Simple reason.
Yield is at 5% for Mapletree Commercial. '
Yield is at 5% for HPH Trust, in a depreciating US Dollar.
DBS NCPS was offered at 4.7%.
Why bother taking on more risk for a poor return, when one can easily have gotten 0.3% less yield for a much better peace of mind with DBS NCPS?
Mapletree Commercial might make for a good stag, but I sure am not holding it for it's yield.
Hi,
ReplyDeleteYield seems to be not much difference now.
But who can tell, even "Lehman Brothers" can go bankrupt? Besides there are many other aspects to compare and considered.
Hi Anonymous,
ReplyDeleteexactly. That is why I'd much rather go with DBS NCPS than with HPH trust. HPH Trust is in an awfully cyclical sector. DBS gives you 4.7%, with the backing of our ah kong. good right? ;)
Right.
ReplyDeleteMapletree Commercial has a projected yield of 5.7% I think. It's PTB is less than 1.0. Aside from VivoCity, its other properties seem to have room to generate further income. Seems like there's room for upside, aside from the yield. It therefore offers more possibilities than the DBS 4.7% NCPS.
ReplyDeleteAnd I agree HPH Trust in US$ is negative. US$ is going to continue going downhill. The US is going into a rut that will be difficult to climb out of.
Hi Lizardo,
ReplyDeleteI had a look at MCT's prospectus yesterday. 75% of revenue to be generated by this REIT will come from VivoCity. If something happens to Vivo, this REIT instantly becomes starved of revenue. (What I can think of is, say, a terrorist attack on vivo, a gradual loss of market power like the Heeren)
It's properties are also exposed to high geographical risk, since all of it's properties are in the South of Singapore.
I would probably forgo the extra 1% for safety.
But I do agree with you that the MapleTree Business Properties at Alexandra do seem to have more upside, if more companies would choose to relocate out of the CBD area. Moreover, I believe MCT is going to revamp it's Business Properties.
We'll see how it pans out, but as it is now, I would probably not apply for this IPO.
Regarding HPH Trust, I might do a new post on why this trust is an extremely poor investment. The gist of it is: the forex risk in US dollar/HK dollar(which is pegged to USD), the extremely cyclical nature of it's business, and the poor yield.