Following are my reason for buying FLT REIT
1. Board Directors of the FLT REIT Managers has a stake
- HO HON CHEONG - 1,021,000
- PANOTE SIRIVADHANABHAKDI (Non-Executive Director) - 89,887,000
- LIM EE SENG (Non-Executive Director) - 400,000
- MICHAEL BOWDEN NEWSOM (Non-Executive Director) - 60,000
- GOH YONG CHIAN (Independent Non-Executive Director) - 300,000
- PAUL GILBERT SAY (Independent Non-Executive Director) - 150,000
- Robert Stuart Claude Wallace -40000
2. Gearing
At 28.2% with 2.8% interest which will have ample room to growth the dividend via DEBT – However with such low 2.8% when Interest rate is up, this will impact the finance interest cost.
Below is the current debt information
- 2019 - 170m
- 2020 - 160m
- 2021 - 169m
3. Lease Expiry Profile
The nearest significant lease to expired will be in 2018 and this is something we need to watch as the current lease passing rate is higher than the market rate. If the market rate does not catch up to the current lease passing rate – then DPU will likely drop unless it is supported by new acquisition however I think if we use the market rate, the gross revenue will drop around 1.5% which should be insignificant drop to the DPU and with annual rental increment this would be mitigated by other property that is passing rate below the market rent.
- 2018 Sep, 8.3%
- 2019 Sep, 14.4%
- 2020 Sep, 8.5%
- 2021 Sep, 10.6%
4. Dividend Yield
The current dividend has a very strong potential (due to it having 6 years WALE) to growth for next year till early 2018 when we see the lease expiring in 2018 that has higher passing rate than the market rate kick in that might have some impact if the Manager unable to renew with positive reversion.
a. Built in 3.2% average annual rental increment
b. 11 ROFR property development pipeline from the sponsor
5. Risk
- Currency Risk
- Interest Rate
- Few of the property passing rate is higher than market rate
- New REIT yet to prove its performance
No comments:
Post a Comment