S-REITs portfolio

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As of today, there are 7 core S-REITs that form an interal part of building the passive income for the future. The S-REIT portfolio is expected to generate an overall 6% yeild per annum. 1. Ascendas REIT (AREIT) is an industrial REIT with a good management team and proven execution track record.  AREIT's predominant expsoure is Singapore and increasingly to Australia and UK. AREIT continues to proactively manage its portfolio to generate higher DPUs.2. Frasers Logistic and Indistrial Trust (FLT) is a logsitic REIT with exposure to Australia and Europe. Its management team has executed a number of yield-accretive acquisitions since its listing.3. EC World REIT is a speicialized REIT in ports and logisitcs in China with less known sponsor and a less proven management team. I invested becasue I like the sector, benefiting from e-commerce in China. However, the performance is below my expectation despite the underlying performance remains solid. The lease expiry is not indeal with a significant portion expiring in 2019/20.4. AIMS AMP REIT (AA REIT) is an industrial REIT in Singapore. It is a relative small REIT compared to AREIT and FLT, with its investment properties concentrated in Singapore. It has a good management team with a proven execution capability, as is evidenced by its stable DPU over the years.  5. Capitaland Retail China Trust (CRCT) is catergorized as neighborhood malls, attracting traffic from nearby communities. It is less impacted by the business cycle and ecommerce as people need to eat and entertain all the time and is not affected by the external factors such as the China-US trade war. The only negative factor is currency as CRCT receives RMB in China and RMB is on the depreciating trend. However, strong rental revisions offer great comfort. 6. FIRST REIT is a healthcare REIT. Triple-net lease with escalating rental revison clauses. The primary exposure is Indonesia and the key concerns at this moment are (i) the liquidity issue of the sponsor, Lippo Karawaci, who is the sole counterpart to FIRST REIT; (ii) depreciating rupiah is a concern despite the rentals in the leases are SGD-denominated. The unit-holders of FIRST REIT do not bear the currency risk. The pressure is on the sponsor. As the healthcare sector is not subject to business cycle, FIRST REIT is a good defensive play in nature.7. Keppel DC REIT is a specialized REIT focused on data centers. It has a long weighted lease expiry (WALE) with more than 8 years. Similar to First REIT, the REIT has a mix of triple-net leases and double-net leases (clients generally bear ongoing expenses) as well as co-location leases. Given the industry tailwind (benefiting from big data), the REIT has strong fundamental growth. However, AREIT and some industrial REITs are eyeing for data center assets, resulting in a more competitve environment for Kepple DC REIT to acquire new data centers. Regardless, it can leverage its sponsors, Keppel Capital and Keppel Telecommunications & Transportation, and acquire data centers from them. This REIT has the lowest DPU yield among all.          In short, the total return for this portfolio in 2018 was slightly in the negative territory, suffering from FIRST REIT’s dramatic price correction for the fear of its sponsor’s credit status. (First REIT was once my largest position and was thus reduced by 2/3 of the position before the significant price correction). Nevertheless, the result was better than STI in 2018.  

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