash	CASHX	-0.05	0.39	0.26	-0.05	-	0.00	2.12%
iShares MSCI Singapore Capped ETF	EWS	0.88	0.25	-0.33	0.16	0.00	-	14.53%

Fig. 1 – Correlation results based on monthly returns for the period 1 Jan 2019 – 31 Dec 2019. For full data click here.

The table in Figure 1 showed that while all asset classes, as represented by their counters, had produced positive returns for 2019, there is still negative correlation existing between some of them, e.g. between equities and bonds (-0.39). This leads to the conclusion that although negative correlation between asset classes exist, it does not necessarily mean that some enjoy gains while others suffer losses.

So for 2020 (and the years beyond), stay diversified. 

2019 Review, 2020 Preview And Bob

2019 is coming to a close, and we are soon entering the third decade of the twenty-first century. It has been an eventful year, and the best is always yet to come.

2019 Review

After suffering a scare during the Christmas period of 2018, the markets had recovered when 2019 began. For the U.S. markets, using the S&P 500 as a gauge, its year-to-date (YTD) performance up till 26 Dec 2019 stood at about +29.08%¹, despite the trade war roller coaster ride that prevailed throughout the year. The STI’s YTD was about +6.17%¹, which was not that bad despite the lower than expected local GDP figures for 2019.

I had used 3 ETFs that represented my long-term trend views for cybersecurity (HACK), payment solutions (IPAY) and alternative energy (ICLN). Let us see how these three perform YTD for 2019 (as at 27 Dec 2019):

HACK: +23.64%²

IPAY: +42.58%³

ICLN: +44.57%⁴

2020 Preview

The known fact is that we cannot really predict the future, but based on factors and indicators, and sans black swan events like the Hong Kong protests, we may be able to derive some “educated guesses” to guide us in our decision. Let me share with you some of my “guesstimate” opinions.

I would see some volatility in the U.S. markets given that it is an election year. Although a new challenger has yet to be nominated to challenge the incumbent, the candidates’ various stands on policies and opinion polls may swing several sectors or the markets as a whole. If you are an active investor, stay close to the news and use the ups and downs to your advantage on your buy or sell decisions.

In the local scene, the S-REITs run-up that was experienced during the whole of 2019 had showed signs of tapering, but with interest rates likely remaining low and there might be a chance of the gearing limit increasing from 45%⁵, we may see a boost in this asset class again in 2020 if both of these fall into place.

On the technology front, though there will always be new stuff and concepts invented and created respectively, the mainstream ones that were seen as disruptive a few years ago (such as e-payments, ride sharing, etc.) are, using the technology adoption cycle, at the border of early adopters/early majority, based on my personal observations in the developed world. This is good news for growth investors as there is still room to go, but not so much for value and dividend investors as most of these companies are still burning cash to sustain the growth. Hence, in my opinion it is better to use ETFs for exposure to the emerging technology sectors, and/or identify matured sectors/companies that provide upstream or downstream support to the former.

I would like to reiterate (again) that it is prudent to stay diversified (e.g. The Bedokian Portfolio’s asset class allocations) in order to optimize your gains and ride out the losses while maximizing capital protection and minimize risks.

Bob

As at 27 Dec 2019, Bob’s Bedokian Portfolio had grown to slightly above SGD 59,000 (excluding the cash component which is not shown) and gained a dividend amount of SGD 1,955.89. All asset classes (except cash) had shown healthy growth for 2019. Bob will rebalance on 2 Jan 2020 with another SGD 5,000 injection, so stay tuned to his portfolio.

Happy 2020!

Disclosure

The Bedokian is vested in ICLN.

Disclaimer

1 – Yahoo Finance. 2 Jan 2019 – 26 Dec 2019 (accessed 29 Dec 2019)

2 – ETFDB.com. ETFMG Prime Cyber Security ETF. https://etfdb.com/etf/HACK/ (accessed 29 Dec 2019)

3 – ETFDB.com. ETFMG Prime Mobile Payments ETF. https://etfdb.com/etf/IPAY/ (accessed 29 Dec 2019)

4 – ETFDB.com. iShares Global Clean Energy ETF. https://etfdb.com/etf/ICLN/ (accessed 29 Dec 2019)

5 – Meixian, Lee. MAS seeks views on raising 45% leverage limits for S-Reits. Business Times. 3 Jul 2019. https://www.businesstimes.com.sg/companies-markets/mas-seeks-views-on-raising-45-leverage-limits-for-s-reits (accessed 29 Dec 2019)

The Fraser REITs Merger

By now there were a few blog posts written about this merger, so I will give my perspective as a Frasers Commercial Trust unitholder.

Overview

On 2 Dec 2019, Frasers Logistics & Industrial Trust (FLIT) had announced that it would merge with Frasers Commercial Trust (FCOT), with the new REIT to be subsumed under the FLIT banner. In this merger deal, FCOT holders will get 1.233 FLIT units plus SGD 0.151 in cash for each FCOT unit, which meant that for every 1,000 FCOT units, one would expect to have 1,233 FLIT units and SGD 151.00 in cash. The pricing was based on FLIT’s price of SGD 1.24 per unit and FCOT’s price of SGD 1.68 per unit, which were at or around the prices prior to their trading halt.

In addition, FLIT would be acquiring a 50% stake of Farnborough Business Park in the United Kingdom from its sponsor, Frasers Property Limited. The remaining 50% belonged to FCOT, so the whole property would eventually become 100% owned by FLIT.

The Bedokian’s Take

In a way, this merger had somewhat blurred the lines of REIT sectoral divisions. With this “enlarged REIT” (the actual term used in the announcements), we will have office, retail, business parks, logistics and industrial, a very diverse mix. In fact, some of the reasons provided for the merger included: to enhance diversification and resilience of the property portfolio, and to have a broadened investment mandate to invest in a wider spectrum of REITs sectors.

But first, let us look at the numbers.

Post-merger and proposed asset acquisition, the net asset value (NAV) of FLIT will be SGD 1.04 on a pro forma basis, gearing of 37% and a distribution-per-unit (DPU) accretive of +4.2% on a pro forma basis (from FCOT unitholder’s point of view). This meant that FCOT unitholders would get FLIT at a price-to-book (P/B) ratio of 1.19 (1.24/1.04), with a higher gearing (enlarged REIT of 37% > FCOT’s 28.6%) and almost the same dividend yield between 5.6% and 5.8% (assuming the pro forma figures stand and the prices remain as at the offer).

In return, FCOT unitholders will have additional logistics and industrial properties in Australia, plus exposure to Germany and Netherlands (from FCOT’s 6 to the enlarged REIT’s total of 98). Also, the weighted average lease expiry and occupancy will increase to 5.8 years (from 4.9 years) and 99.5% (from 95%) respectively.

So now begs the question: is it a good deal for FCOT unitholders, like me?

The answer is: it depends on how you view it.

In my opinion, this is a good starting or refresh point for FCOT unitholders to have a different perspective of their holdings. With the size of the enlarged REIT and given the number of properties the sponsor has around the world that could possibly be injected, the potential for growth and diversification (sectoral and geographical) is there. This I felt could be a justifying factor for getting FLIT at a higher P/B. 

The big gripe that I have is the eventuality of getting odd lots (number of units/shares not rounded up to 100), though this is more of an administrative issue. With a ratio of 1:1.233, the minimum number of FCOT units to have in order to get the nearest 100 FLIT units would be 100,000 (100,000 x 1.233 = 123,300). Fortunately, you can transact units (or shares) of less than the lot size of 100, but it is advisable to contact your brokerage(s) about unit share or odd-lot market.

The merger is still subject to the approval of the unitholders of both FCOT and FLIT, which is expected to be in February or March 2020, so there is still time to ponder over it.

Disclosure

Bought FCOT at:

Bedokian’s Portfolio:

SGD 0.165, Aug 2009 (before 5 to 1 consolidation)

SGD 0.165, Sep 2009 (before 5 to 1 consolidation)

SGD 1.51, Apr 2015

SGD 1.255, May 2016

SGD 1.24, June 2016

SGD 1.26, Mar 2017

SGD 1.47, Mar 2019

Bedokian’s CPF Portfolio:

SGD 1.39, Feb 2018 (sold SGD 1.72, Dec 2019)

SGD 1.37, Jun 2018 (sold SGD 1.72, Dec 2019)

Disclaimer

References

Frasers Logistics and Industrial Trust. Proposed Merger with Frasers Commercial Trust and Proposed Acquisition of the Remaining 50% Interest in Farnborough Business Park. 2 Dec 2019. https://flt.frasersproperty.com/newsroom/20191202_073027_NULL_PONX74KUPADGK387.4.pdf (accessed 6 Dec 2019)

Frasers Commercial Trust. Proposed Merger with Frasers Logistics & Industrial Trust. 2 Dec 2019. https://fcot.frasersproperty.com/newsroom/20191202_073544_ND8U_RIRP7SYNJ4WUH2WN.3.pdf (accessed 6 Dec 2019)

What If The Two Frasers REITs Merge?

The Business Times reported on 29 Nov 2019 that two of Fraser’s REITs, Frasers Commercial Trust (FCOT) and Frasers Logistics & Industrial Trust (FLIT), are making plans to merge, according to sources familiar with the matter¹. With both counters halted for trading since the morning of 28 Nov 2019, and not much news forthcoming, the merger issue at this point would be at best, a conjecture.

However, with the slew of trust mergers such as the Viva and ESR one last year and the combination of the OUE hospitality and commercial trusts just a few months ago, the possibility of a merger involving these two seems plausible. FCOT and FLIT are two out of the four trusts in the Frasers family listed in the local Singapore Exchange (SGX).

If (and a very big IF) it is a merger, let us take a look at the numbers before and an implied after:

Trust	FCOT	FLIT	Combined
Total Asset Value	SGD 2,226.9 mil2	AUD 3,554.1 mil3	SGD 5,514.4 mil (AUDSGD 0.925 as at 30 Nov 2019)
Net Asset Value Per Unit	SGD 1.612	SGD 0.953	SGD 2.56
Price-To-Book (as at 29 Nov 2019)	1.044	1.314	1.18 (averaged)
Gearing/Leverage	28.6%2	33.4%3	31% (averaged)
Dividend Yield (trailing, as at 30 Nov 2019)	5.75%5	5.65%5	5.7% (averaged)
No. of Properties	62	913	97
Occupancy	95% (committed)2	99.6%3	97.3% (averaged)
Weighted Average Lease Expiry (by gross rental income)	4.9 years (committed)2	6.31 years3	5.61 years (averaged)

Note: The above figures may be asynchronous due to the different “as at” information being presented from the reference sources. It also provides a very simplistic and assumptive point of view should the merger event occur, which may or may not materialize in the future.

At a combined asset value of SGD 5.5 billion, it sits between the current ESR REIT (SGD 3.3 billion as at 30 September 2019⁶) and OUE Commercial REIT (SGD 6.8 billion as at 30 September 2019⁷). Therefore, the asset value is comparable to the two mentioned post-merger REITs.

According to SGX rules, a trading halt cannot exceed three market days⁸, hence we may know the actual news earliest this coming Monday.

Disclosure: 

The Bedokian’s portfolio contains FCOT.

Disclaimer

1 – Frasers Logistics, Frasers Commercial Trust make plans to merge: sources. The Business Times. 29 Nov 2019. https://www.businesstimes.com.sg/companies-markets/frasers-logistics-frasers-commercial-trust-make-plans-to-merge-sources (accessed 30 Nov 2019)

2 – Frasers Commercial Trust. 4QFY19 and FY19 Financial Results. 22 October 2019. https://fcot.frasersproperty.com/newsroom/20191105_201648_ND8U_LOTB79B842SXVZX5.2.pdf (accessed 30 Nov 2019)

3 – Frasers Logistics & Industrial Trust. 4QFY19 Results Presentation. 6 November 2019. https://flt.frasersproperty.com/newsroom/20191106_063827_NULL_OFF7JENV0BVJIHYI.3.pdf (accessed 30 Nov 2019)

4 – Based on last closing price on 29 Nov 2019.

5 – Based on data from Reit Oracle. https://www.reitoracle.com (accessed 30 Nov 2019)

6 – ESR REIT Financial Results Presentation. 3Q19. 25 Oct 2019. https://esr-reit.listedcompany.com/newsroom/20191025_062614_J91U_AUTIU22SVU0IE6H4.2.pdf (accessed 30 Nov 2019)

7 – OUE Commercial REIT. Financial Results for 3^rd Quarter 2019. 13 November 2019. https://investor.ouect.com/newsroom/20191113_194311_TS0U_V36L8QUSDHME2BXH.1.pdf (accessed 30 Nov 2019)

8 – SGX Rulebook. Mainboard Rules > Chapter 13 Trading Halt, Suspension and Delisting > Part II Trading Halt and Voluntary Suspension > 1302. http://rulebook.sgx.com/en/display/display_main.html?rbid=3271&element_id=5338(accessed 30 Nov 2019)

The Bedokian Review Of Mapletree North Asia Commercial Trust And Some Takeaways

Back in June this year, I had written a post on Mapletree North Asia Commercial Trust (MNACT) in my “Inside The Bedokian’s Portfolio” series (see here). In it, I had mentioned about the crown jewel Festival Walk, a large retail and office property situated in Hong Kong, and itself was a prime concern due to the huge concentration in MNACT’s book value and revenue, which both stood at about 60-plus percent.

Last week, Festival Walk had sustained internal damages that warranted a full closure, after it was being targeted by protestor groups in the current unrest. With reopening, we are not very sure whether it may be subjected to further damages. This definitely has a huge impact in retail revenue from shoppers, which in turn rental revenue from Festival Walk tenants and eventually dividends to MNACT unitholders.

I had made an extensive analysis and prognosis of the Hong Kong situation, given the social, geo-political and economy factors, the whole thing may not end quick, and even so, there may still be underlying tensions simmering for another one. Hence, in view of my conclusion above (I could be wrong, though, so please do your own due diligence), I had fully divested MNACT.

It is not really a loss as I had entered at SGD 0.91 back in August 2014 and there were still some capital gains despite my second tranche (which was two-thirds number of units of the first one) of SGD 1.41 added in July 2019. Adding in dividends, it was about 9.8% annualized.

Every moment is a learning opportunity, so using this real-life situation, let me provide some pointers to you as takeaways.

Takeaway #1: Rebalancing The Portfolio, The “Wishlist” And Averaging Strategies

As of 15 November 2019, MNACT stood at about 4.8% of our Bedokian Portfolio in value. The divestment meant an addition of 4.8% to the cash portion and a drop of the same percentage points from our REITs asset class, which is a substantial deviation from the strategic allocation. Therefore, rebalancing has to be done on our Bedokian Portfolio and I would redeploy this capital as soon as possible. This is where the “wishlist” comes in useful.

As mentioned in my ebook, the “wishlist” is a shortlist of financial instruments and investment vehicles (of the various asset classes) that you came up with on a cursory basis¹. It also serves as a “what’s next to enter?” guide. Besides the “wishlist”, you could also employ averaging strategies (up or down) on your existing holdings (see here on my post on averaging). 

Takeaway #2 – What Price To Reenter?

MNACT, in my opinion, still has potential, but not at this moment. Besides Festival Walk, it has eight other properties; two in mainland China and six in Japan. The next question would be: What price to reenter?

The most simplistic (and worst-case scenario) to determine the price would be to discount the entire net asset value (NAV) of Festival Walk, which is 66% based on the latest property valuation as at 31 March 2019². With MNACT’s NAV of SGD 1.43 as at 30 Sep 2019³, it means the price would be around SGD 0.48. The chance of the price going down that low is remote, though it is not impossible.

There are other valuation methods for REITs, such as funds from operations, dividend yield, etc. As I had stated here, pricing and valuation is very subjective depending on the methodologies used, so stick to a method that works best for you.

Takeaway #3 – Looking Beyond

True that at this price, MNACT’s yield stood at about 6.7%, but all dimensions must be factored in before a sound transaction decision is made. The Bedokian Portfolio’s three-tier fundamental analysis model⁴ (financial statements, environmental factors and economic conditions) covered most aspects and angles required while looking at a REIT (or company) as it looks beyond just the usual ratios and numbers.

On top of economics, we need to consider also the social, political and even natural variables, for these do really play a part on how and where your investments are heading. Therefore, it is important to look beyond.

Disclaimer

1 – The Bedokian Portfolio, p94-95

2, 3 – Mapletree North Asia Commercial Trust, Financial Results for the Period from 1 April 2019 to 30 September 2019. https://www.mapletreenorthasiacommercialtrust.com/~/media/MNACT/Newsroom/Announcements/2019/Oct/MNACT_PresentationSlides__2QFY1920.pdf (accessed 20 Nov 2019)

4 – The Bedokian Portfolio, p84-85