The Margin Investing Series 1- The Income Booster Approach To Early Retirement.

Hi Folks, welcome to another episode of Investment Income For Life. Today, I am going to touch on a very sensitive topic, that is, the use of margin financing as an investment tool to boost passive income.  Anyway, just a personal sharing session on why I embark on this path and how this margin strategy works to boost income and open up a route to escape the rat race earlier- please see below video.

A Date With My Financial Planner- Stop Investing Yourself and Leave It To Your FA To Manage For You.

Earlier this week, I metup with a Financial Planner for one of my critical illness policy-let's call him "David". David has been asking for a meet-up to review my financial planning needs as people in different stages of life have varying needs as he put it. We met-up at Ya Kun Toast Box. He went on to say that he is different from other financial planners as he don't anyhow push products but rather listen to customers to know more about their needs before recommending them appropriate products. 

1. Stop Investing Yourself and Leave It To Your Financial Planner To Manage For You.

Before long, David started talking about how his client lost over 30% in stock investing when this client went on holiday and forgot to place a stop loss standing order. Hence one should spend time on focusing on his/own jobs and family instead of doing investments themselves- leave such investments to the trusted Financial Planner. He then rattled on that the unit trusts he recommended his other clients were making over 30% recently. 

This is the classic sales tactics of brain-washing customers to keep them dependant on their financial planner by arguing that people should spend their time on more "useful matters". The hard truth is that your financial advisor will not help you pick or buy/sell individual stocks. They will just be putting your money into a fund run by a fund manager. So, they themselves are actually just acting as a middlemen to the different unit trusts out there. 

Personally, I think that everyone needs to learn how to manage their own money and NOT leave it to a financial planner. If one is not good in stock picking, then there are other alternatives out there such as buying passive index funds (SPY500) or buying recommended portfolios from Robo Advisors such as Endowus or Syfe or even the local banks (DBS, UOB & OCBC) which have their own recommended managed fund portfolios. 

2. Change Your Hospitalisation and Surgical Plans ("H&S") to Cheaper Premiums Insurance Provider On a Yearly Basis To Save On Premium Costs.

The other shocking point on the meetup is when David mentioned that H&S premiums have very different amount of premiums these days for different age groups. Hence before any renewal with current provider, David highly recommend all his clients to approach him first to see whether other insurance providers H&S are cheaper. The difference can be more than S$1K per year for an entire family he asserted. 

I have to politely tell David that this can be extremely risky as there maybe pre-existing conditions that one is not aware of and that will complicate matters in event that you suffer from a major medical condition after switching over. There is always the risk that your new insurer will argue that this is pre-existing condition. This is just creating vast uncertainty in one's own risk management. 

Final Thoughts

I bade farewell to David in about half an hour time as I think that some of his beliefs are just way too strange. The only useful thing I got out from him is the will planning in event of one's own death. It is best to lay down a proper will on what to do with one's wealth else your remaining family members maybe spending unnecessary cost to get the lawyer to write in to all banks and wealth management platforms to enquire about whether you got any holdings with them.   

US Office REITs Recovery Play (KORE focus) And Disappointing Projected Distribution Yield Even If Full Payout Resumes-Part 2

Hi Folks, today let's do some stress tests on the expected distribution yield of Keppel Pacific Oak REIT ("KORE") once it resumes its distribution in FY2026. I know that there are many folks who have been holding on to their US commercial office REITs units since the pre-COVID days which also coincided with the then super low interest rate environment. There are also folks who have accumulated additional units of Manulife US REIT ("MUST"), Prime US REIT and also KORE to take advantage of the implosion in unit pricing at rock bottom while waiting for capital appreciation and dividends post recovery phase. KORE seems to be in a better shape than Prime US REIT and MUST from the key metric of occupancy rate and also leverage ratio. 

First and foremost, let's take a quick look at the recent announced cashflow of KORE 2nd half results before we annualised the numbers for analysis. The net operating cashflow from rental of offices has plunged from US$36.2Mil for 1H2024 to only US$29.8Mil for 1H2025. This is disastrous. This is a drop of <US$6.4Mil> rental income for half a year and if we annualised it, this will be precarious drop of <US$12.8Mil> in FY2025. 

Extract of Cashflow Statement 1H FY2025

Next, we will proceed to examine 3 different scenarios by assuming different level of CAPEX spending and the free cashflow available for distributions. 

1. Assuming CAPEX Required in 2nd Half 2025 is similar to 1st Half 2025

For this conservative scenario, the free cashflow is unable to sustain any payout unless KORE's management decided to go back to their own way of using borrowings to finance renovation to trigger off new leases or renewal of existing leases. 

2. Assuming CAPEX Required in 2nd Half 2025 same as FY2024 Full Year as Benchmark

Initially, as alluded to point 1 above, I thought that I was too conservative with the CAPEX of FY2025 when I annualised the half year released results of 30 June 2025. So I decided to just go back to FY2024 full year to use the CAPEX as benchmark to stress test the free cashflow available. Unfortunately, I got into a even bigger deficit of <US$18.4Mil>. 

3. Assuming CAPEX to Trigger off New Leases Already Done by 1H FY2025 and ZERO for 2H FY2025

If we can assume that KORE management has completed all the necessary renovation add on to their investment properties and that the CAPEX for 2nd half is zero, then we will have US$12.7Mil available for distribution in FY2026. This will be a sustainable 5.79% distribution yield under this relaxed assumption.

Parting Thoughts-Personal Thoughts

The expected sharp recovery in market price of KORE may not happen overnight albeit the 70% discount off its NTA per unit of US$0.70 as the probable distribution yield will be between 0% to 5.79% based on my projection if KORE decided to include in CAPEX and stop their unhealthy previous practice of paying for renovation using bank borrowings. 

US Office REITs Recovery Play And Disappointing Projected Distribution Yield Even If Full Payout Resumes.

Prime US REIT just released its first half results ending 30 June 2025. The results are a mixed bag of good news as well as some slight disappointment. Good news is that green shoots are indeed confirmed with the US office market making a painful but gradual slow recovery from both more favourable demand and supply side. The disappointing news is that distribution is still at only a fraction of the historical distribution. As for Keppel Pacific Oak REIT ("KORE"), its earlier announcement is also not too bad with occupancy maintained at the high end of 85%. I will run a financial projection later on for sharing also on the expect distribution using Prime US REIT to see the 2026 normalised distribution yield.

1. Current US Office Commercial Sector Updates

On the supply front, office ground breakings hit all-time lows, and the construction pipeline contracted to near historic levels, at a fraction of pre-pandemic levels. At the same time, inventory removals for conversions and demolitions outpaced new deliveries, resulting in a net decline of 700,000 square feet nationally in Q2. Scarcity of new, high-end supply is driving aggressive rent growth in the trophy segment and is expected to spur increased spillover demand in well-located, renovated assets as the pipeline dries up

Extract of Prime US REIT Occupancy

2. Financial Projection of Distribution Yield in FY2026 Normalisation.

The numbers are looking really bad with cash balances still dwindling. Free cashflow also still in huge negative after paying for CAPEX and financing expenses. Please see below.

Basically, unless Prime US REIT goes back to its previous free wheeling practice of paying CAPEX with more borrowings, there is nothing much left for payback to unit-holders. Some good news here is that Prime US REIT managed to sign on new 120,000 sqft leases at Waterfront At Washingtonian in June 2025 as well as 43,000 sqft of new leases at its Village Centre property in the same month. But the resultant upsides in cashflow from these new leases using US national average of US$32.87 per sqft annually for proxy reference, will mean only an additional net positive cashflow of US$5.36Mil.

If we divide it by 1,308,259,000 units, then the sustainable distribution per unit will be US$0.0041 per unit. Based on market price of U$0.175 per unit as at 13 August 2025, the annualised yield will thus be 2.34% in FY2026 assuming 100% pay-out ratio is reinstated. (Let me know if there is anything incorrect in my maths or assumptions).

Parting Thoughts
Retails investors need to take note that even if the management of Prime US REIT decided to reinstate the distributions, the payout will now need to factor in CAPEX requirement to cover for activating new leases. Unless operating rental income goes up further along with further cut in CAPEX and financing cost, there is not much left in terms of free cashflow for distribution to investors.

DBS Wonderful PayLah S$3 Cashback Programme and the Ugly Sides of It.

I love the DBS PayLah cashback rebate promotion every Saturday morning where DBS gives back to society as well as gained marketing exposure from it. Nonetheless, I was somewhat exasperated by some dark side of it over the past 2 weekends:

1. Aunties Jostling up the Escalator to Hawker Centre As If It Is The End of the World.

I was shocked by elderly aunties moving to the right side of the escalator and climbing it to beat others in the queue at 7.30am. Hey, I mean the cashback is up to the first 160,000 folks and it normally ends at 9am or 9.30am so there is ample time. I think folks need to take care of their own safety rather than have the fear that the promotion will run out soon in the next minute.

2. Long Waiting Time At Participating Stall’s Cashier- Guy with 3 Mobile Phones For Payment.

This is madness. This morning I saw a young chap in front of me who took ages to complete payment for 3 packets of Nasi Lemak and White Bee Hong. The young man was fumbling with unlocking 3 different mobile phones (he probably took his wife and kid phones along) for making payment. This is too much lah. Isn’t this also a breach of banking security by making payment using accounts not belonging to him as well as creating a public nuisance? 

Imagine if everyone were to follow, there will be folks with 6-7 phones each such as from their grandparents, spouses and kids  and unlocking them one by one to use the respective PayLah. It will take ages for the queue to clear.

Parting Thoughts

Haiz, sometimes I don’t know whether to laugh or cry when I met such strange folks and their intriguing pattern….haha.

Lendlease Global Commercial REIT Makes Big Strategic Mistake to Sell Off JEM's Office to Keppel Ltd.

After a few months since rumour began circulating, Lendlease Global Commercial REIT ("LREIT") finally revealed on August 4, 2025, that it will indeed be divesting Jurong East Mall ("JEM") office for S$462 Mil. The buyer of the office tower is Keppel Ltd.

1. Big Strategic Mistake To Sell off JEM Office.

LREIT should have sold off the underperforming Sky Complex buidling in Milan. Instead it sold off a high yielding office building at JEM with stable government agency tenant. I recalled that they just got a 13% rental reversion after the recent 5 years review in 2024. JEM's area is currently still undergoing transformation and development and LREIT will be missing out on potential future capital appreciation. This is actually the worst time to be selling off the JEM office.

Screen Extract of Rationale of Sales

2. Market Reaction

Strangely, the market reacted positively (August 5, 2025) to the upcoming disposal as there is a +S$8.9Mil gain over book value that LREIT may use to distribute back to unit-holders. Short term view of "get rich quick" distribution among investors seems to be driving the rally in unit price of LREIT to S$0.575 per unit (+1.77%) since the release of the divestment announcement.

Personal Thoughts and Views

As an existing unit-holder of LREIT, I am extremely disappointed with LREIT management team's decision to sacrifice a good asset with 100% occupancy just for short term gains instead of cutting losses with Milan Sky Complex. In addition, we have not seen any concrete executionary results with regard to Sky Complex where occupancy remains in the doldrum at 81.6%. 

Will Donald Trump Sink The US Economy Into Recession With His Self-Proclaimed Tariffs "Wins"?

The very controversial US July 2025 jobs report presented signs of red-flag that the US economy is inching closer to a disastrous recession. Donald Trump may have just succeed in torpedoing the US economy with his self-proclaimed victories with the trade negotiation and imposing tariffs with a base line of at least 10% against global trading partners and increasing import costs of materials and finished goods that its own US business owners will have to eventually pass through to US consumers. Inflation will certainly soar and given the worsening US job markets, Powell will need to make a difficult choice of whether to increase interest rates to stop inflation or cut interest rates to reignite the US economy engine. 

The reduction in purchasing power of US consumers will not just have a drastic impact back in US but also affect global economies such as Singapore which depends a lot on exports to thrive. Looks like we are in for a thunder storm with the erratic and unpredictable Trump policies era. The risk of US entering into a long period of stagflation is ever increasing despite the S&P500 breaching the impressive 6,000 points mark. 

Parting Thoughts- Personal

I am certainly curious as to Powell's next course of action and most folks are projecting that he will have no choice but to starting cutting borrowing rates in the next Fed meeting. If so, it maybe good to load up on more hedged US bonds and also Real Estate Investment Trust.   

NTT Data Centre REIT 7.5% Distribution Yield Sustainable Or Just A Dividend Trap?

I thought that it is quite interesting that folks on social media are having many different interpretations of the financials of NTT Data Centre REIT ("NTT REIT") and with some asserting that the NTA of this REIT will keeping dropping as it is making losses and paying out dividends from its capital. Others voiced similar concerns as me with regard to the high cocentration risk of over 30% in one single customer (suspected to be Tesla) as well as the ever weakening USD. Today we will delve deeper into the financial statements of NTT REIT to make sense of the sustainability of the high dividend yield committed by its management. From there, we will be better able to guage on the degree of margin of safety required- based on one's personal risk appetite- to start buying into NTT REIT. As at August 2, 2025, NTT REIT maekt price has dropped by <6%> from its IPO debuted price of S$1.00 per unit to S$0.94 per unit.

1. Financials Deep Dive.

First and foremost, let's address the elephant in the room. Is the financial performance signalling red-flag even before we consider the myriads of other business risks embedded in NTT REIT? For the latest year ending 31 March 2024 in the prospectus, NTT REIT is incurring a massive net loss of US$<30.8Mil>. The main reason for this reason seems to be a sudden spike in "Other Property Expenses" from US$5.8Mil in March 2023 to US$28.1Mil in March 2024. The strange part is that revenue has plummented by <21%> downwards from S$186Mil to S$146Mil despite the huge increase in "Other Property Expenses". 

2024 and 2023 Historical Profit and Loss

So is this only a one-off non-recurring loss for 2024 but in future, it will rise up from the ash? To answer this, we will need to go to take a look at the forecast provided:

Forecast FY2026 and FY2027

Well, the losses did go down from the mammoth <US$31Mil> to only <US$5.2Mil> and <US$4.9Mil> for  the forecasted FY2026 and FY2027 respectively but nevertheless, the forecasted results are not pretty and NTT REIT is apparently still in the red. This is shocking indeed as NTT REIT seems to be behaving like a Business Trust rather than a REIT. It is paying out distributions from capital and depleting its own net tangible asset over time.  

2.Revaluation of Investment Properties in The Financial Statements 

If you look at the forecast or historical financials, one will be able to see the substantial fair value revaluation for the data centres by NTT REIT. As the fair valuation accounting is subject to market conditions and I really wonder how someone can simply just forecast the future valuation for the next 2 years, we should just ignore this line item (highlighted in pink in above screenshot). Focus shall thus be on the recurring items which illustrates the routine operational Profit and Loss. So do not be misled by the abstract fair valuation which is just a non-cash item even if it looks fantastic.

Parting Thoughts-personal 

Originally, I thought that if NTT REIT corrected by 10%-20%, it may prove to be a good entry point. But based on its financial forecast for the next 2 years, its dismal financial performance will mean that NTT REIT NTA will still see losses at least for 2 more years and paying out distribution using capital. Unless there are clearer visibility on such enigmatic operating model for the data centres it manages, it maybe best to wait for the actual financial results post-IPO before accumulating some units.