Boring Weekend Musing: Rights and Wrongs

Keppel DC Reit is on a buying spree this year.  The Milan DC, the Cardiff DC and now a Singapore DC (Keppel Datahub 2).

A rights issue for Keppel DC Reit is coming in November.  It is a preferential offering of 274 new units for every 1,000 units held for an issue price of $1.155. 

Initially there was not much "meat" in the offer as it is just about 5% discount to its current price then.  But Keppel DC Reit's price has gone up since the news and now the discount is closer to 10%.

I have collected $300+ dividends from Keppel DC Reit, but I guess I have to return all and more for this rights issue.  Well, I am on the accumulation phase, so it is alright for me.  You always need to prepare for such event holding a REIT.  

Looking back on the rights that I have participated in the past:

1. Starhill Global Reit: 1-for-1 at $0.35 in 2009.  During the great Global Financial Crisis.  Probably right and VFM considering current price at $0.81.

2. AIMSAMP Cap Indust Reit: 7-for-40 at $1.08 in 2014.  Probably right considering current price at $1.37.

3. Keppel Infra Tr: 1-for-13 at $0.515 in 2015.  Jinxed by "13".  So, wrong for this counter considering current price at $0.50.

4. Mapletree Com Tr: 17-for-100 at $1.42 in 2016.  Probably right considering current price at $1.54 and the need to pay for the brand name of Mapletree. 

As you can see, it is not always right when buying the rights.

After the Keppel DC Reit rights issue, I am also expecting a Saizen Reit rights as it will need to bring its price up to a respectable level.

Is the SPH dinosaur facing extinction?

SPH reported a 17.5% fall in FY16 earning and my Christmas present gets smaller again. (SPH pays its final dividend on 23rd Dec every year).

SPH has been a very good dividend master for a long time.  However, the declining trend of dividend payouts is hard to ignore and worrisome.  Like the Antarctic glaciers' gathering pace towards the ocean in this global warming era, SPH's declining dividend is also gathering pace:
2011 - 24c
2012 - 24c
2013 - 22c
2014 - 21c
2015 - 20c
2016 - 18c

The core business of SPH, media business, is simply a sunset industry with circulation readership and advertisement income on a persistent downhill slide over the years.

SPH needs to transform at an accelerated pace to survive this new digital era.  The SPH dinosaur has to evolve fast or face extinction.

I think it is time to review the continuing relevance of SPH as one of my foundation stocks.  Perhaps I should get a REIT to accurately reflect the setup of my portfolio?

In terms of market cap, history, prestige and consistent increasing trend of dividends, I think there is only one REIT that is capable of replacing SPH.  The only issue is that it is now trading at a premium to its NAV.  Well, I have to be patient and wait for better opportunity to get more of it.

Phillip SGX APAC Dividend Leaders Reit ETF -- Picking my own cherries

My POEMS broker contacted me regarding subscription for the new Phillip SGX APAC Dividend Leaders Reit ETF.  0% commission fees for the new launch of the ETF.

No. I will give this ETF a miss.  The ETF may be good, but it just does not suit my investing style.  I do not like bundle.

I do not have STI ETF.  I do not have the full set of 3 Telcos.  I do not have the full set of 3 Banks.  And I will not have this Reit ETF.

Especially the yield of the bundle is much less than that of the individual constituents.  And for diversification purposes, A-Reit, Suntec Reit, Starhill, Cache, CDLHT and the new Saizen Reit all have exposure to Australia already.  So, I prefer picking my own cherries.

However, the components of the Reit ETF can be good reference for cherry picking.  The Singapore Reits constituents and their weightages include:

8.  Ascendas Real Estate Investment Trust (5.07%)
10. CapitaLand Mall Trust (3.97%)
11. Suntec Real Estate Investment Trust (3.36%)
12. CapitaLand Commercial Trust (2.81%)
13. Mapletree Commercial Trust (2.03%)
14. Mapletree Industrial Trust (1.95%)
15. Mapletree Greater China Commercial Trust (1.89%)
17. Keppel REIT (1.80%)
18. Mapletree Logistics Trust (1.63%)
24. Starhill Global Real Estate Investment Trust (1.09%)
25. Ascott Residence Trust (1.07%)
27. Cache Logistics Trust (0.99%)
28. Frasers Centrepoint Trust (0.97%)
29. CDL Hospitality Trust (0.97%)

Hmm, I am a bit surprised that Cache Log Tr is included.

Oh, the whole set of Mapletrees and CapitaLand Reits are included.  Need some cherry picking again... 

My Stock Portfolio @ end Sep 2016

No.	STOCK NAME	No.of SHARES	PORTFOLIO%	MARKET $
1	SGX	4,000	12.76	7.41
2	Starhub	7,000	10.33	3.43
3	SPH	6,000	9.84	3.81
4	SATS	3,000	6.43	4.98
5	OCBC Bank	1,438	5.35	8.65
6	UOB	613	4.97	18.83
7	Suntec Reit	5,800	4.28	1.715
8	AIMS AMPI Reit	6,800	4.11	1.405
9	SingTel	2,190	3.74	3.97
10	CapitaMall Trust	4,000	3.74	2.17
11	Keppel Corp	1,600	3.71	5.39
12	FCT	3,800	3.60	2.20
13	Starhill Global Reit	8,900	3.14	0.82
14	SPH Reit	6,700	2.88	1.00
15	CapitaLand	2,000	2.75	3.20
16	Keppel DC Reit	4,500	2.36	1.22
17	Mapletree Com Tr	3,000	2.07	1.60
18	ParkwayLife Reit	1,800	2.01	2.60
19	Sembcorp Indust	1,800	2.01	2.59
20	CDL HTrust	3,000	1.81	1.40
21	FCOT	2,800	1.69	1.405
22	SIA Engg	1,000	1.60	3.71
23	Keppel InfraTr	6,000	1.30	0.505
24	ST Engg	800	1.11	3.23
25	Cache Log Tr	2,700	1.04	0.895
26	FE HTrust	2,800	0.73	0.605
27	FCL	900	0.58	1.49
28	Saizen Reit	1,800	0.05	0.059

Movement in my portfolio in September:-
Sold:- Nil
Bought:- OCBC, Starhill Global Reit, UOB (DRIP).

Dividends collected in Sep: $560.28
2016 avg dividends/month: $1,098.72 [56.4% up at this stage cf. 2015]

Boring process of building up my passive income portfolio brick-by-brick (bit-by-bit).

Comments:
1. Received a few drips from re-investing UOB's dividend. Second counter that I have added to DRIP.

2. Current worst performing counter: Sembcorp Indust (23.2% unrealised loss).