Portfolio Review 4Q10

One transaction completed:

1. Suntec
   
   • Buy
     MBS and Esplanade + Promenade Circle Line MRT stations catalysts
     Retail strength in central CBD area
     Only mixed office and retail REIT -> diversification within a single REIT
   • Sell
     Decreasing dividends from falling office rentals and dilution through issuance of new units (placement and deferred)
     Proposed acquisition of one-third stake in MBFC financed by private placement and term loan will result in lower DPU for unitholders (10.915cents to 9.812cents) -> not at all beneficial to unitholders not entitled to placement units
     

Currently holding on to 7 counters (see Portfolio Review 1Q10 for 1-4 and Portfolio Review 2Q10 for 5):

1. FrasersCT
2. PLife
3. Starhill
4. Saizen warrant
5. Cache
6. First REIT
   
   • Buy
     Proposed acquisition of two Jakarta hospitals (Mochtar Riady Comprehensive Cancer Centre and Siloam Hospitals Lippo Cikarang) financed by rights issue and term loan
     Rights units priced attractively (discount of ~47% to closing price ~1 week before announcement) -> beneficial to new unitholders
     Healthcare is a defensive sector -> stable DPU (cf. PLife)
7. Pacific Shipping Trust
   
   • Buy
     Counter is traded in USD but settled in SGD (see Taking advantage of the falling US dollar)
     Acquisition of non-container vessels (two Capesize Bulk Carriers chartered to Jiangsu Shagang Group Co., two Multi-Purpose Vessels chartered to Cosco Xiamen and five Supramax Bulk Carriers chartered to Glovis) -> diversification of fleet and widening of charterer base
8. Sabana
   
   • Buy
     First Syariah-compliant REIT here in Singapore
     Luck with IPO balloting for public (see Sixth time (un)lucky)? entry)

Next portfolio review due after 31 March 2011.


Looking to hold
There were three counters which I held for the the entire 2010: Frasers Centrepoint Trust, Parkway Life and Starhill Global. Definitely, if distributions remain stable, I would continue to sit tight on these three and collect the quarterly dividends.

Looking to add
Of the remaining counters in my existing portfolio, four continue to have relatively high yields at current prices: First REIT, Cache Logistics Trust, Sabana and Pacific Shipping Trust. Cache and Sabana (and also MIT) are the new kids on the block for S-REITs and they remain largely unproven. First REIT has just undergone a rights issue to acquire two hospitals in Indonesia and there are always country risks to consider but otherwise, comments from the online community on the stability of its payouts have been favourable. As for Pacific Shipping Trust, of late it has been on a policy of acquisitions towards diversification of its fleet and I personally view this positively. Also, it has seemed to be the most prudent in its distribution policy and relatively free of counter-party risks compared to the other two shipping trusts (First Ship Lease Trust and Rickmers). However, as it is traded in USD, there are foreign exchange currency risks and one would have to keep an eye out for SGD/USD rates in addition to the share price.

Looking to release
The last counter which I am holding on to is the Saizen warrants. This was more of an opportunistic purchase to take advantage of a possible boost in share price from the resumption of distributions for this trouble-plagued REIT, so as to hopefully make some capital gains. Alas, I missed the window to sell when the price climbed for a bit earlier in the year and I will be looking to release it if there should be another similar window of opportunity to sell.


Finally, here's wishing everyone good fortunes in 2011 and a better year ahead!

~ Happy New Year! ~