In this insightful interview, Kenny Loh and John Dasson, share their personal investment journeys and offer valuable advice for Singaporean investors at all stages of life. Both are seasoned investment advisors from Financial Alliance, Singapore’s largest independent financial advisory firm.
Discover their unique approaches to investing, how the investment landscape has evolved over the years, and learn from the biggest mistakes they’ve seen people make.
Key topics covered:
🔹 How to kickstart your investment journey 🔹 Investment philosophy: Then vs Now 🔹 Common investment mistakes and how to avoid them 🔹 Tips for young working adults who haven’t started investing 🔹 The advantage of working with an independent financial advisory firm
Bonus:
🔸 The future of alternative investments 🔸 Cryptocurrency: A promising investment or a risky bet? 🔸 REIT investing: What new investors should consider 🔸 Tailoring your portfolio for retirement …and more!
Video Highlights
Introduction and Career Journeys
Self Introduction
John shares his 13-year journey in wealth advisory
Kenny talks about his career switch from the corporate world
Investment Strategies (02:26)
John explains his three-bucket strategy
Kenny emphasizes a defensive-first approach
Importance of diversification
Common Investment Mistakes (05:52)
Investing without clear goals
Emotional management in investing
Risks of unregulated investment structures
Advice for Young Investors (11:05)
Start investing early
Importance of education and understanding risk tolerance
Benefits of compounding returns
Diversification of REITs and Alternative Investments (16:36)
Discussion on REITs and their challenges
Importance of diversifying into alternative investments
Potential of trade financing and private equity
Cryptocurrency and Estate Planning (21:00)
Views on cryptocurrency as an investment
Importance of estate planning for crypto assets
Strategies for wealth distribution and protection
Estate Planning (25:32)
Importance of having a will and updating asset statements
Structuring testamentary trusts for minors
Managing international assets and properties
Tax Considerations for Investment Portfolios (28:40)
How should one manage their portfolio as they approach retirement? (31:24)
Kenny Loh is a Wealth Advisory Director and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair. You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
In this episode, we sat down with Han Khim Siew, CEO of OUE REIT, to explore the dynamic world of real estate investment and management. Celebrating its 10th anniversary, OUE REIT has grown into one of Singapore’s most significant diversified real estate investment trusts, managing a diverse portfolio of upscale hotels and commercial office spaces.
Han shares his insights on several key topics, including the bifurcation in the office market and how prime, green-rated buildings are thriving due to their appeal to the younger workforce. We also discuss the impact of COVID-19 on work patterns, the resilience of the hospitality sector, and the importance of maintaining high-quality office environments in prime locations.
Additionally, Han explains OUE REIT’s commitment to sustainability and ESG initiatives, which are crucial for attracting multinational tenants and securing favourable financing. We also delve into OUE REIT’s future expansion plans in key gateway cities like Tokyo, Sydney, Melbourne, and Hong Kong.
Key Pointers:
00:00 Introduction and Portfolio Overview
Han Khim Siew introduces himself and OUE REIT
Discusses the portfolio composition and diversification
Emphasizes the focus on Singapore properties
02:31 Office Space Strategy
Talks about the bifurcation in office space demand
Highlights the importance of prime locations and green-rated buildings
Explains the impact of work-from-home trends
06:00 Tenant Dynamics and Market Trends
Discusses tenant preferences and the importance of CBD locations
Explains the challenges of right-sizing office spaces
Mentions the stability of co-working spaces
10:00 Impact of Tech Tenants
Shares insights on the tech tenant composition in their portfolio
Discusses the changes in tech space demand
Highlights the benefits of a diversified tenant base
16:00 Future Outlook and ESG Commitments
Talks about the future of office rents and lease expiries
Emphasizes the importance of ESG commitments
Explains the benefits of green financing and sustainability-linked loans
24:48 Importance of ESG and Green Ratings
ESG targets linked to credit ratings
Green-rated buildings in prime locations
Impact on borrowing costs and dividends
27:02 Shanghai Asset and Market Conditions
Prime location of Shanghai asset
Over-supply issues in Shanghai
Long-term belief in asset’s value
31:04 Acquisition Strategy and Market Focus
Focus on key gateway cities
Interest in Tokyo, Sydney, Melbourne, Hong Kong
Avoiding further investments in China due to over-supply
33:00 Shift to Hospitality Sector
Increasing revenue from hospitality
Benefits of dynamic pricing in hotels
Experience managing large hotels
39:02 Operational Improvements and Branding
Asset enhancement initiatives
Rebranding to Hilton Singapore Orchard
Targeting corporate travelers and increasing room rates
51:20 Hotel demand and room mix
Strong demand for certain room categories
Consultants and air crew as key guests
Focus on cities with both tourists and business travelers
52:57 Sustainable dividend yield
Reducing seasonality in hotel bookings
Creating stable revenue streams
Example of Hilton Singapore’s success
54:02 Concerts and events impact
Significant bookings during major events
Taylor Swift’s concert as a notable example
Similar impact to F1 events
56:00 Financing strategy
Avoiding equity fundraisers due to dilution
Maintaining borrowing ratio below 40%
Recycling assets to acquire better-performing ones
57:55 Future growth plans
Positive rental reversion in office spaces
Growth in hotel and retail revenue
Exploring opportunities in major cities like Sydney and Tokyo
Curious to learn more? Tune in to this episode and discover the strategies that make OUE REIT a leader in real estate investment.
Kenny Loh is a Wealth Advisory Director and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk-adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also an invited speaker of REITs Symposium and Invest Fair. You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement-related news. https://t.me/REITirement
Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 654.43 to 702.98 (7.15%) compared to last month’s update. This is the highest percentage gain in the index in a while. The REIT Index has started an uptrend and enter bullish territory.
Short-term direction: Up
Medium-term direction:Up
Long-term direction: Sideways
Immediate Support: 20D, 50D SMA and 200D SMA (665-675 zone)
The following is the compilation of 38 Singapore REITs with colour-coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.
The Financial Ratios are based on past data and these are lagging indicators.
All REITshave the latest Q2 2024 values.
I have introduced weighted average (weighted by market cap) to the financial ratios, in addition to the existing simple average ratios. This is another perspective where smaller market cap REITs do not disproportionately affect the average ratios.
FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters.If Lower, it isRed.
Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of September 6th, 2024.
Gearing (%): Leverage Ratio.
Price/NAV: Price to Book Value. Formula: Current Price over Net Asset Value per Unit.
Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs are referenced to SG Gov Bond Yield.
As of May 2024, all REITs’ Yield Spread will be referenced to SG Gov Bond Yields, regardless of trading currency.
Price/NAV Ratios Overview
Price/NAV increased to 0.89 (Weighted Average: 0.89)
Increased from 0.85 in August 2024.
Singapore Overall REIT sector is slightly undervalued
Most overvalued REITs (based on Price/NAV)
Keppel DC REIT
1.60
ParkwayLife REIT
1.52
Capitaland Ascendas REIT
1.33
Mapletree Industrial Tr
1.21
Frasers Centrepoint Trust
1.05
Mapletree Logistics Tr
1.02
EC World REIT is currently suspended, however at current Price and NAV/Unit values it has a value of 4.67 (N.M)
Most undervalued REITs (based on Price/NAV)
Manulife US REIT
0.29
Prime US REIT
0.33
ARA Hospitality Trust
0.34
Keppel Pacific Oak US REIT
0.35
Lippo Malls Indonesia Retail Trust
0.36
OUE REIT
0.43
Distribution Yields Overview
TTM Distribution Yield decreased to 6.37%. (Weighted Average decreased to 5.91%)
Decreased from 7.14% in August 2024. (Weighted Average was 6.36%)
15 of 40 Singapore REITs have ttm distribution yields of above 7%.
Highest Distribution Yield REITs (ttm)
IREIT Global
11.79
ARA Hospitality Trust
11.39
Elite Commercial REIT
9.93
Cromwell European REIT
9.77
United Hampshire REIT
9.33
EC World REIT
9.24
Reminder that these yield numbers are based on current prices.
Some REITs opted for semi-annual reporting and thus no quarterly DPU was announced.
A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.
Yield Spread tightened to 3.76%. (Weighted Average remained similar at 3.99%)
Tightened from 4.25% in August 2024. (Weighted Average was 4.01%)
From May 2024 onwards, all my yield spread measurements are now in relation to SG Gov Bond Yields, no longer a mix with US Gov Bond Yields.
Gearing Ratios Overview
Gearing Ratio remained similar at 39.12%.(Weighted Average: 38.28%)
Remained similar from 39.14% in August 2024. (Weighted Average: 38.28%)
Gearing Ratios are updated quarterly. Therefore there were only 2 gearing ratio updates this month.
S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.
Highest Gearing Ratio REITs
EC World REIT
57.9
Manulife US REIT
56.3
Prime US REIT
48.1
Lippo Malls Indonesia Retail Trust
45.0
ARA Hospitality Trust
43.5
Keppel Pacific Oak US REIT
42.7
MUST and EC World REIT’s gearing ratio has exceeded MAS’s gearing limit of 50%. However the aggregate leverage limit is not considered to be breached if exceeding the limit is due to circumstances beyond the control of the REIT Manager.
Market Capitalisation Overview
Total Singapore REIT Market Capitalisation increased by 7.12% to S$92.57 Billion.
Increased from S$86.20 Billion in August 2024.
Biggest Market Capitalisation REITs (S$m):
Capitaland Integrated Commercial Trust
14410.76
Capitaland Ascendas REIT
12795.27
Mapletree Pan Asia Commercial Trust
7412.37
Mapletree Logistics Tr
7022.26
Mapletree Industrial Tr
5981.85
Frasers Logistics & Commercial Trust
4226.20
Smallest Market Capitalisation REITs (S$m):
ARA Hospitality Trust
136.30
Lippo Malls Indonesia Retail Trust
153.94
Elite Commercial REIT
161.43
Manulife US REIT
183.50
BHG Retail REIT
226.03
EC World REIT
226.76
Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. If you want to know more about investing in REITs, scroll down for more information on the REITs courses.
Singapore REITs have experienced a strong rallyover the past month in anticipation of an interest rate cut in September. The FTSE ST REIT index has recently begun an uptrend, signaling the start of a bull market for Singapore REITs.
The expected cut in the U.S. interest rate and the decline in the U.S. 10-year bond yield are key catalysts that could further boost the Singapore REIT sector. According to the current Fed Fund Rate projections from the CME Group, a minimum 25 basis point cut is expected by Q3, with a total reduction of at least 100 basis points by the end of 2024.
The S-REIT sector is currently trading at an 11% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.37%. Despite the recent rally, valuations and distribution per unit (DPU) yields remain attractive. Investors may consider locking in the current yield at a discounted valuation, while awaiting a potential valuation re-rating in response to the anticipated interest rate cut by the end of 2024.
US 10 Year Risk Free Rate
Kenny Loh is a Wealth Advisory Director and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair. You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
