Saturday 28 January 2023

United Hampshire US REIT Finally Having Some Signs of Life?

United Hampshire US REIT ("UHREIT") has been one of my lacklustre US REIT investment holdings inside my portfolios despite no apparent bad news like those facing US Manulife REIT. While most REITs such as Keppel DC REIT, DigiCore REIT and Mapletree Industrial Trust sprang back to life and shot up vivaciously over the past few days, UHREIT just went up a tiny bit and laggard far behind. It has tumbled 28% from US$0.625 per unit as at 31 August 2022 to US$0.45 per unit at one point in time during early January 2023. I was beginning to get worried that there maybe some extreme bad news like fraud that has not been officially released.

1.What happened to UHREIT?
I thought that there maybe certain news that I have missed out on UHREIT. So I reached out to a fellow investment blogger, Happy REIT Investor, whom I recalled is similarly vested in UHREIT. For those interested, please refer to the comments section for the insights shared by Happy REIT Investor in his recent portfolio posting. You can see our discussion there on UHREIT.
(Fyi: Happy REIT Investor is one of the few bloggers who has already attained the sacred financial independence with a sizeable investment portfolio built up through his astute investment skills). 

2.UHREIT Distribution Yield
The current distribution yield of UHREIT is 11.75% based on its unit price of US$0.495 per unit and annualised 5.82 cents of payout. Its upcoming year end results will be released on 22 February 2023.

For those like me who pursues an income investing strategy, the ups and downs in terms of the pricing of a stock does not really matter if one adopts a long term view. As long as there are no frauds or major bankruptcy of the major tenants, I think that one can always wait it out while collecting the dividend payout. 

Parting thoughts
I am actually thinking of whether to add on to UHREIT. However, it is currently already taking up 10% of my overall equity portfolios and thus will increase my concentration risk. For 2023, I intend to diversify and build up more investment holdings in non-REITs sector assets. 

For those vested in UHREIT, will you still be holding on to it despite the lackluster price performance since IPO? What are your thoughts?

Friday 20 January 2023

Dasin Retail Trust In Deep Trouble- Letter of Demand Received From Banker For Default of Loan.

Dasin Retail Trust ("DRT") found itself currently in hot soup when one of its bankers, through its lawyers, issued a statutory demand letter to its management. The demand letter dated 10 January 2023 declared that DRT is openly in default of the facility agreement entered into on 15 December 2022 for USD13.1Mil. This first firing of shot by Luso International Banking Limited may complicate the syndicated loan extension by other banks (yes, DRT has already applied for numerous extension of its syndicated loans as it has been unable to repay the debt) and sent DRT into an upcoming forced liquidation and fire-sales of all its investment properties. 

What on earth is happening to DRT with its endless pleas to bankers for loan extension?
The syndicated bankers are not willing to continue lending to DRT unless they do a partial repayment of the total sum to pare down on debt level. DRT management thus have been struggling to find a way to raise capital to reduce part of its debt in order to keep their bankers happy and ink a deal for long term loan renewal instead of the current knives being dangled at its neck with a short 3 months to 6 months of extension.

The recent trouble with Luso Bank seems to suggest that the actual cashflow of DRT is not as healthy as it seems. Back during the half year results release, DRT did not declare any distributions by giving the reason that it needs to be prudent on cashflow in view of continued uncertainties arising from COVID-19 situation in China. Apparently, its business operations situation must have worsened in its 2nd half of the financial year.

Parting Thoughts
I am glad that I have sold off all my DRT units by end of August 2022 as I had enough of the poor management as well as a lack of transparency and timely release of pertinent information. Personally, I am very skeptical of the Net Asset Value of S$1.25 per unit reported by DRT as at 30 June 2022 in consideration of worsening future cashflow from its business operations and higher present value discount rate in view of higher interest rate environment. As at 20 January 2023, its price has declined 6% from a day earlier and is trading at S$0.230 per unit after the release of the news.

For all we know, DRT units may well be already worthless especially in the event that its investment properties fair value needs to be adjusted by more than 50%. An upcoming fire-sales is the perfect storm that DRT need to watch out.

Tuesday 17 January 2023

Lost S$20,000 Due To Phone Scam- Good Deed Became Sheep For Slaughter.

This incident happened last week which left me totally flabbergasted. I have a close colleague (let's call him "Mr Bro") at work who called me to warn me to be careful if I received any phone call claiming to be our colleague at our workplace who needs to borrow money for emergency. Mr Bro further told me that he fell for this scam and was lodging a police report at police station for a whopping loss of S$20,000. I was shocked and perplexed as Mr Bro was extremely street smart and an experienced Senior Manager who had dealt with many challenging situations in the commercial sector.

1. What exactly happened?
Well, this was what Mr Bro recounted on that fateful day:

1.1 Mr Bro received a call from our colleague (let's call him "Sam") based at another work site. Mr Bro and Sam knows each other very well and often meet up for drinks and meals outside work. 

1.2 The voice in the phone sounded exactly like Sam as per asserted by Mr Bro, hence he did not suspect anything amiss despite a weird number flashing on his caller ID. Sam went on to ask Mr Bro for a bridging loan of S$20K as he was starting a F&B business in Malaysia and need the money urgently to complete the deal. Sam further told Mr Bro that he is just waiting for his own money from liquidation of his own investments to come in by the next day and he will return the S$20K to Mr Bro by "tomorrow".

1.3 Apparently, Sam knows a lot of details about our company and even mentioned the exact projects that we are all working on at the moment and the peak period that all of us are going through which clouded Mr Bro's judgement. What sealed the transfer of money was this by Sam to Mr Bro: "兄弟,我们认识了这么多年,我几时有这样低声下气求过你帮忙地?" The English translation goes like this: "Brother, we have known each other for so many years, when did I ever humbly beg you for help?" 

Mr Bro who values utmost loyalty to his friends and brotherly love thus caved in and transferred the S$20K to the local bank account number furnished by Sam.
The scam finally unraveled the next day when Mr Bro called up Sam directly to enquire on whether he has received his funds to return back the bridging loan. The real Sam was utterly clueless when Mr Bro called him to return the money he had "borrowed" the day before. The real Sam also received a lot of calls at the time whereby Mr Bro and the fake scammer were on the phone probably to prevent Mr Bro from calling him. This was also the juncture whereby Mr Bro realised poignantly that he had fell for the scammer's plot. 

2. Can you recover your money upon noticing the scam?
Well, this appears to be tough. Even though the bank account number belongs to one of our local bank, the bank officer will tell you that they are powerless to do anything and cannot freeze the bank account whereby your money is being transferred to. The advice given was for you to quickly lodge a police report. Mr Bro has since made a provision of the full S$20K as he has doubts on whether he will ever see his money again.

Parting thoughts
It is unfortunate that an act of a Good Samaritan ends up in financial losses for Mr Bro. Scams seems to be rampant these days. I got another colleague who lost S$8K to a scammer (masquerading as a property agent) who disappeared after collecting rental deposits from her for rental flat. Chances of recovery are low as once the money went into the other party's designated account, the scammers will quickly transfer it to another overseas bank account or withdraw it. 

The only good thing that resulted from the above scam is that the real Sam is very touched that Mr Bro actually value him a lot as a "brother" and is willing to loan S$20K in times of crisis to him. I am sure that their brotherly love deepens in the aftermath of this incident.

Wednesday 11 January 2023

How To Enjoy Brokerage Fees of Only S$10 Per Trade (60% discount to normal commission) Using DBS Vickers Pre-Fund Feature.

I just opened an online trading account with DBS Vickers as they offered a discounted 60% commission rate of only S$10 per trade (or 0.12% of traded amount whichever is higher) which is far cheaper than the usual minimum brokerage of around S$25 per trade for trading on equities listed on SGX. Any Singapore listed stocks purchased will still be credited to one's personal Central Depository ("CDP") account which is unlike online Brokers (Tiger Brokers, MooMoo etc) which hold your purchased stocks in their custodian account. This thus gives (i) absolute comfort over the legal title of SGX securities purchased since it is under one's own account and in adddition, (ii) savings over potential imposition of custodian charges. Nonetheless, there are some things to take note since the pre-funded feature is not as intuitive for new users onboarding to Vicker's platform.
Commission rates as at 11 January 2022

1.There is no electronic payment for shares ("EPS") feature during settlement
I was initially wondering how do I link up the EPS to transfer money into my DBS Vickers trading account. Apparently, new accounts setup with DBS Vickers these days do not require EPS. During account opening, DBS Vickers would have already asked for a multi-currency DBS account to be designated for use during settlement. Upon the T+2 settlement date, DBS Vickers will automatically deduct the cash from the specified multi-currency DBS bank account.

2. One will need to log into Digital Banking first instead of direct browser log in to DBS Vickers to gain access to the special feature.
Under the trade "Settlement Mode" feature, the drop down list will only reflect the option for "Cash Upfront" (which is the cheaper $10 commission preferential charges) if one logs in from DBS Banking site. Then from the DBS Banking site, click on "Invest" header and then log into DBS Vickers from the hyperlink. 

Take note that if you log in directly from DBS Vickers online browser trading platform, then this special option will not appear at all from the drop down list at "Settlement Mode " and you can only select the usual "Cash" option which cost S$25 per trade.

Ok, now for the confusing part, if you are using the DBS Vickers App, then this "Cash Upfront" option will appear in there and you do not need to go into DBS Banking App unlike the browser form.

Parting thoughts
In summary, the browser version of DBS Vickers is strangely different from the App version in terms of the ready availability of the "Cash Upfront" option. One other thing to note is that the above concessionary rate is only for "Buy" trade and not "Sell" trade. Overall, I like the auto deduction at settlement date akin to GIRO feature and is hassle free. Of course, one would need to ensure that one has sufficient cash balances in one's DBS multi-currency account. 

Tuesday 10 January 2023

The Hidden Danger Of Investing in US Based SREITs Due to Shareholding Restriction.

The recent US Manulife high aggregate leverage level crisis (within a whisker of the statutory breach at maximum of 50%) due to a sharp decline in valuation of its investment properties has brought up another key risk that many retail unit-holders did not consider in-depth previously. Even during the COVID-19 crisis with global lockdown, the valuation of investment properties of most REITS were not adversely impacted. It has also been more than a decade since the 2008/2009 global financial crisis. The key risk that I am talking about is the possible failure of a rights issue exercise to raise funds due to the peculiarity of the situation of SREITs with investment properties in the US.

Why rights issue exercise may fail for SREIT with properties in US?
This is because the Sponsor may not be willing to undertake the rights issue given that they need to maintain less than 10% stake to qualify from withholding tax exemption for dividends received. If not, US withholding tax of 30% will need to be applied for all future distribution. Nevertheless, it is not the end of the world. The sponsor could still form a private equity property trust to buyover some of the investment properties at the revised net book value to provide liquidity to the REIT for reduction of leverage.

The sad thing is that if a rights issue exercise is not conducted, the alternate option via sales of investment properties to its sponsor at this juncture would still be a lower price due to bad market timing and also lead to another vex issue of cherry picking the best assets out and leaving the worst properties in the REIT. While this is better than a fire-sales at depressed pricing to non related external parties, existing unit-holders may not be happy and there would be some unit-holders who still preferred a rights issue exercise instead. 

Parting thoughts
Will a good and reputable sponsor be able to save their listed REIT from financial challenges given unit-holding consideration that hampers the prospect of the usual rights issue? The upcoming corporate action from Manulife US REIT will be a good case study on what will happen to the rest of the US SREITs like Keppel Pacific Oak REIT, Prime REIT and US Hampshire REIT in the event that they faced the same aggregate level crisis due to plunging valuation of their investment properties from higher discount rate and lower future cashflow projection. 

Monday 9 January 2023

Alibaba (HKSE 9988) 75% Stock Price Explosion in Valuation and Revival from Bottom Low of HKD60 Per Share.

It is interesting to note that Alibaba suddenly shot through to the moon in January 2023 (75% surge in valuation from bottom low as of last week at HDK102 per share) after plunging to a low of HKD60 per share in late October 2022. Apparently, there are 2 main factors: Firstly, analysts are now bullish on Chinese stocks due to the removal of draconian measures against COVID-19 and the impending re-opening of the world's second-largest economy. Secondly, the market views the news that Jack Ma will be relinquishing control of Ant Group as a positive development for Alibaba too. 

I am vested in Alibaba with 2,300 shares at around S$40K in market value based on recent stock price. I did not buy a lot into Alibaba during the trough period as it was too much for my risk appetize. My average price is around HKD89 per share and looking at around a 20% capital gain. Those who bought at a low of HKD 60 will probably see a 80%-90% unrealized gain in market value of their shareholdings soon- so congrats!

Sometimes I think that I got no fate with sudden wealth- I am fated to only be able to accumulate wealth gradually at the pace of the tortoise. Whenever I buy something for capital growth, most likely than not, what I bought will sink in valuation. So I am contended with the bite-size small amount (in the context of my entire investment portfolios) that I have invested into Alibaba thus far. 

Tuesday 3 January 2023

Central Provident Fund Updates-Aiming To Achieve Enhanced Retirement Sum.

For 2022, I managed to hit S$232K in my Central Provident Fund ("CPF") Special Account after interest income from the CPF Board. I hope to eventually attain the Enhanced Retirement Sum ("ERS") before age 55 years old. Thanks to earlier years investment using my Special Account as well as the beef up tips gained from Mr AK (A Singaporean Stocks Investor-ASSI) by consistently transferring CPF OA to CPF Special to take advantage of the higher differential 1.5% in interest rate, I was able to coast through my Full Retirement Sum ("FRS") a few years ago. However, internal funds transfer is only valid up to Full Retirement Sum ("FRS") level-once this level is reached, the accumulation rate for the special account slows down.
Above depicts S$9.3K of interest income paid out from the CPF Board into my Special Account.

For my CPF Special Account, this forms the last resort for a decent standard of living even if my cash investment portfolios go completely South. Hence I will not be taking any additional risk with my CPF Special Account and will just let it earn the normal 4%-5% interest income with the CPF Board.

My Ordinary CPF Account has another +$60K in investments in REITs and also S&P500 via Endowus. Anyway, the remaining money here has been reserved to be used to pay off my housing loan.

As for Medisave account, the balances here to me is only temporary as I will most likely be using this amount up completely since my parents do not have any enhanced H&S plan and I will need to pay for their old age medical expenses- it is hard being the sandwiched generation....haiz.  

Monday 2 January 2023

Investment Portfolios Updates- S$536k (30 Dec'22)- Investing During Bear Market Turmoil.

While the stock market conditions have improved slightly, December 2022 remains in the doldrum and the expected year-end huge rally mentioned by many analysts did not materialize at all. Based on StocksCafe, my year to date unrealised losses (including historical dividends received) is <-7.17%> as at 30 December 2022. The income investing strategy is still working well for me and getting realised investments in the form of recurring dividends helps to cushion against economic turmoil and mitigate the vagaries of exploiting the most opportune market timing to take profits.

1. Portfolio 1- Stocks held in SGX Central Depository 
(Note: This portfolio is designed to provide immediate dividends for use (if required) as it is under my own CDP account and the dividends credited goes directly to my bank account.)
I have invested my excess fund of approximately SGD10K over 2 tranches of 7,000 units each at prices of US$0.540 and US$0.520 respectively during the last week of December 2022 into DigiCore REIT. In fact, I have been gradually building back my stakes in DigiCore REIT since I sold off all my DigiCore REIT units at US$0.865 per unit to take profit during the mini-rally in August 2022. Please see "Is DigiCore REIT a Good Buy Now Since its 41% Decline in Unit Price From IPO?".

2. Portfolio 2- Margin purchased securities
(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and also to repay annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 
2.1 Additional investments were made into Capitaland China Trust. The devastating frequent shut down and rental rebate to its retail shopping malls will soon be a thing of the past going forward into 2023. China has done a sudden reversal of its zero COVID strategy. 

2.2 Manulife US REIT is in trouble as its fair valuation has dropped substantially which caused its leverage ratio to hit 49% (1% short of Monetary Authority of Singapore maximum ceiling of 50%). There is a high probability that Manulife US REIT may be blacklisted by Maybank Securities in its allowable margin programme. Nevertheless, Manulife US REIT has now dwindle to become a small part of my entire margin portfolio such that even if it became non-marginable or zero in value, I will not be caught in a margin call. I have also applied the stress test on my Portfolio 2 in the event that the other 2 US office REITs (Keppel Pacific Oak and Prime) also ended up in the same predicament and overall, I would still be able to escape unscathed. 

2.3 If push comes to shove and the recession worsen, I still have an alternative backup plan in place to ensure my margin portfolio held up for the longer term. 

3. Portfolio 3 (with Tiger Brokers)- Venture into higher risk as well as capital growth stocks here

3.1 I have increased my stake in DigiCore REIT for capital growth as its price has declined 41% to its IPO debut which I personally think is being oversold. 

3.2 I have also took profit on my short term investment into Global Investment Limited with a small 7.1% capital gain within 2 months. 

4. Portfolio 4 (Other Investments)- Non-listed equities and DBS DigiPortfolio

I have invested S$1K into DBS DigiPortfolio to test out their new category of digital portfolio. This product is an income focused portfolio which has 55% in equities, 40% in bonds and 5% in cash holdings and seeks to pay out 4% dividends per annum. So far, I do not really like it as visibility to its components needs quite a bit of mental acrobatics. 

In future, I will also be opening up a pre-funded brokerage accounts with DBS Vickers for investing in index ETF that has a focus on income distribution. The brokerage fees starts from a minimum of S$10 per trade (or up to 0.12% of any transaction) for such an account. Portfolio 4 is being opened also to diversify away from the use of Tiger Brokers.