Tuesday, 16 March 2021

Equity Portfolio Updates (15 Mar 21)

1. Write off remaining estimated residual value for Eagle Hospitality Trust ("EHT")- S$20K
I have done a full write off of S$20K of my remaining investment in EHT. Latest update from DBS Trustee is selling off of most of the hotel properties (15 out of 18 properties) via a "stalking horse" bid. The stalking horse bid is a technique use to reserve a minimum floor price during upcoming auction.  The opening bid is way below even the recent market valuation and stapled securities owners will not get anything back after paying off bankers and creditors at such a low price. Good news is that the 3 remaining hotels do not need to be sold off immediately under duress pricing as apparently, they can still be operational and not under chapter 11. 

Clearly, the only viable option was to appoint a REIT manager during the last EGM to re-start hotel operations but this was voted down by unitholders and unable to gather the required 75% in Dec 2020 (only 55% obtained). Frustrated and irrational voting by unitholders during EGM thus lead to Chapter 11 bankruptcy protection and restructuring with the US courts which is as good as a forced liquidation at one of the worst possible time. 

Anyway, this is water under the bridge. Stay away from weak sponsor. Personally, I think there are a few conflict of interest operational decisions being made by 2 of the directors as well as multiple counts of breaches of the Securities and Future Act. Even the Monetary Authority of Singapore stepped in to sack the previous REIT manager. 

2. Purchase of United Hampshire REIT
I started accumulating units in United Hampshire US REIT. Its main tenants are blue chip companies dealing with grocery and seems resilient enough to withstand any recession and downturn. IPO price was US$0.80 per unit but current unit price is at only US$0.65 per unit.

Results so far so good but trading liquidity for this REIT is poor. Good point on United Hampshire US REIT is that if it continued to report good results going forward, the dividend yield will be close to 9% per annum along with potential room for capital appreciation.

3.Accumulation of Ascendas REIT and Mapletree Industrial Trust ("MIT")
I have taken advantage of a momentary weakness (due to concerns over steepening US yield curve) in recent market pricing to accumulate units in Ascendas and MIT in both my cash and margin portfolio respectively. Ascendas and MIT provides good exposure into data centre businesses. Looking forward to the additional M&A by Ascendas as well as MIT acquiring remaining 50% stake in their data centres. 

4. Building up position in Singtel of my margin portfolio
I have raised my stakes in Singtel in view of the turnaround in India Bharti Airtel and also the winning of the digital banking license. With COVID vaccine being rolled out worldwide, I expect the further opening of the world economy as well as gradual lifting of travelling restrictions by end of the year. Singtel will thus logically perform well again. With the Singapore government as the main stakeholder in Singtel, this adds further resilience and diversity to the margin portfolio. 

5. Opening of trading account with Tiger Brokers and new Portfolio
I have created a new portfolio to invest in riskier assets such as FSL Trust or overseas market using Tiger Brokers. Basically, I will be tweaking my current investment allocation and diverting a small portion of my future funds into buying overseas stocks for capital growth and diversification as well as those riskier investments here. However, the main focus of my investment approach will still be a dividend focused one.

Looking forward to receiving my dividends of around S$10K (derived mainly from Lendlease, United Hamsphire REIT, Manulife US REIT & Prime US REIT) by end of March'21 for additional deployment. 

1 comment:

  1. The lesson from EHT is never invest in weak and unknown sponsor.. EHT together with Lippo and First Reit caused huge losses for some S-Reit investors in 2020..