Monday, August 29, 2016


Fresh off the press is the SGX Asia Pacific ex Japan Dividend Leaders REIT Index (see here). A REIT ETF, based on that index, will be issued by Philip Capital (see here).

As an income investor, I'm glad for this development. If you compare the proposed REIT ETF with any one of our individual REITs, the yield is a bit on the low side (4.53% over the last 12 months).

Of the top 10 constituents, only 2 belongs to Singapore (Ascendas and CapitaMall). With the exception of the Link REIT from Hong Kong, the remaining 7 are Australian REITs. As the ETF will consist of 30 members, I was curious as to who the other constituents are. However, I was not able to find the information on SGX's site. The information is now available here.

The ETF will be reviewed semi-annually in March and September.

I will most probably deploy my cash into the ETF in tranches. While the PE ratio of 10.91 seems acceptable, the total returns for the Index have since ran up quite a fair bit. I have to remind myself that I should be looking at total return instead of yield on cost. If I purchase at too high a price, I would definitely lose out once the price corrects. A safer approach is to enter after a correction, benefiting from both a price appreciation and dividend yield (total return).

Book Review: The Rise of the Robots - Technology and the Threat of Mass Unemployment

Before I begin my book review, I would like to thank owq for some additions to my previous post. Initially, I planned to write a part 2 on the post. After some mulling through, I decided otherwise. Instead, I will be sharing what I have learned through reading Martin Ford's The Rise of the Robots: Technology and the Threat of Mass Unemployment. Book reviews will also be one of the common features of my blog.

The Rise of the Robots is a title that has always caught my attention whenever I visit Popular Bookstores. First, I have a personal interest in this area. Second, we live in a time of increasing digital disruption and automation. Job security seems to belong in the past. You never know when a new technology could arrive and displace you of your job! I do not wish to be blindsided to the potential impact that such emerging technologies could have on my job.

I will be enumerating salient points which I have gleaned from the book:

1). Historically, automation has vaporized jobs in agriculture. This has led to growths in the manufacturing sector. Similarly, automation has caused massive job losses in the manufacturing sector, pushing people into the service industry. In time to come, the service industry will be equally affected. All in all, jobs disappeared at a much faster pace than they were created.

2). Acquiring further education and skills may not necessarily mitigate the impact of automation.

3). Income inequality would further widen. Having save costs through automation, companies and shareholders would benefit the most. The author shared that the top 5 percent of households are currently responsible for nearly 40 percent of spending. This trend will continue into the future.

4). There is also a trend of "reshoring." Previously, companies go offshore for cheap labour. As offshore labour cost has risen, companies have adapted by bringing manufacturing back to their shores, using automation instead of human workers. One familiar name I saw was Kuka AG, the favourite stock of Tacomob. See here.

5). Competition in the job market will intensify. In 2011, there were 50,000 new positions in McDonalds. Over one million applicants applied for the jobs.

6). Artificial intelligence will be migrated into the cloud. Therefore, individual robots do not require that much onboard power and memory. What individual robots learn from their immediate environment are sent to the cloud, contributing to a global store of knowledge which could be used by other robots.

7). Knowledge workers are not immune. Software is beginning to be able to gather information and write coherent essays and reports in a variety of areas including sports, business, politics, finance, etc.

8). Freelancing platforms could grow smarter. Freelancers who use such platforms generate data for the platform. Gradually, the platform would learn how to meet the requirements of clients through the generated data and make freelancers obsolete.

9). In July 2012, the London Symphony Orchestra performed music completely composed by a machine.

10). Eventually, software will be able to mark student essays and provide feedback on their work.

11). Massive open online course (MOOC) platforms enable students from all over the world to learn any subject of interest at minimal cost. Personally, I love this development and this warrants a separate post on MOOCs. What the author shared in this area is intriguing. Instead of attracting the poor and under-educated, most of the people who signed up for the classes already had an undergraduate degree. Another interesting point which the author highlighted is that middle-tier educational institutes would struggle the most from the introduction of MOOCs. Elite institutions could rely on their academic prestige and the rigour of the education offered. On the other hand, lower tier institutions could offer education at more affordable levels. Therefore, mid-tier institutions are stuck in a quagmire, offering little incentives for prospective students to pick them.

12). There's actually plenty more points to highlight, but I shall cap it at 12. The author highlighted that one of the strategies to combat the impacts of automation is to provide a portfolio of equities to every single person, with the necessary safeguards in place. This allows everyone to share in the profits of the economy.

Here are my thoughts:

Following my graduation from university, I have never stopped learning and self-upgrading. I graduated from another academic programme this year and added yet another piece of paper qualification to my CV. I will be commencing on yet another academic programme soon. Still, I feel horribly inadequate.

Maybe it is because the ideal career I have in mind is multidisciplinary in nature and I desperately need expertise in the various domains. Another viable explanation is that the current job market is gloomy. If you include increasing automation, stagnant wages, graduate underemployment, and the various indicators of poor economical health highlighted in the book above, the situation becomes all the more bleaker.

Instead of being unaware of where the technological behemoth is stomping its foot, I intend to learn from it and incorporate what it could teach me into my work. Also, to prevent myself from stepping foot into certain (sunset?) industries that could be obliterated in, maybe let's say, another 30-50 years time.

If point 7 comes to fruition, my research job and, to some extent, my backup career will be taken from me. Why hire Unintelligent Nerd to do research when a computer could scour the worldwide journal databases for literature, form hypotheses and iteratively test those hypotheses, engage in various model fitting, and auto-write and publish a journal article, to boot?

My current strategy is to balance work, education, and investment. If I over-invest in my education, I could end up as a jobless PhD holder. If I take a more circuitous route (Masters than PhD), I will be better able to build my warchest but overall spend more money on my main career. I could also continue doing what I'm doing. Getting additional non-postgraduate certificates to beef up my CV. Oh! And there's financial education that I am aiming for as well (CFA).

I'll just 走一步算一步

Tuesday, August 23, 2016

History of Cash Calls for REITs

One of the grouses which investors have against REITs is that the asset class occasionally calls for cash. Therefore, it comes as no surprise that there is a saying that what a REIT distributes out is eventually taken back in with the use of cash calls. This sentiment has caused some investors to shy away from investing in REITs.

However, is the above notion really an accurate depiction of REITs? I decide to find out.

Before sharing my findings, I need to note down some obstacles which surfaced during my search:

1). Some of these cash calls are not reflected in the "Corporate Action" section on the SGX website. Instead, they are found in the "Company Announcements" section. Some of the cash calls surfaced in Google searches.

2). I have supplemented my search by referring to each of the REIT managers' website. Some cash calls are worded slightly differently (e.g. "fundraising", "equity", etc). I have tried not to miss out on cash calls that are worded differently to the best of my abilities. However, I am sure that I may have missed out on one or two of these cash calls.

3). Some cash calls are executed waaaay back in time. To exacerbate the problem, information pertaining to these cash calls cannot be found in both the SGX Corporate Action section and the REIT manager's website.

4). Sometimes, preferential offerings and private placements are both executed at around the same timing. Do you classify this sort of scenario as a single cash call or two cash calls? It's up to you, the reader, to decide.

To reiterate, what I present below is not exhaustive; there could be errors as well as missing information. Do drop me a comment if you spot any discrepancies. The information is presented in the following format: the name of the REIT, followed by the date/s of the cash call/s and the type of the cash call (e.g. "Rights Issue", "Preferential Offering", "Private Placement", etc) on subsequent lines, in order of recency.

CapitaLand Mall Trust
November 2012 (Private Placement)
November 2011 (Private Placement)
March 2009 (Rights Issue)
October 2005 (Preferential Offering + Private Placement)
July 2004 (Preferential Offering + Private Placement)
June 2003 (Preferential Offering + Private Placement)

Fraser Centrepoint Trust
July 2014 (Private Placement)
September 2011 (Private Placement)

Mapletree Commercial Trust
August 2016 (Preferential Offering + Private Placement)


Starhill Global REIT 
July 2009 (Rights Issue)

Lippo Mall
December 2014 (Private Placement)
November 2011 (Rights Issue)

Fortune REIT
August 2013 (Private Placement)
September 2009 (Rights Issue)
June 2005 (Preferential Offering + Private Placement)

CapitaRetail China Trust
October 2013 (Preferential Offering)
October 2012 (Private Placement)


Keppel REIT
September 2014 (Private Placement)
November 2011 (Rights Issue)
October 2009 (Rights Issue)
April 2008 (Rights Issue)

Frasers Commercial Trust
July 2015 (Private Placement)
July 2009 (Rights Issue)
June 2007 (Rights Issue)

CapitaLand Commercial Trust
June 2009 (Rights Issue)
July 2006 (Preferential Offering + Private Placement)
April 2005 (Public Offering + Private Placement)

Suntec REIT
March 2014 (Private Placement)
November 2010 (Private Placement)
October 2006 (Private Placement)

Mapletree Greater China Commercial Trust

OUE Commercial REIT
July 2015 (Rights Issue)

Manulife REIT

IREIT Global
July 2015 (Rights Issue)

Ascendas REIT
December 2015 (Private Placement)
January 2009 (Preferential Offering)
September 2005 (Preferential Offering + Private Placement)
November 2004 (Preferential Offering + Private Placement)
February 2004 (Preferential Offering to existing unitholders + new units)

AIMS AMP Capital Industrial REIT
February 2014 (Private Placement)
September 2010 (Rights Issue)
November 2009 (Rights Issue)

Cache Logistics Trust
November 2015 (Private Placement)
March 2013 (Private Placement)
March 2012 (Private Placement)

Cambridge Industrial Trust
March 2011 (Rights Issue)
October 2010 (Preferential Offerings + Private Placement)

Mapletree Industrial Trust
August 2011 (Preferential Offering)

Mapletree Logistics Trust
September 2010 (Private Placement + Preferential Offering)
July 2008 (Rights Issue)

Soilbuild REIT
August 2016 (Preferential Offering)

Sabana REIT

Viva Industrial Trust
November 2015 (Preferential Offering + Private Placement)

Fraser Logistics & Industrial Trust

CDL Hospitality Trust
June 2010 (Private Placement)

Far East Hospitality Trust
July 2013 (Issue of stapled securities to institutions? Private Placement?)

Fraser Hospitality Trust
July 2015 (Private Placement)

Ascendas Hospitality Trust
June 2013 (Preferential Offering + Private Placement)

OUE Hospitality Trust
March 2016 (Rights Issue)

Ascott REIT
November 2013 (Rights Issue)
September 2010 (Preferential Offering + Private Placement)
March 2007 (Preferential Offering)

First REIT
December 2010 (Rights Issue)

Parkway Life REIT

Keppel DC REIT

As this post is long enough, I shall note down my thoughts/comments on a subsequent post.