Some might remember that the money I used to invest in Croesus Retail Trust was mostly from selling 90% of my investment in Sabana REIT a few years ago.

Since my investment in Sabana REIT was as big as my investment in AIMS AMP Capital Industrial REIT, the amount of money involved was pretty big for an average retail investor.

For those who have been following my moves over the years, they would know that I got into Sabana REIT at depressed prices, collected dividends over a three-year period and sold as its unit price retreated from a high on the back of various red flags.

Off the top of my head, I probably made about 13% per annum from my investment in Sabana REIT, all in.

Getting into Croesus Retail Trust after its price retreated significantly from its post-IPO euphoria and also by taking advantage of the rights issues later, I am probably looking at a total return of between 70% to 100% for the investments made at different times.

On an annual basis, if I were to accept the offer of $1.17 a unit, the return on investment is probably between 17% to 60% per year.

OK, please note that all numbers are off the top of my head and are only approximately right.

Now, quite understandably, not everyone is happy with the offer to take over Croesus Retail Trust at $1.17 a unit. We would be losing a good investment for income, after all.

A few readers wrote to me, asking if I would vote against the sale and a couple of readers also asked that I mobilise my army of readers to vote against the sale.


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Alamak. AK is just another retail investor. AK is no kingmaker. So stressful.

Seriously, I will not ask anyone to vote for or against the sale but I will share a few points to put things in perspective.

1. With a DPU of about 8c, at 85c a unit, we were looking at a yield of 9.4%. At $1.17, we are looking at 6.8%. The yield has compressed by quite a fair bit.

2. Gearing is almost 50%, if I remember correctly. So, much of the yield we see is leveraged yield. If we should reduce leverage and that is possible through equity fundraising, distribution yield would drop. That makes for a fairer comparison against some retail S-REITs which have less than 40% in gearing.

3. It is not useful to say that $1.17 is X% higher than its price from X months ago. We should be interested in value. $1.17 is about 20% higher than the NAV per unit.

Now, if we remember, Saizen REIT was bought over at a premium of about 3.0% above NAV and that was when I thought Saizen REIT’s properties were probably worth more than what was carried in the books too. Also, remember, Saizen REIT’s gearing was much lower than 50%.

4. It is true that even a compressed distribution yield of 6.8% is higher than comparable J-REITs’ yields but we have to remember that the rules governing J-REITs are different which was an important reason why Croesus Retail Trust decided to list in Singapore. If they were to list in Japan, their DPU and, consequently, their distribution yield would have been lower.

Unfortunately, investors of Saizen REIT grew weary of waiting for the value to be unlocked and agreed to its sale of assets.

What about investors of Croesus Retail Trust? Obviously, many have a different attitude and are more willing to wait for a better offer, if any. Of course, being paid while waiting is not a bad deal.

This is interesting to me because Saizen REIT was a big investment for me and Croesus Retail Trust is a big investment for me too. I wonder.

This article originally appeared on AK’s blog.