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Friday, May 6, 2016

Sharing My Thinking Cap As An Employee

Everyone fantasizes being something different once in a while and I am no different from the rest.

When I started the blog, I was inspired by fellow bloggers who walked a certain path of life that are different from the rat group I belonged to. It was always exciting to be different because the experience was not mundane and it gives an escape to the life we have yet to experience. It almost feels as if the grass is always going to be greener than the one we live in today. 

As an employee myself, most people will be able to relate to what I am experiencing. You wake up everyday at the same time, do the same activities in the given time, take the same bus with the same group of equally dreaded passengers and reach the office to do your required task from 9 to 6 after which you reach home for dinner and repeat the same again Monday to Friday. During the weekends or public holiday, we usually chose to escape from the reality because for the sake of the 2 seemingly short days, we need a break from the routine. We need a holiday to slow our mind down and perhaps a laid back resort by the beach would be the perfect vacation plan to recharge our energy. Towards the month end, we get paid for our labor and this is perhaps the most looking forward moment of any employee's life. After all, it is a fact that in modern slavery, we had exchanged one resource after another - our precious time for a glamorous life and money.

When I started the blog, I had written about such escape from reality as a measure of attractiveness to readers, for instance you can view the About Me page. You can say I am just like any other salesmen on the street trying to sell you insurance or any other products. I was selling an envious lifestyle to readers, an opportunity to join me in what I do in order to escape the dreadfulness of reality. But this is no longer the case now. To me, the blog has grown to a matured stage where I should be able to offer readers some insights that I get over the years more than just dividends and envious lifestyle. I want readers to know that there are many path to a greener grass and my path is not the only way for you to reach that ultimate zen that you seek for unconsciously.

Based on B's personal scoring

Table Factor Matrix

The above table you see will show an underlying matrix to how much each factors will mean to me as an employee, early retiree and an entrepreneur. The score input on the table is based on my personal scoring so that will be different for different people.

Let me provide the breakdown of each factors in more detail:

Money - This is a rather straightforward decision for me. As an employee, I can say that I am extremely comfortable with the amount of salary I continue to receive because I get paid rather well as an employee, admittedly. Note that I don't earn sub-abnormal high salaries like what you read on the paper but nor do I earn such a low pay that I have difficulty paying my butter and bread. In fact, for most of us who are an employee, I think we get paid an obscenely high amount of salary that it can easily feed hundreds or even thousands of people in a poor nation. I think that's a pretty fair statement for people who are earning at least a median salary.

I rated 3 for early retirement because obviously I will not receive any sort of income when I am no longer working. The score of 3 is there because I have at least a small dividend I received that can pay off the basic necessities. But for now, they are inherently not sufficient at all to fund our family lifestyle.

As entrepreneur, it is often a risk in terms of money. You can either be very rich if you are successful or very poor if your start-up goes bust. Because of the unknown factor, I have factored the score at 3 for now.

Risk - As an employee, the one risk is always going to be retrenchment when the economy turns sour, as much as we dislike it to happen. However, there are certain roles that I think are more durable than the others. Myself for instance, it is pretty unlikely that I will be let go even in dire conditions because it is one of those thing that you will need an accountant no matter what happens. Phew, safe score checked.

Again, quickly dissecting the risk factor as an early retiree and entrepreneur are pretty self-explanatory.

Fulfillment - I rated this as 5 for myself as an employee because I do not get the kind of fulfillment others get in my role as much as I would have liked. It is okay because this has probably got to do with the role I'm playing in my company. I certainly can't be an accountant yet at the same time reach a fulfillment such that I scored a goal in the extra time in a football match. That just will not happen unfortunately.

I rated a high 9 for early retiree and entrepreneur because I guess they'll be more aligned to what they prefer to be doing and have that sort of drive and satisfaction that the corporate world cannot give. I can be very wrong in this of course because I have a few friends who get a high 9 fulfillment in their corporate role and I congratulate them for it.

Autonomy - As an employee, I think it's fair to say that we don't usually get an autonomy to do the things that we want to do, pick an idea that we think is right or take leave from work as and when we feel like it. There are corporate rules and hierarchy to follow no matter how much you disagree with and this is why I am scoring myself 3 for this as an employee. I think most people would agree with me on this.

As an early retiree, the biggest takeaway is perhaps the release of this autonomy that tied you as a rat in a tight race. When you get to this stage, you no longer have a boss to report to nor do you have to follow an SOP that someone unknown has created in the past. You do what you want and need to do at your own leisure and disposal. This is why I have rated this as 9.

Sharing My Thinking Cap

Based on the above table matrix I've shared, you can see that there are different combinations you can choose in order to obtain happiness.

For instance, if you are an employee with a low score of fulfillment and autonomy just like me, you can perhaps take on roles that might increase your fulfillment and autonomy score over time. You can change multiple jobs to trial and error and see where the sweet spot might hit best for you. That is one option.

The other option you can choose is to take the leap of faith to become an entrepreneur. Perhaps, cooking is your passion and you've been dying to do this from young. Taking a leap of faith to entrepreneurship from an employee will increase your fulfillment and autonomy almost immediately but will increase the risk and monetary factor. In other words, if you decide to become an entrepreneur, you better think thoroughly on the amount of money you have to burn and risk of failure should the business doesn't work.

For me, I decided to go with the third option.

The availability of option to increase my autonomy scoring appeals to me very much because I don't like to be tied with decisions and time. For instance, in my current role, it is often very difficult to take leave during the last week of Christmas and New Year because they are my peak period and it is almost impossible to be away during such a time. In fact, there was once when I was seriously sick and I had to come to office to close my year end book. Being an early retiree appeals to me because it gives me the option to do what I wanted to to during Christmas and New Year. Perhaps, a white Christmas getaway vacation would be nice for my family. I do not know how it feels because I am bounded by my job at the moment.

The other thing that weighs on my mind is money. Obviously, regular readers of this blog know what I am trying to do with this one. I am trying to slowly but surely transition my income from an active one to a passive one in the form of dividend income. When the amount of dividend has reached an inflection point and able to cover my expenses, that is when I declared myself financially free and I can transition to an early retiree lifestyle when it comes. Of course, who knows by then I might be offered a role as a coach for my favorite soccer team and by then my fulfillment score will shoot up and I won't be dreaming of early retirement again. Anything is possible.

Final Thoughts

Please be warned that the above scoring is purely based on my current input and you are welcome to disagree. But if you are picking on that, then you're missing the forest for the trees.

Everyone has a process thoughts on the things they do but they are often crumbled together that it is often difficult to put a piece of the puzzle together. Writing them can help to organize the thoughts more concise and properly.

Now that I've shared my thinking cap, it's time to close the cap and get back to work. See ya!!!

Tuesday, May 3, 2016

Dividend Income Updates - Q2 FY2016

I am writing this dividend update in an attempt to compile my quarterly dividend performance for the year. The last update for Q1 was written a couple of months ago (Link Here). 

The theme of this post will be based on my understanding of the advantage of dividend investing and that is to compound dividends for as early as we can, for as long as we live

I am sure by now many of you have heard the common saying of “Sell in May and Go Away” phenomenon that has been going around, lurking and prompting investors to sell their portfolio holdings and seek a hideout until the bear comes out. There are some truth in this, as hindsight statistics have proven over the years that resembles many other hidden truths but do note that they are not bound for absolute certainty given how some years they’ve turned out otherwise. 

If we take a step back and think what it really means, we will soon realize that they are all but a bull of crap, no pun intended. They are noises to stir around the emotion of an individual, to test and see if they are investors who have a developed mind of their own or simply buying and selling based on what they heard on the street. I’ve been tempted myself not once, not twice but a couple of times, many times in fact over my investing journey and with the ubiquitous of the media stream, I believe the same goes for many.

Now, if you decide to sell them based on the above reason, you will soon find yourself to be in an extremely difficult position to allocate the capital you have at hand as you have to find a better company with a better valuation, which does not come across too often. I’ve shared in my previous post (Link Here) how difficult it can be for an individual to sell and buyback and unless you’re a proven winner in this category, you are better off compounding those dividends you receive from your company as much, as early and as long as you can. I think that’s a slower but a pretty high success rate in the long term. 

CountersDividend (S$)Payable Date
Ascott Reit159.0027-Apr-16
ST Enginnering1200.0010-May-16
China Merchant Pacific1575.0019-May-16
Ho Bee1540.0027-May-16
First Reit169.0030-May-16


After tabulating my dividend for all my companies, the 2nd quarter dividend amount came up to $7,848. Together with the Q1 dividend amount of $3,056, the 1H FY16 dividend amount came up to $10,904, which is still below my targeted amount of $2,000/month or $24,000/year. I'll keep going and see where it takes me though at the end of the year.

I am treating this dividend income as part of my cashflow which would be reinvested into the market that will give me a higher dividend income in the future which would fund my early retirement, if that is ever going to happen.

If you think that this strategy might work out for you, I’d suggest you give it a try for at least one year and see what happens. For most, I think it’s a pretty addictive exercise to churn out year after year.

How are you doing in terms of dividend in the 2nd Quarter?

Sunday, May 1, 2016

Recent Action - Fraser Centerpoint Trust (FCT)

FCT is one of the Reits I am more familiar with.

I've been wanting to add them to my existing position but couldn't get any solid entry points in recent times. The last addition was back in December when I added 7,000 shares at a price of $1.81. Last Friday, I managed to add FCT to my existing position at a price of $1.95 for 5,000 shares. This was an average up decision.

My last write-up on the company was 4 months ago when I attended their AGM for FY15 so I would not be repeating much on the operational updates on the company.

The company announced their Q2 FY16 results recently so there are just two things I am particularly on the look out for.

The first is on the ongoing AEI they are doing with Northpoint.

Occupancy for the premise has dropped to 81.7% and is expected to drop to the low 70-ish as they continue to progress with their phase 1 and 2 enhancement.

In Phase 1, which will take place from March to October 2016, will see a reconfiguration of the retail space, relocation of the food court at basement 2 and upgrading of the passenger lift, ceiling, toilets, etc.

In Phase 2, which will take place from January to September 2017, will see an integration with the upcoming retail mall Northpoint City at all levels from B2-L3. This is a big one because the Northpoint residence and retail mall will commence operations in 2018, so it is vital that there are synergies and integration in both retail malls rather than competition, since they are owned by the same parent company.

The management cited minor disruption to the tenant as they had to be moved, but this will no doubt has an impact to earnings and DPU at the end of the day, for the short term until it is completed. AEI Capex is budgeted at $60m and to be funded by borrowings and internal resource, so we should see gearing goes up over time. Upon completion, a rough estimate of 9% rental reversion is expected from the mall. If you see their track record since inception, you can see how they have managed to edge out positive rental reversion through all economic cycle up or down. That is impressive management. Long term investors can have comfort knowing that the tree will reap fruits when it's ready.

The other thing that I am looking out on their development is their debt maturity, which currently stands at 1.91 years.

I won't be too worried on this since I'm pretty sure they are able to obtain a term loan with their credit rating, albeit this will probably come at a higher interest cost than before. Still, if you look across all the other retails reits I've listed below, FCT has the lowest interest costs so far. So they will probably go up but will do just fine with it.

ReitsGearingAverage Cost of Debt
SPH Reit25.5%2.84%
Suntec Reit27.5%2.99%

Final Thoughts

The current share price does not offer a compelling opportunity to go in since the company will have a hangover from the AEI of Northpoint which will cap the upside in the short term.

Management fees to be paid in units have increased from 20% to 50%, so this will allow more cash to be retained to be use for the capex and the company can avoid raising placement to do it. 

In the long term though, I believe this Reit will benefit from the integration of the Northpoint, the completion of the DTL2 (Changi City Point) as well as the expansion of the Woodland regional center as a hub.

*Vested with 18,000 shares as of writing.

Friday, April 29, 2016

Ho Bee Land - Q1 FY16 Results Review

Ho Bee announced their first quarter results recently for FY16, so I thought of covering a few thoughts here.

The company reported a 19.9% increase in the rental income year on year from $31m to $37m due to contributions from the 3 new acquisitions in London in the 2nd half of 2015 - mainly 39 Victoria Street, 110 Park Street  and Apollo / Lunar House at Croydon. With exception to 110 Park Street which are currently let out at an occupancy of 82% due to some upgrading works, the rest are all operationally fully occupied.

These properties are currently yielding a cap rate of around 4.5% and 5.35% respectively but with debt this looks much higher. These rents are also expected to be highly reversionary once they entered the re-negotiate agreement spectrum.

When I bought the shares of the company, one of the main lookout is on these rental income because these are recurring in nature and cashflow positive to the company (I'll explain why the rest are not later below) so this forms the expectation base to which how much dividends I should be expecting from the company. I don't know if people look at cashflow anymore these days for developers. They seem to be more fixated on the traditional method of discount to book value.

The company managed to book a seemingly impressive 59.7% net profit year on year to round up the first quarter but do note that most of these gains are not cashflow positive. I don't know if anyone notices this point anymore these days.

Take the loss on foreign exchange for instance, these are mostly due to the weakening of the Pounds sterling and RMB Yuan, which has a reporting impact on Hobee's performance since they were done in SGD. If you notice the portion on "Other Comprehensive Income", you will also notice how much currency translation losses the company is suffering from as compared to last year. These will not have a bearing on the cashflow but will impact the book value of the company. If you are buying hoping that the book value of the company will increase, you will be disappointed to know that it has dropped this quarter.

The other point which stands out from the results is the good performance from the associates. The company reported a $9.3m share of profits from associate. These was contributed by the the joint venture project they did in Xujing, Shanghai which will be completed by 2016. So far, 50% of the total 1,470 units have been sold and recognized on the book. Ho Bee owned 40% interest of this JV project so we can expect approximately another $9m upon completion assuming fully sold.

Do note that these share of profits from associates are also not cashflow positive for the company for now due to the application of the equity method reporting requirement based on IAS 28, unless they chose to divest their interest in these JV one day. Under the equity method, an initial recognition on the investment in an associate or a joint venture is recognized at cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the investee. In other words, these will go directly to increase the book value of the company instead of being cashflow positive in nature. Again, these doesn't mean much but if you are someone who wants to scrutinize on their cashflow this will be something you need to note.

The company will have some further developments from their Tangshan and Zhuhai project as well as completion of their Australian project - Rhapsody in Gold Coast and Pearl in Melbourne, but also do note that this will be how they will be similarly recognized in the book.

JV @ Xujing, Shanghai

Final Thoughts

My longer term outlook for dividends of 10 cents/share from the rental income still remain a possibility for now, though it is looking unlikely for this year given how much they need to fork out cash for working capital and completion of development costs. As such, I am expecting the company to keep their dividends at 7 cents/share for FY16, with a possibility of a much higher on in the later stages where working capital are more relaxed.

*Vested with 22,000 shares of Ho Bee as of writing.

Thursday, April 28, 2016

AGM Review - Kingsmen Creative Ltd

I made my way down today to Changi South lane where Kingsmen HQ was located. It was my first time attending the company's AGM and getting to know the management personally so it was a very good impression after listening to them speak about the company's vision towards the future. The management was very shareholder's friendly as they tried to shake and engage the shareholders before the meeting convenes.

There were also a few familiar faces of friends and fellow bloggers around so I was glad to have met them during the event as well and have a small chat afterwards.

"Humpty Dumpty sat on the wall..."

Management and Independent Directors

Andrew Cheng, the upcoming new CEO of Kingsmen, started by giving a presentation diving into what they did for 2015 and what is the prospect of clients they managed to clinch or are looking to venture a project with in the future as potential clients. I really like how he presented because for all the other AGMs I attended, the presentation was straight from the financial presentation which was rather dull. But this was different. There was a lot of glimpse sneak peak into the future and strategies the company will be undertaking. He also showed an artist impression of their new HQ (800m away from expo) which will be ready in the second half of 2018. Brilliant presentation.

Kidzania Singapore
Volkswagen Motor Show @ Seoul

Yata, Hongkong

Pangyo Department Store, Korea

Artist impression of the new HQ to be ready in 2018

1.) There was a shareholder who was concerned about the headwinds and outlook of the company going into 2016-2017 and hence he raised this up the management.

The management conceded that the general economy outlook will be tough but that does not mean they will fade away with the slowdown. Contrary, it is often during these periods of uncertainty that the company manage to strive forward and become bigger. For instance, with the retail luxury and fast fashion sector slowing down, the management will not be idle but instead offer clients solutions in alternative marketing that will help boost the experience of the customers, potentially turning traffic into sales and get a better return on every dollar they spent on their marketing with Kingsmen. Even as more retails are going into e-commerce, there will be a segment of customers which will prefer coming into stores and this is where Kingsmen is able to offer in terms of building not just design but also experiential platforms.

The management also offers potential partnership and strategic move into the extended segmentation of retail - such as pop-up stores and airport development (travel retail).

Pop-up stores concept

Travel Retail concept

2.) A shareholder raised a question about the cash the company is carrying on their balance sheet and would like to know to which extent does it become excessive at some point.

It is always going to be difficult putting a number or formula to this because where cash is concerned, it is always the more the better as it can work out as a call option that the company can utilize during periods of uncertainty and bargains.

The management responded by clarifying the nature of the industry and work they are in puts them in a situation where they will need cash to tender for the project and buffer for working capital as and when required.

In addition, the company has a total of 19 offices in different locations and each geographical areas will offer opportunities in the different segments and hence it is crucial that the cash be kept in the books of each of the entity in case an opportunity arise.

Apart from it, the company would also require cash to build their upcoming HQ which will commence anytime now until 2018. The construction work alone would require approximately $20m  to $30m spanning over 2 years.

The management do however agree that should they feel there are excess cash at the end of the day, they would return to shareholders in the form of higher dividends, but the likelihood should be low because there will always be business and opportunities for the company to grow.

Disneyland @ Shanghai

3.) There was a shareholder who asked regarding the longer term outlook of the company.

The management responded by saying that ideally they would like to see topline growth to double in the next 6 to 8 years, which is highly possible given the opportunities the market is offering.

4.) Another shareholder asked about how they designed theme park as several of them, e.g Universal Studio, Legoland, Disneyland has their own preferred design that they would like to have.

The management replied by confirming that theme parks usually have their own IP concept in mind that they'd like to build, but they are often looking for vendors who can offer good reliability in execution, design and built with attention to details and the choice is often clear who has the expertise to do so in such a niche market.

Legoland @ Florida, USA

5.) The same shareholder asked about whether the company taps on the association the Board might have on Singapore related, e.g Capitaland or CDL has hotels business.

At the moment, the company is not looking into these segments so it is not under their radar. Having said that, airport development such as the new Jewel @ Changi Airport are those they are looking out for which was just completed last week.

Project Jewel @ Changi Airport

Overall, it was a good session and this is my first time attending the company's meeting in their HQ.

I think with the management's honest take on their strategies and their assurance, I will look forward to the growing business and confident the management's ability to bring them to greater heights in the future.

Vested with 80,000 shares as of writing.

Tuesday, April 26, 2016

How Do You Position Yourself For A Sideway Market?

The STI market has not been in ferocious mood since last October when we witnessed a sharp drop from a high of 3,521 to a recent low of 2,520. Since then, the market have recovered slightly - moving up and down cautiously and consolidating without any sort of seriousness to show a longer uptrend or downtrend. 

While these movement in the market has lasted only a few months, we can sense a general cautiousness in the sentiments and at times frustrations because there isn't any particular indications where the market is heading. This can be seen from the fact that there are a rush towards the bond yield in the market and hence pushing yields lower.

As investors, it is very important that we stick to our strategies regardless of how the market reacts. Often, people forget that the market is irrational and may suddenly offers compelling opportunities for investors who are prepared to pounce on.

So how do I position myself during these periods of sideway market?

The first thing I would do is to review my portfolio asset allocation.

In the bigger scheme of things and to make things convenient, I would only consider liquid assets - cash and equities allocation. This means that I would exclude all other assets such as housing, CPF, gold, or anything else that is not liquid.

Cash is an important component of my strategy and I would always try to keep some cash allocation available because you never know what the market might surprise you with. Having said that, I have been allocating more cash into buying more equity recently as first I believe the market is relatively cheap and second my cashflow conditions have improved for the better. This allows me to buy companies at regular interval without needing to time the market as the latter makes it very difficult to predict, especially since we can be subjected to hindsight bias from the recent low in Feb. By doing this, I am trying to take the psychological aspect (hardest aspect of investing) out of the way.

A sideway market is also a mental test to one's patience because often you have to do things you are not comfortable with in order to get better. Sometimes, this can mean doing nothing at all for a longer period of time while observing the market. If you look at my monthly transactions each month, you'd see that I seldom have any zero transaction in a given month. Having said that, I would not buy or accumulate for the sake of doing so if I knew that the company is overvalued. I think that would be very silly.

Last but not least, I'll also continue to review the position I have, keeping tabs on any latest development while keeping fresh information abreast. This includes browsing their daily announcement, analyzing their quarterly announcement and attending the annual general meeting if schedule permits. I think this is what most investors are already doing so this shouldn't be anything new.

What about you? How do you position yourself during these period of time?

Tuesday, April 19, 2016

Recent Action - Ireit Global + AGM Review

I attended the Ireit AGM this morning which was held at Suntec convention hall which I will summarized below based on the meeting and my conversation with the CIO, Mrs. Jeremy thereafter (2nd pic from the left) 

After the meeting was concluded, I also took the chance to accumulate Ireit shares by adding them for 30,000 shares at a price of $0.70 this evening. As a result of this purchase, this has now become my core holdings to make it into the top 4.

There was not too much crowd and it’s understandable given the small size of the shareholders, so the whole session was rather cosy. As usual, the management started out with the usual presentation and thereafter open the questions to the floor for further clarifications.

Questions & Answers

1.) The first question was pertaining to the concentration risk which DT Telecom made up the majority of the tenant profile. 

This isn't new as I have heard from many fellow investors myself that this is one of the risks highlighted. The management asserted that DT Telecom is a crème of the lot bluechip tenant which comes with little risk of defaulting but conceded that they are doing something to allay the investors’ concern about it. For instance, the recent Berlin acquisition reduces the tenant profile for DT Telecom from 80% to 50% at the moment. They will continue to monitor this concentration risk which is on top of investor’s concern. 

2.) Another investor asked about the potential acquisition in 2016 which the management is upbeat about concluding the deal. I also asked the CIO thereafter about the interesting project she is working on at the moment.

The management conceded that with the portfolio yield at around 9%, it is not easy to find an accretive acquisition where most of the property yield for grade A assets in Europe are at around 5.5%. The recent Berlin acquisition was concluded at 7.1% yield, which is amazing but it’s unlikely they can repeat such a deal for a grade A asset at current environment. The Europe negative interest rate environment has made the property assets an attractive purchase and as such there are yield compression everywhere. 

Also, the management conceded that given their gearing status and 100% distributable income policy, it is likely that they would need to turn to placement or rights issue should they decide to fund any potential acquisitions. 

From the way I read their words, it appears that a placement is soon on the card since they have the acquisition on the pipeline. It is quite unlikely that they will do another rights issue this year since the acquisition this year should be much smaller than the Berlin acquisition and hence a placement plus debt would suffice at this juncture. In any case, as Reit investor, we just have to be prepared when it comes. 

3.) There was also another investor who asked if the management is looking to venture into other parts of Europe such as Bulgaria or Portugal market. 

The management is looking for opportunities outside of Germany but Bulgaria and Portugal are not in the pipeline because the market is small. Based on my discussion after with the CIO, it appears further that they may go into UK or Netherlands market because the cost of debt structure is what the management does like. For instance, in Germany, there is a type of bond called “Pfandbriefe” which is generally issued by German mortgage banks that is collateralized for property use. The cost of debt is currently less than 2% for the Pfandbriefe while the same in UK would cost 2.5% and in Netherlands it would cost 3%. So you can see where they are focusing at. The cap rate in those countries are also higher than the rest.

4.) Another investor asked about the tax structure in Germany and understand that it is high at 15.3%. 

The management explained the way the structure is built and all investors need to know at the end of the day is the effective interest rate is at less than 5%. Also, should the company divest the property in Germany, they would be subjected to capital gain tax.

5.) There was also a question on currency hedging and why the management is only locking in 1 year of currency hedging (FY2016 = EUR1: SGD 1.52).

The reason for this is because hedging is a tricky practice and there are usually costs associated with it. It is also very difficult to time the market in terms of currency and hence they are looking to only hedge for a year for now. But the management assured investors that this is one agenda that is high in their important list because it affects the DPU directly. 

6.) Last but not least, there was also question regarding the AUM targets on how much the company is going to grow in the next 3 years. 

The management explained that while they want AUM to grow at a sustainable rate, they would not make any acquisitions that would destroy shareholders’ value for the sake of increasing AUM. They then mentioned about how their performance fees are tied to the DPU increase, which is aligned with the shareholders’ interests. 

This reminds me of my previous Ascott case where their performance are directly linked to AUM and distributable income (not DPU/share) and hence you can see why they keep growing so aggressively. 

Final Thoughts

It was a very good session and I came out rather impressed from the way I spoke with them. 

Even though they are small in size, the management appears assuring that they would not destroy shareholders’ value with dilutive equity placement and if there are any, they would be accompanied with an accretive acquisitions to the DPU. 

Furthermore, I like the fact that the macro factors are in favor to the company with EU still on an aggressive quantitative easing program which will last for quite a while. This would keep the costs of debt low, which means that the spread return for the portfolio is rather significant. 

I also like their long WALE and stable blue chip tenant such as DT Telecom and Germany largest pension fund. I also learnt from the CIO that their Bonn campus are currently on fixed uplift while Berlin and the rest are on fixed + cumulative CPI linked variable. The hurdle rate is at 10% and once they hit that, they would be able to get an organic growth from their rental reversion, which should surprise on the upside. 

Vested with 62,000 shares of Ireit as of writing.