K-Reit

Today Keppel Land has announced that it will be launching a new REIT in the first quarter of 2006. The new REIT will be called K-Reit. Initially, the properties that K-Reit own will be Keppel Land's office properties, which are Keppel Towers, GE Tower, Bugis Junction Towers and KepLand's 44% share of the space at Prudential Tower. This REIT counter will be focusing on Office and it nearest competition will be CCT which is trading at around 4.9% yield. At the present moment, no information is provided by Keppel Land on the yield of K-REIT. I think we can use CCT as a minimum benchmark as K-REIT will be very similar to CCT. There will be no IPO for this REIT counter as Keppel Land intends to distribute 200 shares of K-REIT for every 1000 shares of Keppel Land held. The only way to get a hold of this new REIT is either buying Keppel Land share at open market or buy the REIT counter when it started trading in 1Q06.

Maybe this is a good way to launch REIT now as the current market sentiment to REIT IPO is not that great as PRIME REIT is trading below IPO price now and the rest of the REIT counters has drop around 15%. Anyway, all these will only happen when Keppel Land shareholder approve the deal.

Let see how the event unfold.

Prime Reit

Well, Prime Reit has hit $0.975 in the afternoon trading and it is now trading below it IPO price (Hope that it will not close below it IPO price today). Look like Prime Reit will be the first REIT counter that is trading below it IPO price in the recent years since SGX started trading of REIT counter. Does this mean that REIT counter has lost it shine in Singapore market? How will this affects Centrepoint, F&N and other properties counters like UOL, UIC, Keppeland, etc in raising their fund. Will this affect their plan of offering REITs. With the recent interest rate hike, look like REIT counters will need to offer higher yield in order to attract investor to park their fund. There is only two ways to acheive that; one is the downward movement of the share price, while the other is to increase their revenue so that the DPU they paid out will make the share price look attractive. More work for the REIT management to improve yield :)

Previous Post

Start of Nov Trading Month

Well, today is the first trading day of November in Singapore market and the market has react in a positive manner (STI is up by 30.21 in the morning session trading). We finally can said good bye to October. STI was 2305.14 on 30 Sept 2005 and it end at 2216.77 on 31 Oct 2005. A drop of 88.37 points. Is it true that October always caused the Singapore market to drop. I decided to check the STI record for the past 6 years and the following are the results I get:

2005 2305.14(Sept) 2216.77 (Oct) -88.37
2004 1984.74(Sept) 1980.69(Oct) -4.05
2003 1630.80(Sept) 1723.71(Oct) +92.91
2002 1352.30(Sept) 1463.37(Oct) +111.07
2001 1319.53(Sept) 1367.84(Oct) +48.31
2000 1997.03(Sept) 1976.54(Oct) -20.49

Well, it is a tie between the last past 6 years. So the conclusion is never time the market. Trust your own research.