Quick Thoughts on Frasers Centre Point Trust Upcoming Rights Issue- Potential Trading Opportunity.

Just penning down some of my quick thoughts for Frasers Centre Point Trust ("FCT") upcoming rights issue to fund the purchase of Northpoint City Southern Wing which is a popular mall in Yishun. This exercise is a no choice election but forced to subscribe to avoid dilution kind...so no need to think too much over it, unless there is a downturn in stock market. Only question is whether one want to subscribe for excess rights. The current market price hovers from S$2.170 per unit to S$2.19 per unit after the announcement. The ex-dividend date is 3rd April 2025 (Thursday) and worth S$0.0615 per unit. So if you own 10K units, you will be getting dividends of S$615 in total. I expect the price range to drop to between S$2.10 per unit to S$2.13 per unit after the ex-dividend record date.

1. Preferential Offering Attractiveness Analysis

The issuance price will be between S$2.030 and S$2.070. Assuming somewhere in between of S$2.050, this will be a discount of only +2.4% to the lower end of the market of S$2.10 per unit. If market price hovers at S$2.13 per unit, then it will be at a higher discount of +3.9% to the upper end market price of S$2.13 per unit. Saying that, if the market price tanks due to the current tariff war and other unforeseen macroeconomic events, then one would have to hold and wait it out for the long term. I will probably be subscribing for some excess rights for speculative purpose in the hope that I can sell them off for a tiny profit to eat egg fried rice with pork chop at Ding Tai Fung.

2. Indicative Timeline For Retail Preferential Offering

For fellow retail investors who are interested in this exercise, please take note that the tenative commencement timeline is 8th April 2025 (Tuesday) for retail tranche offering. This exercise will end in about a week, that is, 16th April 2025 (Wednesday) so do indicate your acceptance by this date.

Parting Thoughts

Personally, I am not extremely excited by this rights issue as FCT has higher potential business risks ahead with the Johor Bahru Rapid Transit System ("RTS") rail project that may take away many shoppers from Woodlands and other suburban malls. In addition, FCT is also in trouble in one of its smaller Mall in Hougang where the government is launching a huge plot of land this year for a mega shopping mall just next to it. Frasers will most likely be bidding aggressively for this intergrated project as a defensive maneuver (similar to what they done for Northpoint City integrated development). But we will have to wait and see what happens next.

Life Reflection- "The pain of losing someone we love is the price we pay for the privilege of having loved someone and having that person be a part of our lives".

Would you have chosen to re-live your life differently if at the age of 21 during university time, you happen to steal a glimspe of the future and gleaned from there that you will have stage 4 cancer (that continues to spread aggressively despite all medically available treatment) in another 20 years time? I was left pondering this question when I heard the poignant news of a friend who unfortunately have a bad prognosis from her medical specialist albeit early pick up of the medical issue and extensive medical treatments as I understand. There is also the issue of the young children.....what will happen to them after the parent is gone? I am still reeling in from the shock and unfairness of life and I was despondent over this devastating news during the entire long weekend.

Life is full of uncertainties, tomorrow isn't promised or guaranteed. Spend more time with your loved ones as much as possible.

Keppel Pacific Oak REIT- Latest Proposed Change To Trust Deed To Pave Way For Reinstatement of Distribution and Potential 22% Distribution Yield.

Keppel Pacific Oak REIT ("KORE") along with the other US office commercial REITS have been in the doldrums for the past few years. The work from home trend since COVID had a devastating effect across the entire US office REITs with some on the brink of bankruptcy from low tenant occupancy. Anti-inflation measures with high interest rate hikes by the US Fed further worsen the woes of US Office Commercial REITs. With the announcement by Donald Trump and many US business leaders such as the chief of JP Morgan to be back office, there are finally green shoots of recovery emerging. But the light at the end of the tunnel may not appear so fast for US Office REITS as US seems to be entering into a recession.

1. Gap Between High Net Asset Value Per Unit to Market Price Per Unit is Insanely High. 

Interestingly, market is viewing KORE as extremely risky with Net Asset Value ("NAV") at US$0.69 per unit as at 31 December 2024 while market price is US$0.205 per unit which represented a whopping -70.3% discount from NAV. Even if the current market price climb 100%, to US$0.410 per unit, KORE will still be at another significant discount of -40.6% to NAV. The extremely high risk premium is not surprising in the context of high leverage of 43.7% albeit 1 years plus of retaining all distributions to boost equity as well as the ever decreasing gross rental income collection reflecting that the US office industry is still in trouble. 

In addition, by now, I think many retail investors would have realised the hidden danger for investing into US Commercial REITS, that is, during crisis, rights issue to recapitalise the REITs will not be possible. The only proven way out are either (i) selling properties during crisis at fire sales price or (ii) reduce or suspend distribution to raise the cash position for CAPEX and working capital. For those interested on the technicality, you can read this post- "Updates on United Hampshire US REIT and Manulife US REIT- The Curse of the 9.8% Unit Holdings Limit Imposed On US REITs Sponsor."

2. Current Distribution Yield Assuming Stabilisation of Office Occupancy From Back to Office

Current income for distribution has unfortunately declined to US$47.6Mil for FY2024 mainly due to raging financing cost for its loans in the higher rate environment. Base on 1,044,450,000 units available as at 31 December 2024 and assuming 90% pay out upon restoration, this will mean a distribution yield of 22.24%.

3. Amendment of Trust Deed To Allow Smaller Amount of Distribution and Varied Frequency For Flexibility is Essential Step to Pave Way For Reinstatement of Distribution.

Extract of Current Terms of Trust Deed Before Proposed Amendment

Extract of Proposed Amendment To Trust Deed For "Flexibility"

The EGM seeks to amend the trust deed to give more flexibility in terms of distribution percentage of income as well as the frequency. This will be an essential step that is necessary for KORE to begin preparation for distribution restoration. 

Parting Thoughts

Overall, I view the proposed trust deed amendment as positive and also a potential signal that KORE management may start paying distributions earlier than the original planned 2026 by starting off with a smaller pay out ratio after getting unit-holders to bless the amendment to the original Trust Deed. Nevertheless, I am concerned on the tax transparency of such a move to vary payout below 90%. KORE has been rather silent on the regulatory tax exemption treatment for REITs in such scenario.

Eagle Hospitality Trust Aftermath- Grand Design Fraud by Apparent Swindlers Who Managed To List Trust on SGX.

 

It has been almost 5 years since Eagle Hospitality Trust ("EHT") sank to the bottom of the ocean within a year of its listing in 2019. Till date, none of the directors involved have been punished yet. The 2 main perpetrators, Howard Wu and Taylor Woods from US, have been busy swindling new investors in the aftermath of the collapse of EHT. Apaprently both conmen are extrememly charming and eloquent. 

For the fun of it, I have put up the latest updates with regard to Howard Wu and Taylor Woods who have been charged by the US Securities and Exchange Commission in August 2024 for the following allegations:

Securities Fraud Scheme 1: Misrepresentation to investors to sell their hotels to 3rd parties but secretly injected them as part of investment properties into EHT and then list them on SGX.

Extract of charges filed

Securities Fraud Scheme 2: Raised money (US$1.775Mil) from new investors as bid placement for buying hotels on firesales from EHT under bankruptcy.

Extract from charges filed

Parting Thoughts

Howard Wu and Taylor Wood have wicked moral compasses. There maybe also a streak of narcissism in them. I am flabbergasted that after both have caused the bankruptcy of EHT, they have the audacity to fraudulently raise money from new investors on the pretex of bid placement to buy the EHT hotels under liquidation and even before placing the bid, they have commenced using the money for their own personal purpose. Nonetheless, both scammers have made a name for themselves for succesful listing of EHT on SGX right under the nose of the IPO banker and SGX regulators. As for Singapore, so far there have been no fraud charges brought against Howard Wu and Taylor Wood yet as if everything is being swept under the carpet to keep the entire fiasco quiet.  

The Little Known Way to Use 100% CPF OA Investable Amount For Investment into REITs Without Road Block of the Usual 35% Limit.

I have always wanted to use my CPF Investment account to buy into REITs. Unfortunately, I was always restricted by the 35% limit on excess investable funds over S$20K for property funds and equities. Property funds under CPF website refers to SREITs on its white list which is subject to this 35% limit. While watching Master Leong's You Tube video on "A Different Path to CPF  Investing...", I could not believe my ears when I heard that one can buy into the REIT ETF (NikkoAM-StraitsTrading Asia ex Japan REIT ETF-CFA.SI) using 100% CPF OA investable amount. Earlier this week, I invested S$20K of my CPF investable balances into the CFA ETF and the first few days was nerve wrecking on me as my trading representative and my CPF agent bank officer both insisted that this is impossible and CFA ETF is under the 35% limit grouping, hence I have to prepare to cough up S$15K in hard cash due to insufficient CPF funds for release after the T+2.

1. Stock Firm Trading Broker Says Impossible For 100% CPF Allowed Into CFA REIT ETF.

When I contacted my trading representative, she insisted that base on her years of experiences, this is not allowed as there is always a 35% limit on SGX traded securities. She gave me the number of the Stock Trading Firm front desk to double check. Funny thing is that the front desk also sings the same tune and referred me to call my CPF Agent Bank (I am using United Overseas Bank ("UOB") which is the right party to check).  

Apparently, the entire stock trading firm is not sure whether ETF funds can use 100% CPF and their thoughts are that it should be subject to the 35% stock limit. In any case, no one wants to take responsibility hence easier to just Tai Ji to the agent bank. 

2. UOB CPF Agent Response Equally Bad

Now, this gets even more interesting. The UOB CPF Agent customer service officer told me that while CFA REIT falls under the approved "List A ETF", not all ETF is 100%. He cited SPDR Gold ETF, which is subject to the 10% investable limit, as a good example of exception. So for CFA ETF, the officer argued that this is a "Property Fund" since it invested into various REITs hence it is caught under the 35% investable limit. What the heck???

3. Master Leong Response To My Query On You-Tube Video.

I then decided to seek clarification from Master Leong as I am not sure whether my understanding of what he has mentioned inside his video is referring to 100% usage of investable CPF amount. Master Leong replied: 

Summary

Anyway, by mid-week, the trade which I made went through with CPF Board releasing 100% CPF funds to my UOB agent bank and from there the money went to my stock broker. So, it appears that UOB CPF account management customer service team and the stock broker firm personnel are rather out-dated with their staff knowledge and training which is really shocking. 

Lendlease Global Commercial REIT At All Time Low in March 2025- Dipping Below S$0.50 Per Unit At One Point.

Lendlease Global Commercial REIT ("LREIT") has dipped below S$0.50 per unit to S$0.485 per unit as at 6 March 2025. This is even lower than the COVID period and also the SREIT price tumble last year- as a matter of fact, this is an all time 5 year crazy low for LREIT. Hence I have taken the opportunity last week to add on 10,000 units @ S$0.485 per unit after going through the below thoughts process as well as risk assessments.  

1. LREIT Badly Battered By High Financing Cost and Empty Commercial Office in Milan

The higher interest cost has been severely affecting the results of LREIT. Moreover, the early termination of lease for a major tenant at its Commercial Office building Sky Complex added to its existing woes. So there is a key risk here if LREIT's leasing team is unable to fill up the vacant space fast enough.

2. Good News From LREIT on Singapore Office 13% Negotiated Rental Increase over 5 years.

On the Singapore JEM office front, there are positive upsides for LREIT With Singapore Office rental to Ministry of National Development at 13% Rental Increase.

3. Incredulous Distribution Yield of 7,42% From LREIT Relative to Risk Free Rate 10 Yr Govt Bond of 2.64%.

Based on 6mths ending 31 December 2024, S$0.018 per unit was distributed. Normalising this would be S$0.036 per unit on S$0.485 per unit which translates to 7.42% distribution yield. This is close to a +5% yield relative to a 10 year government risk free bond.  

In addition, with inflation being tamed in the US as well as worsening marco-economic conditions, probability of more rate cuts will mean higher distribution income in the future for all unit-holders. This is surely good news.

Parting Thoughts

After consideration of the various market factors, I have thus added additional units into LREIT as I thought that the upside in terms of further reduction in financing costs as well as upsides from Singapore properties will more than outweigh the potential downside risk resulting from the Sky Complex tenancy woes.  

(Note: On the CPF Ordinary Account front, I have recently invested S$20K of it into SGX REIT ETF. Will share more details on this in my future post). 

The Chocolate Finance Meltdown- MAS Querying On Instant Withdrawal Representation.

Wow, I suddenly noticed a huge surge in readers on my previous post (Why I Am Not Taking Part In the Guaranteed Interest Rate Product Offered by Chocolate Finance?) in July 2024 on Chocolate Finance.  In case some folks who are too busy and not sure what is happening, the recent talk of the town over the past 2 days is about a "bank run" on Chocolate Finance which forced it to halt its instant invested cash withdrawal feature. The panic cash withdrawal was primarily triggered off by the videos posted by Kelvin Learn to Invest and Sethisfy where both social influencers informed their followers that they are withdrawing from Chocolate Finance. 

1. Quick Thoughts

I thought that both Kelvin and Seth could have been more discrete and low profile in their handling of this epsiode instead of putting out the videos and then bringing up integrity issue among the management team of Chocolate Finance due to the withdrawal of the miles programme using AXS payment. I also believe that both have previously been paid by Chocolate Finance to promote their products last year. Unfortunately, triggering a stampade of mass exodus of funds and investors will not look too good on them- apparently they have underestimated their influence. 

In addition, both finfluencers also risk exposure to potential lawsuit by Chocolate Finance and also retail investors who followed them in the event that there are any financial losses arising out of this entire fiasco. While probability of Chocolate Finance going after them is extremely low as it will further damage their business reputation, I do not think that it is worth the trouble to even expose oneself to such needless potential legal lawsuits. Even if one thinks he/she will surely win any law suits, there will be initial non-recoverable legal consultation costs and also invaluable time wasted in such an event.

2. Will Investors Get Back Their Money?

Since the CEO of Chocolate Finance has come out to defuse the entire situation, I believe that retail investors will be able to get back all their money eventually if the panic withdrawal subside.  Nevertheless, I am still pessimistic about the product offered by Chocolate Finance as aforesaid mentioned in my previous post. 

Parting Thoughts

There is no doubt that there is already a certain degree of branding damage to Chocolate Finance due to it not honouring the instant withdrawal feature that was being marketed. Personally, I will continue to stay far far away from Chocolate Finance. For excess funds, it maybe better to just park them in real banks where the first S$100K is entirely covered by the Singapore Deposit Insurance Corporation ("SDIC") for piece of mind.