Beware of US Bonds Also Declining in Trade War- No Asset Class Safe.

Interestingly, I noticed that my PIMCO Bond funds purchased via Endowus have been declining recently. Rising interest rates on bonds seems to be due mainly to sell off by worldwide investors who are losing confidence hence US bond value has declined. Apparently, the ripples from Donald Trump's trade wars have sent US government bond prices down sharply last Wednesday, driving up yields in a paradoxical development as the global economy faces a recession. A key safe-haven asset, US Treasuries usually offer lower yields when investors seek shelter from volatility but has now been viewed as a risky asset class with a higher yield. What a strange twist this has turned out.

So do look out to ensure broad diversification in terms of asset class as well as geographically in one’s investment portfolio. 

The Tragic Fate of SREITs- Battered Down Time and Time Again Over Past 5 Years.

This is just a short post to ramble on SREITs which have always made up the bulk of my investment portfolios. The SREITs journey over the past 5 years have been nothing short of a major disaster. Since the 2020 COVID crisis, REITS prices have been hammered down non-stop. After COVID, too much money printing worldwide lead to inflation getting out of control and the US Federal Reserve started increasing interest rates which led to sudden spike in financing cost and borrowings/leverage ratio soaring. 

Just when everyone thought that the global inflation is under control and interest rates finally coming down, the megalomaniac and narcissitic Donald Trump kicked off the tariff war swhich seems to be the onset triggering off of a global recession. Many SREITs such as my favoruite Mapletree Industrial Trust ("MIT") is already at its 5 year low as at 8th April 2025. I am wondering how much will SREITs be further dropping this week given that China will be announcing its retaliatory measures to Trump's additional 50% tariff hike as China has mentioned that it will not be blackmailed into submission and will fight US tariffs to the very end. 

How does Donald Trump plan to make America great again when using artifical tariffs simply erodes America's industrial competitiveness? Also, for much of the products being manufactured, US does not have the competitive advantage. Today's news report that Trump's wishlist of moving back iPhone production to US will mean the cost of iphone going up from US$1,000 to US$3,500 per phone. Even if the tariff is now 100%, it will still be cheaper to import them. Consequentially, consumers back in US will still be bearing the brunt of the tariff being imposed. Focusing on US competitive advantage in its tech and financial services maybe better in the long term I thought. 

Fear of Black Monday from Trade War To Be a Self-Fufilling Prophecy?

Just be careful when many folks are shouting out Black Monday for today's trading......we may just witness the self-fufilling prophecy theory in motion with everyone rushing for the exit and much panic selling. In a recession (which is starting to look like a Global Depression if worldwide trading volume drop substantially), even if interest rates are cut, SREITS will also not escape unscathed. Not sure whether Frasers Centrepoint Trust ("FCT") rights issue at this juncture will go through smoothly- assuming a global market bloodbath this week, if unit price of FCT drops below S$2.05 per unit, then the rights issue will be a gone case. So don't be the first one to rush in to subscribe for the rights. Wait till the end of subscription period to assess further.  

Nonetheless, I do not think I will be adjusting for my cash investment porfolios. Also being vested in the market for the long term rather than playing trading suits me better. No one knows what Donald Trump is playing and maybe he will do a sudden reversal of his tariff threats. I am glad that 1 month ago, I have commenced adjusting my CPF Endowus portfolio configuration from mostly equities focused into a 70% bond and 30% equities. On hindsight, maybe should have just converted 100% of the unit trusts into bond funds. As for my other CPF direct investment into SGX REITs index fund recently, I think I will just leave it for now. Looking forward to deploy rest of my CPF OA into the US market if the S&P 500 crashes to COVID-19 level.

Keep your fingers crossed folks. 

Grab Got 10 Years License For Taxi In Singapore- Strange Venture Into Sunset Industy?

We have already seen the video of rows of empty SMRT taxis being parked long term in public HDB carpark. So it is a somewhat mind boggling to learn that Grab has just joined the fray into the local Singapore taxi service sector. Perhaps, Grab saw their competitive advantage in their popular online booking platform giving priority to their own taxi fleet on top of being able to do stop and pick up along the road. Nevertheless, it has been a bloodbath on the local taxi industy (ComfortDelgro and SMRT taxi arm all in trouble) which has been in the doldrums since the coming of Uber and Grab that disrupted their traditional taxi business model. 

I do hope that Grab management knows what they are getting themselves in and have already done their sums. Nevertheless, I view extra competition as beneficial to consumers. 

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.

(Updated 7 April 2025: This week will be mayhem on the stock markets, not sure whether Frasers Centrepoint Trust ("FCT") rights issue at this juncture will go through smoothly- assuming a global market bloodbath this week, if unit price of FCT drops below S$2.05 per unit, then the rights issue will be a gone case. So don't be the first one to rush in to subscribe for the rights. Wait towards the end of subscription period to assess further.) 

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. 

Credit Card Miles Reward and Unrealised Capital Gain from Stocks Now Counted As Passive Income?

I thought that it is rather interesting to come across a You Tube video with the video creator talking about her impressive 9 streams of passive income that contributed $8,500 per month for her. Yes, you did not see wrongly, 9 streams of passive income that she had was the subject header she shared in her video.  

2 very intriguing "passive income streams" that caught my eyes:

1. Credit Card Miles Reward

Bonus miles points from credit card sign up and spending helps one to reduce cost of air tickets for travelling overseas. Hence miles reward are arguably also passive income.

2. Stocks Unrealised Capital Gain

Apparently, unrealised capital gain is also be counted as passive income because one can sell off the stocks to realise the gain and then use it.

For those interested, can watch the "9 Passive Income Ideas That Make Me S$8,500/Month in 2025" by The Krazy Koala. Her passive income stream number 9 is very interesting and forms the bulk of her S$8.5K passive income. Income stream number 9 is apparently derived from fixed term certificate of deposit ("CD") in a US digital bank earning around 5.1%-5.2% interest rate. Hence her capital amount, after some mental acrobatics, is probably between $750K to $800K which is no doubt remarkable. The capital invested as per the creator is protected by FDIC insurance up to $250K. So, this is the perfect high return and low risk financial instrument.

Upcoming US Recession and SREIT Rally From Lower Interest Rate Fallacy.

Wow, this is really bad news! Early US economic data for the first quarter of 2025 is pointing towards negative growth, according to the Federal Reserve Bank of Atlanta. If we have 2 consecutive quarters of negative growth, then techincally, the US would be in an economic recession. What this means is that the probability of two or even more Federal Reserve rate cuts has just increased drastically. 

1. The Call to Buy REITs as Interest Rate Cuts Will Mean Huge Savings in Financing Cost is a Fallacy.

Interestingly, a number of folks on social media have mentioned that now maybe the best time to buy into REITs which have been performing badly and in the doldrums. Nevertheless, it is important to note that a financing cut may not lead to a rally in SREIT market price because the main factor is still whether the REIT can continue to generate sustainable rental income. Many businesses will be severely impacted and there will be increased in bankruptcy from firms and consumers. There will also be widespread retrenchment of staff (which we are already seeing for a number of years).   

Not suprisingly, during past recessions, most of the REITs will have substantial drop in their market price (along with the broad market sentiment) despite a lower interest rate environment. So far, I have not seen REITs price rally in past recessions. Do remember that REITs are still equities afterall and underlying business fundamentals are still the essential determinant of its market price. This is unlike bonds instrument whereby their market price soar when interest rate is being cut- this is the basic 101 inverse relationship of bond price vs the market financing rate.  

2. REITS I Will Try Avoiding During Recession

Personally, I will be avoiding the following REITs sector:

(1) Hospitality REITs- if everyone is struggling with bread and butter, no one will be in the mood for travelling; demand will thus plunge. 

(2) Office Commercial REITs- Too cyclical and unpredictable.

Instead, I think that shopping mall REITs (Frasers Centrepoint Trust and Lendlease REIT) as well as Industrial REITs (backed by Temasek Holdings) will be a safer buy while waiting for the market to recover.  Special theme REIT like strip malls with grocery focused business (United Hampshire US REIT) should also be a safer place to ride out the recession. 

Parting Thoughts

With a narrowing net interest margin spread, bank stocks like DBS, UOB & OCBC will find their earnings dipping soon as they have peaked. SREITs will also be in the doldrum for at least another year or two. So will you folks be making any adjustment to your current portfolios?

Investment Portfolios Updates (28 February 2025) - Net Investment of S$722K and Projected Annualised Passive Income of S$47K.

My total gross investment rebounded back to over S$1Mil while net investment after margin loan hovers around S$722K. While SREITs continue to perform miserably with a steep drop again recently, the overall portfolio was propped up by a sudden +S$30K rally in my China stock holdings of Alibaba, Ping An, Link REIT, Bank of China ("BOC") and Industrial & Commercial Bank of China ("ICBC"). 

1. Portfolio 1- Stocks held in SGX Central Depository 

Not much changes here except to mention about Haw Par Corporation which declared a special S$1 per share of dividends on top of the usual dividends. This announcement led to a sudden spike in the share price of Haw Par.

2. Portfolio 2- Margin purchased securities

(Note: My margin purchased securities has grown to a sufficient scale to sustain itself and can pay off annual financing charges as well as to gradually pay down the margin loan through dividends generated.) 

Mapletree Industrial Trust ("MIT") crashed recently to below S$2 per unit due to analysts report that its US Data Centres will have tenants exiting and the vacancy will rise. This maybe a good opportunity to buy more of MIT which has a high distribution yield of 6.85%. Even with the upcoming fall in occupancy from its data centres in US, there will be enough buffer cushion for a 5.5% to 6% yield. The market perception of MIT prospects seems extremely pessimistic. 

3. Portfolio 3 (with Tiger Brokers and MooMoo) 

(Venture into higher risk as well as capital growth stocks here)

Alibaba finally came roaring back to life after the Deep Seek. It has strangely morphed into an AI Tech company. 

4. Portfolio 4 (Endowus Unit Trusts & Other Investments)

I have continued to put in additional capital into the Endowus Higher Income Portfolio since the last update in December 2024. 

Parting Thoughts

I have approximately S$13.2K of dividends payment for re-deployment in March 2025. Out of these, I intend to utilise S$6.7K to pay down the margin loan. Another S$6.5K will be used for either reinvesting into SREITs which are at rock bottom or buying into Endowus bond funds. 

The Mysterious Woman Behind the City Development Ltd Family Dispute.

I was surprised to read that Mr Kwek Leng Beng, 84 years old, is still helming City Development Ltd ("CDL") as Executive Chairman- I would have retired at age 65 years old (if not 55 years old ideally) to enjoy my old age.  Worst still, Mr Kwek Leng Beng has brought a lawsuit against his son, Mr Sherman Kwek, for attempting a coup and wanting to remove him as Group CEO of CDL. This seems surreal and something that only happens in Hong Kong TVB drama. As a result of the chaos, investors are jittery over the future of CDL.

1. Mysterious Woman That Caused the Rift Between Father and Son
Since ancient times, disputes between human beings have always revolved around 3 matters, namely, (i)Money; (ii) Power and (iii) Woman. Mr Sherman Kwek had mentioned that Dr Catherine Wu, who had a "long relationship" with his father Kwek Leng Beng, interfered in matters "well beyond her scope". The attempted removal of Dr Catherine Wu seems to be the main trigger of the current legal battle between father and son as per Mr Sherman Kwek. 

2. CDL Share Price Disasterous Performance Over the past 5 years. 

CDL's share price has been a disaster for the past 5 years which saw it plummenting from S$9.77 per share in February 2020 to the current S$5.12 per share as at 27 February 2025. Mr Kwek Leng Beng has mentioned disasterous foray into China property market which saw the group losing S$1.9 billion dollars as part of a series of missteps of Sherman Kwek. The elder Kwek pointed to past business decisions under his son's leadership that have "put CDL in a precarious position", including a S$1.9 billion loss from CDL's investment in Chinese developer Sincere Property in 2020 and poor returns from UK property ventures.

Parting Thoughts

Interestingly, CDL net assets per share as at last publised 2024 results is S$10.17 per share. Hence current market price is 50.3% off its NTA per share. If CDL's share price crash further due to the current legal fiasco, maybe it will present a good opportunity to acquire some CDL shares with additional safety buffer. Afterall, CDL is a long standing organisation with well functioning internal structures in place. Once the dust is off the board of directors infighting, CDL will be up and running as per normal. 

United Hampshire US REIT Released Another Set Of Disappointing Numbers for FY2024.

I thought that United Hampshire US REIT ("UHREIT) released another poignant set of of 2nd half and also full year 2024 results amidst the inflation nightmare as well as the higher interest rate environment driving up financing cost. I am heavily vested in UHREIT, hence keeping a close eye on it. Despite grave disappointment over the past 3 years where we saw the market price of UHREIT as well as its distributable income dropping non-stop, there is still some consolation in that its latest balance sheet has strengthen with aggregate leverage ratio declining to 38.9%. This is certinaly remarkable given that it used to be towering near the 42%+ range. Let me just do a quick recap of the financial summary from FY2022 to FY2024 below.

1. 2023 vs 2022- Spike in Finance Cost Dragging Down Overall Results in 2023

2023 vs 2022

Finance cost was a major killer in FY2023 which increased by a whopping +32.2% from US$12.2 Mil in 2022 to US$16.1 Mil in 2023.

2. 2024 vs 2023- Spike in Finance Cost Gradually Stabilising and Hidden Unknown Downside Impact.

2024 vs 2023

For FY2024, finance costs of UHREIT continue to increase by +17% from US$16.1 Mil to US$18.9 Mil thus exerting downward pressure on Net Income before tax, fair value & gain on divestment of investment properties. If the 2 US rate cuts that was widely anticpated in FY2025 materialise, then rental escalation will finally be able to catch up to the higher interest rate environment.   

Nevertheless, there is one hidden downside from the back to office mandate from Donald Trump for government employees as well as US Corporate Bosses. On slide 8 of the power point deck, UHREIT management team has always been asserting that "On the other hand, the Strip Center sector has benefitted from the remote work arrangements trend as the additional flexibility has increased demand for the goods and services offered in Strip Centers, ranging from grocery shopping to dining. Strip Center sector values have increased 22% since June 2020".  So, does this mean valuation will head south soon given the back to office drive in US?

3. Distribution by UHREIT and Key Dates

For those still hanging on to UHREIT, do take note that the Ex-date of 2nd half distribution is on 26 February 2025 while the payment date is 28 March 2025. Distribution per unit will be US$ 0.0205 per unit.

Parting Thoughts

Well, 2025 may turn out to be the much anticapted "breakthrough" year for UHREIT to deliver better results and meaningful higher DPU to long suffering unit-holders. Let's keep our fingers crossed that UHREIT will roar back to life in this new year of 2025!

Pritam Singh Found Guilty of Lying- Looks Like Aljunied GRC Will Remain with Workers' Party.

First and foremost, I have originally no intention to comment on the guilty judgement by the local judiciary. But as a layman, I am just extremely curious on how the issues on hand can be decided by trial to determine whether something is a lie or not a lie. The only 100% certainty thing that can convince everyone is if there are videos taken or conversation recording to prove what he or she had said or not. Else everything becomes pretty judgemental albeit circumstantial evidences and witness statements, is it not? Anyway, I am not a lawyer, so I am resigned to being clueless on how these legal thingy works.  

Additionally, worst thing is does this issue even matter when there are larger issues at stake for Singaporeans such as high inflation effect on daily bread and butter matters. Personally, I thought that it is an enormous waste of public resources and time. Also, I read that Mr Singh is going to launch an appeal to the higher courts with regard to the judgement....so the soap opera continues. 

This trial of Mr Pritam Singh will only lead to more support and sympathy vote for him during the upcoming General Election. So looks like Aljunied GRC will remain with the opposition for another term.

US Office Commercial REITs Facing Bleak Future Outlook Despite Back To Office Mandate.

While many US Corporations have been increasingly forcing their workers back to office, it seems that the hope for US Office Commercial REIT to rally closer to their NTA value per unit relative to the current depressed market trading price maybe dashed soon. The upside factor of interest rate cut and back to office mandate by the US Federal government and CEOs of US global corporations are being offset by the termination of office leases from rapid downsizing of the Federal government.

1. Interest Rate Cut by the Fed in 2024 Reduces Financing Pressure on Commercial REITs 

The 0.5% cut in September followed by subsequent cuts of 0.25% respectively in Nov 2024 and Dec 2024 brought down US financing rate by about 1% overall. This also makes it more conducive to borrow funds either for CAPEX or purchase of commercial building.]

2. Weaker Bargaining Chip of Workers Due to Increasing Signs of Softness in US Labour Market

US labour market have been showing signs of weakening. US workers thus does not have the same type of bargaining power that they once did. So, when the head of various US Corporations start to exert pressure for staff to be physically back office to work, workers have to suck thumb and follow the new guidance. JP Morgan and Amazon are leading examples of corporations clamping down harshly on remote work and expected their staff to be back in office 5 days a week. The era of remote working may soon be a thing of the past.

Also, Donald Trump has ordered US Fed workers to be back office. This lead by govrnment example also boosted the ground for the private sector bosses to recall back their remote working staff. Therotically, this should drive back up demand for office space.

3. DOGE Targets To Cut Federal Government Office Leases

Recently, there was a discussion based on report by Trepp Research and Insights which mentioned that a sizable user of office space is the federal government which leased almost 150 million square feet of office space across the US and contributed rental income of $5 billion to the office commercial sector. While Fed workers have been asked to go back office, DOGE seems to be right-sizing the number of Fed employees. In fact, the federal government has already started terminating short term office leases and is eyeing for bigger lease cut. 

Summarising, the dark cloud surrounding US Office REITs will not be over soon. The drag on demand and occupancies for office commercial may last for 4-5 years.

Thoughts on Alibaba Surging More Than 50% Within 3 Weeks- Time To Sell Or Hold On?

I have been extremely busy with work these days with major projects coming in one after another and not really fully monitoring my various investment portfolios. It therefore came as a big surprise to me (Stunned like a vegetable) to find that Alibaba (HK9988) has surged by more than 50% within 3 weeks. My position in Alibaba is neither big nor small....my current cost quantum is around S$33K per record at an average of HKD77. Recently, I was astounded when I looked at my trading App. The sleeping giant had suddenly awaken.

1. Beneficiary of DeepSeek Rally and iPhone AI Partner in China

The mind-boggling spike in share price seems to be primarily driven by the DeepSeek AI rally and also the announcement of Iphone partnering with iPhone for their China market. When Alibaba unveiled its own latest version of AI after the DeepSeek announcement, it created quite a big stir for its incredulous progress. In addition, Alibaba has also invested in many AI firms. Simply put, Alibaba is now China's AI darling. It has morphed from an E-commerce company to an AI Tech company- at least, this is what the market perceive for now. 

2. Sell Immediately To Take Profit or Hold On?

Alibaiba (HK9988) seems to be a very volatile counter. In 2022, it dropped a whopping 30% from HKD100 to HKD 71 in less than a week- simply too unpredictable. It also has periods where it  languished for the longest time in the HKD70-HKD80 per share range. While it is tempting to just sell off to lock in the profits based on the historical lesson of huge rally running out of steam and then self implosion shortly, I think that I will be holding on to it for a longer term to see whether its AI transformation story can take it futher to become a multibagger winner. Its financial PE ratio is also still attractive despite the sharp rally in stock price this past week. 

Parting Thoughts

Since my stake in Alibaba is neither here nor there (not material enough), I guess I will just leave it in my portoflio without further action. The China AI rally has also helped breathe life into my other current China holdings such as Link REIT, Ping An and China banking stocks. This does somewhat helped to offset the disasterous performance of SREITs recently. 

The End of Paragon REIT- Eaten Up By Hungry Lions!

The seemingly wonderful announcement of an offer by Cuscaden Peak to buy out the minority unit-holders of Paragon REIT at S$0.98 per unit lead to a sudden surge in its market perfromance as at 11 February 2025. While Paragon REIT soared 11.2% in a single trading day to become the best performing SREIT of the day, some unit-holders are crying poignantly as they have bought Paragon REIT at S$1.00 to S$1.10 per unit before the high interest rate environment became the norm post-COVID that leads to the downward spiral in its market unit price.

1. Hungry Lions Butchered Retail Investors

While this latest offer of S$0.98 per unit is way better than the S$0.9372 per unit offered back in 2022, it nevertheless is way undervaluing the crown jewel, Paragon shopping mall. Furthermore, it is actually a free-hold property but financial engineered into a 99 years leasehold when injected by the then SPH into SPH REIT (currently renamed Paragon REIT) and we all know that it is sitting in the prime area of Orchard Road.  

I will take it with a pinch of salt that Cuscaden is playing hero to take up the extremely risky option (as per their insinuation) of major asset enhancement initiative ("AEI") of S$300Mil to S$600Mil over 4 years hence willing to buyout the minority unit-holders due to the execution risk. The truth is that Cuscaden is a commercial organisation that seeks to maximise profits for its shareholders. Their accountants, along with their commercial team,  would have done a detailed financial projection of the future prospect to recoup back the upcoming CAPEX to achieve a favourable reward to risk outcome.  

In view of Paragon shopping mall's future outlook post AEI, I thus think that a more reasonable price would be at least 20% in premium to its NAV of S$0.915, that is, at least S$1.098 per unit.

2. Will I take up the offer or vote against the offer if vested?

Note that I do not hold any units in Paragon REIT directly but my family members held around 11,000 units since 2019. I think that most REITs investors are more interested in a decent & stable distribution yield of 5% to 6% per annum. The AEI initiative will lead to a drastic plunge in distribution for the next 3-4 years as Clementi Mall will be left doing the heavy lifting during this period. I will probably be lobbying for my family members to just accept the offer and then move on to invest in other opportunities. The only issue is that of the late payment timeline of May 2025 (even if the EGM went through). Of course, if the REITs price crash further during this period, then Paragon REIT holder will benefit from the locked in S$0.98 per unit and vice versa if market price suddenly surge if interest rate decline more rapidly than expected.

Parting Thoughts

Personally, I do not like this deal as I do not find it very attractive or compelling enough for unit-holders. It would be great if Cuscaden can revise its offer upward by another 10%. But then again, there is a lack of clear direction for the growth of Paragon REIT given that its major unit-holders seems to have bought it to strip out its remaining investment properties. So, I am leaning towards the just sell and move on to other investment opportunities albeit the non-attractive offer. 

P.S: Please see my previous other post on Paragon/SPH REIT on 2 May 2022

Take It With A Pinch Of Salt-The Reluctant Half-Baked Chain Offer for SPH REIT By New Major Shareholder Cuscaden Peak And 3 Points To Note.