Perennial China Retail Trust (PCRT) - Why prices remained low despite announcement of S$0.70 share offer?

Awesome! PCRT just announced St James will be offering a buy out of existing shareholders via issuance of shares issued by the new Retail Group with a diverse property portfolio. The Vendor will offer S$0.70 per share. This is a whopping 27% premium over the current market place of S$0.55 per share. Net assets per share is S$0.77 per share. I am currently holding on to 55 lots of PCRT (after selling off 20 lots) and have just received S$1200++ in terms of cash dividends. No prize for guessing PCRT as my star performer for 2014. 

Why then does the share price of PCRT still languish behind? Today, it touched S$0.60 briefly before dropping off and ended at S$0.55. Reason is simple: The market is pricing risk premiums extremely high and expecting a substantial discount from assets under construction as well the risk of not being able to secure quality tenants in view of overwhelming retail supply. There were even reports in mainland China of retail malls which offer free rental to their anchor tenants.

Anyway, chances are even if the new entity commenced trading, its share prices will eventually drop off to compensate for the market risk premiums. I would actually recommend current holders to sell off as soon as the new entity commenced trading. Just how much exactly? For those interested, jot down your request through your comments and I will oblige. 

Rivertrees Residences Review

Development Name: Rivertrees Residences
Developer: Frasers Centrepoint Homes, Fareast Orchard Ltd, Sekisui House Ltd
Address: Fernvale Close
District: 28 
Development Type: Residential
Tenure: 99 yrs
Site Area: 14,930.5 sqm / 160,712 sqft (approx.)
Gross Floor Area: 44,791.5 sqm / 482,136 sqft (approx.)
Plot Ratio (GPR): 3.0
Maximum Building Height: 80m AMSL (Above Mean Sea Level)
No. of Blocks / Storey: 5 Blocks, part 20-Storey/22-Storey high & 8 Landed Homes
No. of Units: 495 (Residential) including 8 Cove Homes & 1 Shop Space
Facilities:  Full Condo Facilities.
Expected T.O.P: 13 June 2018

Beautiful 155m reservoir facing frontage. The ground level for the condo units are actually on an elevated platform that is already 2 storey high. Like Qbay Residences at Tampines, the developer has also introduced a chalet that one can book for relatives or friends to stay overnight....known as the River Villa (see below pic at bottom). This project reminded me of Clearwater Bay in Hong Kong and Monte Carlo.



Suites selling like hotcakes





Main entrance from the new Fernvale side road

                                                  

Tennis court and another tower facing H20 Residences



Stack facing pool and former reserve site for "school"



Tower facing H2O Residences infinity pool and fitness clubhouse



The U shape design maximises pool view and reservoir view



The much coveted Cove House- HOT!



Reservoir facing tower with River Villa on the side



Impressive landscaping



This side will be facing River Bank

                                                 

River Villa- Some naughty kid destroyed the fence and throw it into the SPA

                                         

Pictures of Showflat for 2 Bedroom Deluxe Suites



Taken from Entrance-Dining and Living room sizes



Small kitchen but still functional



Kitchen seen from dining area



Common bedroom-decent size

Balcony just the right size for a small family

Good size of living room and dining area

Kids can roam freely in the spacious living room

I find the kitchen a bit small but overall, the layout for all units are very functional and space efficient. Prices from 950psf to 1150psf which is fairly reasonable for such a well designed project. Suites due to their smaller size quantum selling like hot cakes. The cheaper units are those facing away from the pool and reservoir view. I would recommend prospective buyers to spend a bit more to get the better facing units as these will be easier to rent out or resell in future.

 

Location wise, not sure why many short sighted people keep bashing Fernvale and said that this place is remote and do not have much amenities. Seletar Mall is due for completion. Also, the upcoming BTOs will have commercial shops built into the ground level for the benefits of all residents. Park connector will link this up to Seng Kang Riverside Park and Punggol Promenade. There will also be a viaduct built to connect to the TPE. Rivertrees Residences represent an unique investment into the upcoming new town which is closely integrated with nature.

The Tembusu Review- Gem of Wing Tai group

Lush landscaping and the allure of freehold in the heart of Kovan. Sky bridges linking all the blocks together. Wing Tai presents their exquisite concept of home which integrate modern sleek architecture with environmental sustainability: The Tembusu!

Prices start at 1500psf. A typical 3 bedder at 1,044sqft will cost around $1.58mil. Excellent finishing such as compressed marble, good quality timber flooring, sliding wardrobes, rain shower, mosaic tiles in bathroom and space saving built in kitchen cabinets that exploits wasted corner spaces being provided by Wing Tai. 

Facilities bring provided not just at ground floor but also on level 6 and 12. I particularly like the observatory deck on level 12. For units just below the single level penthouse, the private enclosed space is actually a built in garden. For those with the money to spare, do consider a purchase in one of these rare units that will make you the envy and talk among your relatives and friends. 

The Tembusu is truly an outstanding and remarkable iconic masterpiece by Wing Tai. This is not surprising given that this used to be Wing Tai's HQ when they just started their business. No efforts have been spared to make it the most prominent piece of architecture work standing out in the vicinity.

S-REITS Correction and Effect on rising interest rates

It is interesting to note that most experts believe that rising interest rates will hurt REITS. My views are totally different from the mainstream folks. The current interest rate hikes is attributable to better economic performance in particularly the US. Based on US history for REITS in such environment, REITS had delivered strong growth in terms of revenue. At a minimum, I would expect REITS Manager to be able to pass them on effectively to their core tenant. 

The current correction in price of S REITS present good opportunity for buy in. 

Asian Pay TV Trust- Updates on Results release

Results for APTT announced on 12th Nov'13. Results and dividends distribution as per original IPO forecast. In addition, APTT also going ahead with network expansion across greater Tai Chung area in Taiwan. This expansion drive will give it access to an additional 400,000 household.

In view of it's recent price drop, APTT has declined to an extremely attractive price of S$0.77 per unit which translates to an annual dividend yield of 10.71% yield. Also, there is even more room for distribution to improve due to new potential customers which will widen it's subscriber base. 

Asian Pay TV Trust- Why its price keep dropping?

Over the past 1 week, I observed that Asian Pay TV Trust ("APTT") dropped below the resistance level of $0.80. It declined to an all time low of $0.775 by end of 1 Nov'13. APPT IPO debut in May'13 at $0.97. Based on the current price, it represents a shocking plunge of approximately $0.20 drop per unit or 20% decline in its market value within half a year. Another peculiar point is that the Sep'13 results will only be announced on 12th Nov'13....but there were sudden sell off by current investors. Is it insider trading and the results from APPT is going to be a major disappointment? 

Well, my own analysis is that APTT is a very much misunderstood stock. The market is pricing risk and reward at 10.6% yield based on $0.775 per unit.....this is crazy. I have been holding on to APTT since its Macquarie International Infrastructure Funds days which was 5 years ago. APTT had performed magnificently in terms of capital growth and dividend income (I entered into the market during the Global Financial Crisis in 2008).....for me, this has always been an excellent cash cow and I believe it will continue its stellar performance for the following reasons:

(1) There is no major change in the management of APTT. It is a team which has a consistent track record of delivering results and executing strategic plans in business development in Taiwan.

(2) Potential competitors will have a tough time competing with APTT which already has the basic infrastructures in place. It will be tough for any competitors to try to sustain operations till they achieved the same economy of scale.

(3) Content on offer by Taiwan Broadband Communications such as HBO, National Geographic, Discovery Channel etc. are solid. There are over 105 TV channels in the basic package alone. Internet download of programs are currently still somewhat lacking in content. I foresee consumers still onto paid TV for many many years. Anyway, if technology and lifestyle change, there will still be ample time to get out before it truly became a sunset industry.

(4) My valuation using the discounted dividend model arrived at close to $1 per unit. Also, net asset per unit is around $0.92. Hence based on current pricing, there is a significant margin of safety in mopping up more shares in APTT. Over the past few days, I have acquired another 10,000 units, taking advantage of the declining pricing.

(5) The cash flow is sustainable bearing any major mishap. APTT management has reduced leverage significantly over the years. They have learnt many invaluable lessons during the last 2008 recession. 10.6% yield means one will be able to recoup one's investment in less than 10 years. The current yield is very much worth the risk taking.

Of course, the main concern will be whether APTT can get their broadcast license renewed in another 5 years. Based on what APTT has built up, this should not be a major hurdle.

The financial results to be announced soon will indicate whether my analysis are on the right track. As the saying goes, no risk no gain.

Midtown Residences Review (Hougang Central)

DEVELOPER: Oxley-Lian Beng Pte Ltd
LOCATION: 1189 Upper Serangoon Road, 3 min walk to Hougang MRT
TENURE/STATUS: 99 Years
LAND SIZE: 57,047 sqft
BUILDING DETAIL:
Basement 2- Residential Car park
Basement 1- Commercial car park & Supermarket
Level 1-Duplex Restaurant & Retail Shops
Level 2-Duplex Restaurant & Retail Shops
Level 3-Facilities Deck & Residential SOHO Units
Level 4-9-Residential SOHO Units
Level 10-11-Duplex Penthouses
CAR PARK: 162 Residential lots; 87 commercial lots
ESTIMATED TOP DATE:31st December 2018

TOTAL NO. OF UNITS: 160 Residential SOHO units (3.3m high ceiling)

• 1+Study (452sf)
• 2-bedroom (646-667sf)
• 3-bedroom (710-743sf)
• 2-bedroom Duplex Penthouse (840sf)
• 3-bedroom Duplex Penthouse (1292sf)
• 3-bedroom Triplex Penthouse with Roof Terrace(1570sf)

 

107 Shops (Including Duplex Restaurant, Supermarket and F&B Shop) 
• Duplex Restaurant (from 700sf, 55 units)
• Retail shops (322-344sf, 51 units)
• Supermarket (3300sf, 1 unit)

 

 

Review

The joy of everyday living comes alive at Midtown Residences! Hougang MRT and bus interchange is a mere 3 minutes walk away. In addition, all amenities are already built up in the mature estate of Hougang Central. So one does not need further elaboration on the excellent location for this development. There are also 2 level of shops planned for this mixed development. Residents thus can enjoy much convenience with shopping downstairs whenever they get bored at home.

 

Units Layout

Good rectangular design which is efficient space planning. However, the unit sizes are extremely small. For example, 3 bedrooms here are only 67sqm. My sense is that the units available are more suited for rental investment rather than for family living. Good thing is that the units comes with a 3.3M high ceiling hence the volume is increased which makes living in this development bearable by increasing the space available. Mezzanine floor can be built for the bedrooms to make use of the high ceiling. Bedroom on the Mezzanine and study below design is an option to make good use of space.

 

Interesting Points to highlight

(1) The parking for residents is at basement 2 whereas basement 1 is for shops owners and shoppers. Problem is each unit is entitled to only 1 lot. There may be parking issues for relatives and friends. It will be kind of embarrassing to ask them to park at the HDB multi storey carpark and then walk over to Midtown. But I guess if most of the units are for rental, then the tenants will be relying more on the MRT for transport hence freeing up enough lots for visiting relatives and friends.

 

(2) Facilities are fairly decent such as a 20m lap pool. There is also a multi purpose court where one can play basketball.

 

(3) Prices after discount is still at over 1450psf.This is shocking high. However, quantum remains affordable with the small unit sizes. Less than 1 Million dollars for a 3 bedder.

 

Final thoughts:

There are actually still lots of potential for further capital appreciation. The huge plot of land near Hougang MRT remains undeveloped. It is being reserved for a Mega shopping mall and residential project.