How I Am Keeping Myself Sane In This Plunging Market For REITs As A Dividend Investor

-

Regular readers of this blog will know that I classify myself as a dividend investor, and based on capital injected, my portfolio consists of 51% in SGX REITs, 28% in SGX Non-REITs and 21% in US Growth.  The plunge in the prices of REITs for the past 1.5 years by about 30% based on CSOP iEdge S-REIT Leaders Index ETF has indicated that the REITs are in a bear territory (there are many other REITs performing much worse like US Commercial REITs which are excluded from the ETF), and where and when the bottom is going to be is anyone's guess.  

If we look at the performance of the REITs and Trusts since 21st March 2022 (the week after FED begins propelling interest rates) till 31st October 2023, all of the REITs and Trusts, with the exception of Frasers Hospitality Trust, are in the red.


Unsurprisingly, the worst performers are the US Commercial REITs, and on the other spectrum, the best performers were the hospitality trusts that were badly beaten down during the pandemic, and currently on its recovery path as revenge travel continues to take center stage.

Despite the crashes in share prices, the dividend income is keeping me sane.  Although some REITs are cutting their DPU due to higher borrowing costs that eats into their net income, some form of cash flow is still welcome, and I view it positively.  The dividends allow me to sleep soundly at night, as I know that I am constantly rewarded in some form, by just holding on to the shares of the REITs.  However, I know the danger of being a sleeping investor of REITs at this juncture, as I should constantly be on the lookout of the two important metrics of the REITs at this time, namely gearing ratio and interest coverage ratio (ICR).  This is because for Singapore listed REITs, if the ICR of the REITs fall below 2.0, by MAS regulation their gearing ratio will be lowered and capped at 45% instead of 50%.  In addition, if the gearing of the REITs exceed 50%, they may be required to pay down the debt and thus required to cease dividend payments (as seen in the case of Manulife US REIT).

I am not one who is able to do lump-sum purchases of stocks and shares, as my cashflow is usually limited and thus I try to dollar cost average (DCA) into the various stocks and shares either by injecting capital or reinvesting dividends.  Some readers has questioned me, why buy REITs now when price are still in the downtrend and has yet to stabilize, especially when the interest rates are going to stay elevated for longer periods.  For me, I am bad at technical analysis, and definitely clueless in timing the market.  As such, I just slowly DCA into the 'quality REITs' in my portfolio (quality in my personal perspective and definitely not a recommendation to buy).  

Recently Channel News Asia's Money Mind has posted a video discussing 'Are Singapore REITs Still A Good Investment?'.  My take-away from the discussion?  It is a good time to slowly buy into quality REITs that have strong sponsors and with predominantly local properties, within the hospitality, retail and industrial sectors.  Do you agree with them?  I suppose a good move for myself will just be holding on to the quality REITs in my portfolio, and continue to collect and reinvest my dividends as usual.  Barista FIRE, here I come...!

Comments

  1. Happy Reit Investor6 November 2023 at 14:23

    You need a strong heart and diamond hands if you have been holding bags of REITs for the past 1 year!

    ReplyDelete
    Replies
    1. BFIRE6 November 2023 at 15:07

      Haha, no diamond hands, just an aim in mind to compound my portfolio to generate a sufficient income for Barista FIRE, and your portfolio is also one I look up to! Just stay the course, hold on, no leverage, and the dividends will reward shareholders.

      Delete

Post a Comment

Popular posts from this blog

How Does SGD 200K Of Annual Dividends Sound To You?

-
Image
In the recent video by The Fifth Person, they interviewed the famous local blogger (and budding YouTuber) AK, author of A Singaporean Stocks Investor (ASSI) .  In his blog and in this interview, AK revealed that his portfolio has compounded and delivered an annual dividends of SGD 200K in 2022!  This is definitely eye-popping, a source of envy and admiration, and an inspirational figure whom I wish to follow. That is a goal that I would can only wish to reach, but currently it is definitely far-fetched, especially when my annual dividends is just 10% of that amount, and I am already planning to Barista FIRE in 3 years time.  Personally, aiming for 20% of that amount in annual dividends sounds more realistic and achievable to me.  However reading his blog and 'listening' to what AK says to himself is an enjoyment.  He has always preached his investing philosophy of 3P's, being prudent, patient and pragmatic.  In addition, his advice for investors with the mnemonics of "
Read more

2 Milestones Reached and A First-Time Income- BHS, 0.5M and SBL

-
Image
In this short post, I am updating on two milestones I finally hit, and a first time ever income received from an unexpected source.  As above, the milestones are that I have achieved the Basic Healthcare Sum (BHS) in my Central Provident Fund Medisave Account (CPF- MA), which is SGD 68.5K in 2023, and for the first time, my portfolio value has exceeded half a million in value (as of 31st July 2023)!  The first time income source is that I made some pennies from my Central Depository (CDP) from the Securities Borrowing and Lending (SBL) Program. Achieving BHS Earlier in April, I made the decision to speed up the contribution towards my CPF-MA by contributing to only my MA instead to all 3 accounts, aiming to hit the Basic Healthcare Sum (BHS) of SGD 68.5K in 2023.  Just for context, I am self employed so I can have the choice to which account in CPF I can contribute my income to. I am pleased that I have finally reached my goal and hit the BHS in August 2023!  A small milestone achieve
Read more

A Review Of The REITs' Quarterly Performances

-
Image
Back in January 2023, the interest rates reached 4.25-4.50%.  Since then, interest rates continue to gradually climb till 5.25-5.50% in July 2023, where it held constant till today.  As such, it is a good time to review how the crazy climb in interest rates in 2022 impact the performances of REITs, which are highly leveraged and more sensitive to interest rates compared to other listed companies.  In the comparison below, I only focused on the REITs and Trust I hold in my portfolio. 1)     CapitaLand Ascott Trust (CLAST)   " CLAST's properties saw strong demand as international travel continued to recover.  CLAST’s revenue per available unit (REVPAU) in 2H 2023 reached 103% of pre-pandemic levels in 2H 2019 on a pro forma basis, increasing by 10% y-o-y to S$157.  REVPAU also rose 23% y-o-y to S$148 for FY 2023.  In 4Q 2023, majority of CLAST’s key markets such as China, Japan, United States of America (USA) and Vietnam also registered y-o-y REVPAU growth.  CLAST’s gross profit
Read more