Sunday, 29 April 2018

Frasers Logistic and Industrial Trust (FLT): my second REIT

  Posted at  April 29, 2018 No comments
I must say that I am optimistic about the sponsors of FCOT and FLT. FLT is currently a REIT predominantly focused on Australia (61 industrial real estate assets) and there is considerable concentration risk in this aspect.

Recent developments in this REIT is going to see a few changes going forward (A meeting will be held on 8 May to decide if the following goes through):

1. Proposed acquisition of 21 properties in Germany and Netherlands

2. Proposed issue of 525,000,000 new units under equity funds raising

3. Proposed issue and placement of new units to FPL & TCC group investments (private placement)

For the full circular, please read it in its entirety: https://flt.frasersproperty.com/newsroom/20180423_075002_BUOU_NA4AUENJ0NRZLRGW.3.pdf

So who are the sponsors and what are they doing with FLT?

The sponsor of FLT is Frasers Property Limited (formerly known as Frasers Centrepoint Limited) (“FPL” or the “Sponsor”), a multi-national company that owns, develops and manages a diverse, integrated portfolio of properties. Listed on the Main Board of the SGX-ST and headquartered in Singapore, FPL is organised around five asset classes with assets totalling S$28 billion as at 31 December 2017. FPL’s assets range from residential, retail, commercial and business parks, to industrial and logistics in Singapore, Australia, Europe, China and Southeast Asia. Its well-established hospitality business owns and/or operates serviced apartments and hotels in over 80 cities across Asia, Australia, Europe, the Middle East and Africa. FPL is unified by its commitment to deliver enriching and memorable experiences for customers and stakeholders, leveraging knowledge and capabilities from across markets and property sectors, to deliver value in its multiple asset classes."

FLT's latest circular to unit holders

The 61 Australia assets in FLT are now set to include 21 new properties in Germany and Netherlands. This will also mean its estimated portfolio value is expected to increase from A$1.9billion to A$2.9billion. By no means is this a small amount of money so accordingly we are seeing FPL raising it though a combination of equity fund raising and private placement of units.

The one good outcome of this acquisition is that FLT's concentration risk will now be diversified into approximately 67% Australia, 25% Germany and 8% Netherlands.
 



Germany and Netherlands present a good market for trade oriented economy and the resulting acquisition will also be made up of a more diversified mix of tenants. Likewise, the concentration risk due to geographical location is also diluted. The assets are also up to 71% freehold.


The sponsors have also negotiated a ROFR on many of the assets:

Right of first refusal (ROFR or RFR) is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party.

Lastly, the REIT is expected to be DPU accretive.










These changes are subjected to approval from unitholders who should most likely approve of the acquisition as there doesn't seem to be a bad thing where this REIT is headed. If it goes through, the acquisition could be done by late July 2018. Gearing, however will be increased from 29.3% to 35.4%. 

Appendix C of the circular also includes an interesting independent market research done on the following if you are interested:

"INDUSTRIAL AND LOGISTICS MARKET OVERVIEW: GERMANY AND THE NETHERLANDS"

Vested at $1.06 on 25th April 2018.

Until Next Time, 
K.C.

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Thursday, 5 April 2018

The 3 not so wise decisions Graduates make with money

  Posted at  April 05, 2018 No comments
So, CONGRATULATIONS! You finally graduated! The world is now before your feet and you can accomplish anything! You deserve a celebration!

Hold on a minute... before we get too excited, the fact is that most Singaporeans are not from rich backgrounds. Majority of us graduate without a job, and sit on a study loan of around $30,000 (This is a debt!). And yet, we are going to... SPEND SPEND SPEND when we haven't seen a single cent come into our bank accounts. Many of us (I myself included) have been guilty of at least one of these.


Graduation Trips
How can anyone resist going to places like these? 


On the number 1 item is graduation trips! How can anyone NOT go on a graduation trip, seriously? Everyone who is graduating seems to be travelling somewhere these days. See the Northern Lights, visit Eiffel Tower, road trip around Europe, and the list goes on.

"Eh, But Hor, you think la. You only can travel now leh, is the best time you know? When you start work liao you think you got time to travel meh?"

Many Singaporean graduates will think exactly like this and go on extremely "long trips". One or 2 weeks trips are fine, but many are looking beyond 1-2 months trips now. Some even take a loan from their parents to go on graduation trips.

If you come from a rich family, you could be excused for it. However, if you are not loaded, your parent might frown at you because they expect you to start work and lighten the family load. The last thing they would expect from you is to stretch out your hand asking for money! But remember guys, we are still sitting on a $30k debt and it just got to maybe $35k or even $40k, just with the graduation trip.

Sure, go have fun, after all it might be a once in a lifetime experience. But keep in mind, the longer and further you go, the more additional debt you do not need increases.

Expected Damage: 
Recommendation: Spend within your means if you have to go. Save up by doing part time work during the 3-4 years of your study life to minimise the damage incurred. Don't empty your bank especially if you have not landed a job!


Graduating without a job
It takes time and effort. It is not my fault, or is it?
Sure, its not your fault. Who would want to graduate without having a job? However, if you did graduate without a job and still proceeded to go on a graduation trip, do close your eyes and observe a minute of silence for your poor wallet.

Ready? Now let me give you the truth. And it hurts. You were really naive for not making sure you graduated with a job.

The current Singapore market is not doing too well. Many industries prefer candidates who have experience over fresh graduates. Coupled with a slightly sluggish economy, it is no wonder many graduates cannot even land a job within half a year of graduation. This is unless of course you are a top student who is sought after. Don't be hoodwinked by mainstream news like Straits Times telling you "9 in 10 graduates (88.9%) who graduated in 2017 are able to find jobs within six months of their final examinations with those from local universities earning a median of $3,400."

If by reading mainstream news, you EXPECT to land a job automatically and EXPECT to earn somewhere around $3,400, you couldn't have been more wrong in taking things for granted.

An article by Dollar and Sense reveals that in fact many struggle to land a job and earn far less than what the news media are telling us beyond the numbers.

The longer you wait to find a job, the longer your study loan debt will stare you in the face and the more stressful it gets when you eventually wonder if you will land a job at all. Many don't panic until the water is boiling.

Expected Damage: 
Recommendation: The best time to start job searching is in fact 6-8 months before you graduate. This is because if you start late, you most likely have zero interview experience under your belt and will likely screw it up. The earlier you start, it gives you a buffer time and chance to access the job market for opportunities and prepare well. It even gives you an advantage over your peers - those who wait. The early bird catches the worm. Heck, you could even go on the graduation trip in peace of mind knowing you guaranteed a spot at a company. Don't wait till it is too late.


Entertainment/Lifestyle gadgets - Credit Card
I love Jay Chou. Who doesn't? Maybe your wallet. Lol.
So, perhaps you have gone on a graduation trip, and even landed a job. Well done! You should really reward yourself with a concert. Or get that new Iphone X or Samsung S9. You deserve it!

The truth is that we are really victims of our generation of success. We have grown up with this society telling us we should instantly satisfy our wants. In the past, our parents generation were mostly poor and they understood the sweetness of delayed gratification. Not so much for us. We want it and we want it now.

Expensive clothes, branded stuff, expensive restaurants or dining places...talk about even more expensive holidays. Can't afford them? For everything there is the Credit Card. (Beware of the trap of the credit card)

I have met quite a few young Singaporeans some of whom are friends "living it up" for a variety of reasons. Some just want to look trendy, and not lose face among their friends while many spend more beyond what they can earn. Some got into really bad habits like gambling while keeping up the lifestyle facade. This kind of spending is not sustainable, especially when you have a debt on hand. By using a card each time you make a purchase, it also becomes hard to keep track of all your spending. You might be tempted to just keep swiping/tapping the card.

Expected Damage: 
Recommendation: This is where many graduates struggle even after they landed a job. Because our income suddenly increased when we did not have it previously, we have upgraded our lifestyles by spending more. A good rule of thumb would be to decide a portion of your salary to save per month FIRST before spending and not saving only after you have spent most of your salary. And, pay off all your debts first while keeping track of your expenses. This is especially crucial in the starting stage of your career.

-------------------------------------
I, too was a 月光族 (Every month finished spending salary) for a good 2-3 years of my life. In retrospect, if I had the chance to do it again, I would tell my younger self to plan properly. Our education system has taught us many things but the one thing they did not teach us was how to manage our money.

Do a good job. You will thank yourself in the future.

Until next time,

K.C.

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Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first
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You don't need to pay anyone/company to have a plan of your own and work towards achieving Financial Independence. Only we alone have no conflict of interest with our own money. "30 Year Old Investor" is a personal blog about a Singaporean's savings and investing journey.


Being the average Singaporean, K.C. is also interested in good food, a little bit of politics and a good slice of humour.

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