|Screenshot taken from "Portfolio - February 2018"|
And in a blink of eye, only days into March.
Mr Market seem to be a little pessimistic about Starhill Global REIT and it's shareholder is being punished for this.
I took this opportunity presented by Mr Market to buy somemore dustbins from Ngee Ann City and Wisma.
See. I told you, I'm buying dustbin.
Back to SGR. I've entered an extremely small position with them a year ago at 73.5 cents.
Fast forward to a year later, this opportunity comes back once again and I made use of this opportunity to accumulate another 1,200 shares of Starhill Global REIT at 0.71. In this case, I'm buying more dustbin.
Why would a teenage fella look to buy some dustbin? Strange.
So what do they own?
SGR owns commercial properties (offices and shopping centers) across 5 countries - Singapore, Malaysia, Australia, China and Japan, for which most of their revenues are derived from shopping center rental income.
Singapore properties: Wisma Atria, Ngee Ann City
Malaysia properties: Lot 10, Starhill Gallery
Australia properties: David Jones Building, Plaza Arcade (Perth), Myer Center (Adelaide)
China properties: Renhe Spring Zongbei (Chengdu)
Japan properties: Daikanyama, Nakameguro Place, Ebisu Fort (Tokyo)
|Source: SPH - Wisma Atria|
|Source: SGR's 2Q FY2017/18 Investor Presentation - Slide 15|
A fairly big part is contributed by Toshin's master lease which took up 21.1% of SGR's gross rental. Toshin's lease will be expiring in 2025. Having Toshin's share, it's both dangerous and beneficial for SGR.
With Toshin's master lease, SGR can rest a little on aggressively finding active leases. But this will also mean that if Toshin decide not to renew this master lease on 2025, they will be having some headache. But it's pretty much like FCOT's case which I've talked about previously. It will be good if they diversify themself a little and not over rely on one tenant. But guess, we will leave it for 7 years later.
Taking a look at SGR's latest financial statement, we can see that it's NAV stands at 92 cents/share. In this case, with the price at 71 cents. We're actually buying a 500k HDB for a price of 386k!
|Source: Page 17 - SGR 2Q FY2017/18 Financial Statement|
Ok.. Sorry. We're buying SGR at a discount of 22.8% off it's book value.
But is this the end? No!! More to go!!
It's important to know the gearing for a REIT. Gearing refers to the level of a company’s debt related to its capital, usually expressed in percentage form. In this aspect, we're looking at how much they "owe".
It's never good to buy a company that has a lot of debt. But eventually debt is one thing that will fuel it's growth and espeically for counters like REIT, where they will need to borrow money in order to acquire properties as they do not have much retained earnings. REITs will have to pay out 90% of their income to it's shareholder which will result in them having little retained earnings.
|Source: Q2 FY2017/18 Investor Presentation - Slide 20|
|Source: Q2 FY2017/18 Investor Presentation - Slide 14|
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Disclaimer: All information published on this site is only meant for general information purpose. No warranties should be carried out on the action that is taken based on information found in this blog and no liabilities will be undertaken by the owner for any losses/damages incurred from the use of this information.
SGR's 2Q FY2017/18 Investor's Presentation Slide can be found here.
SGR's 2Q FY2017/18 Financial Statement can be found here.