Wednesday, 29 August 2018

Singapore REIT of the Week



Well, hello all you REIT lovers out there. How's it going?

This post is the first in a new series called Singapore REIT of the week. Now, I'll assume for now all of you know what is REIT is and how it works. If you don't, don't fret, here are some wise words from the folks over at ZUUONLINE

The REIT I want to focus on today is First REIT (which from now on I'll refer to as First)

First was the first - funnily enough - REIT to be listed on the SGX way back in 2006. It has a diverse number of yield accretive (I think I spelled that right) health care and health care related real estate assets in Asia.

The portfolio consists of 16 properties in Indonesia, 3 in Singapore and 1 in South Korea. For more detail read here.

Let's have a look at some reasons why I think First is cool:

1. Track record of raising DPU

Between 2007 and 2017 its DPU grew from 6.73 to 8.54. This is bliss for us dividend hunters as it allows our hand earned cash to compound deliciously over the years. Yum yum!


                           Source: First REIT annual report

2. Revenue Growth

Between 2007 and 2017 First's revenue grew from $28 mill to $111 mill. I'm sure you will agree, this is some sexy growth, but what's more important for us divided divas is it means management can keep the DPU pointed in the right direction.

Here's a lovely graph comparing First's revenue and distrabutable income between 2007 and 2017.


                           Source: First REIT annual report

3. Demographic Trend

Go on the oldies!

First REIT is not going to disappear overnight. People are living longer than ever.

'Staying Alive' by the Bee Gees reverberates around my head at this point, if you'll excuse me.

Who wouldn't dig deep (excuse the death pun) for high quality health care. Thus, the likelihood of humans sidestepping the G-Reaper is slim.

That said, according to rag British newspaper, The Sun, if you are presently under the age of 40, then there's a chance you'll be able to live forever.

My goodness, wouldn't this be bad news for healthcare REITS! and us who invest in them. Aggghh!

Anyway, let's put a wacky futurologist's ramblings aside for a moment and breath in the cool air rationality.

Aggggh... that's better, isn't it?

Feel your blood pressure return to normal and swipe that sweat from your brow. I'm an optimist, you see. I know we are a rare breed in the investing world, but I am and that's it. I'm not ashamed to wear it on my chest either.

In fact, I might get a t-shirt printed with 'Singapore Dividend Collector knows everything will be fine'. I could start selling them on my blog and armies of smiling Singaporeans could skip their way to work, beaming from ear to ear.

So that's it folk's First looks good to me, but it is a bit pricey with a price to book of 1.2 something. You you'd be forking out a premium for the pleasure of owning this REIT. That said, with the rising DPU and revenue growth, combined with old people living longer, I might just have another bite at this.

*Please don't invest based on anything I say, for I am semi-sane and haven't really a clue what I am talking about. In fact, I ate a banana backwards this morning and though it tasted better. Your investments are your business - not mine*

Have a toothsome evening folks.

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Slainte

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