Portfolio Summary for September 2023

As of 30 September 2023

CDP

Security	# shares	Price S$	%
DBS	400	33.64	3.78
UOB	400	28.50	3.20
OCBC Bank	700	12.81	2.52
SGX	2,700	9.75	7.39
ST Engineering	6,900	3.91	7.58
CapitaLand Investment	7,400	3.10	6.44
SATS	8,200	2.60	5.99
Powermatic Data	8,500	2.91	6.95
TheHourGlass	5,000	1.94	2.72
Micro-Mechanics	14,200	1.90	7.58
VICOM	17,800	1.48	7.40
Sheng Siong	19,100	1.52	8.16
Nanofilm	21,600	0.94	5.70
Genting Singapore	11,700	0.845	2.78
Credit Bureau Asia	14,300	0.92	3.70
HRnetGroup	21,900	0.735	4.52
TalkMed Group	14,500	0.40	1.63
China Sunsine	41,800	0.41	4.81
HC Surgical	35,500	0.365	3.64
Kimly	27,000	0.315	2.39
Silverlake Axis	15,000	0.265	1.12

Portfolio Market Value = $355,997
YTD Dividends Received = $11,040
YTD SBL Fees Received = $890

Trades
None

SRS

Security	# shares	Price S$	%
DBS	100	33.64	2.55
UOB	200	28.50	4.31
OCBC Bank	900	12.81	8.72
SGX	1,300	9.75	9.59
ST Engineering	3,000	3.91	8.88
CapitaLand Investment	2,600	3.10	6.10
SATS	3,800	2.60	7.48
Powermatic Data	3,400	2.91	7.49
Micro-Mechanics	5,400	1.90	7.76
VICOM	5,500	1.48	6.16
Sheng Siong	8,700	1.52	10.01
Nanofilm	5,500	0.94	3.91
Credit Bureau Asia	5,700	0.92	3.97
TalkMed Group	5,800	0.40	1.76
China Sunsine	10,800	0.41	3.35
HC Surgical	19,500	0.365	5.39
Kimly	5,800	0.315	1.38
Silverlake Axis	6,000	0.265	1.20

Portfolio Market Value = $132,153

Trades
None

Singapore Savings Bonds

Security	Amount ($)	Avg Yld %
GX18070N	12,500	2.63
GX22120S	14,000	3.47
GX23010Z	15,000	3.26

Portfolio Market Value = $41,500

Commentary:

In the blink of an eye, September has passed. Again, I sat pat on my hands and did not execute any trade this month. Markets remained rangebound, with Street talk about one more Fed rate hike before year end. There is also the concern of China's economic engine sputtering.

On the home front, I'm sure many welcomed the unexpected S$1.1 billion Cost-of-Living Support Package announced on Thursday [source]. A little relief in the face of persistent inflation and ahead of the 1% GST increase come 1 January 2024. (It is also a thinly veiled political measure to soften the ground before the General Election next year.)

In the previous post, I mentioned that I applied for a new Sales role. In the end, I didn't get the job. My junior in the same team got it.

Felt a stab in my heart.

Am I really that lousy? Doesn't my capability suffice?

Did some soul searching. Surely, I need to improve on my communication skills. But more importantly, I realised I had let work consume too much of my life. I was replying client emails late at night, logging in during weekends to clear stuff and having night calls with engineers. What for? I had fooled myself in the illusion of busyness and overestimated my contribution to the company.

It is a mistake to think the world will grind to a halt when you stop/quit/die. No one is indispensable. Time to make a course change in life. No longer will I do any work after office hours or on my leave days. I will re-direct the time and effort for my family as well as for my own wellness.

When I took a day off last Wednesday to spend quality time with my partner, I felt surprisingly at ease. (Actually, some serious sh*t happened to my client that day while I was away. Thankfully, my team mates handled it competently. LOL)

Heading into the last quarter of the year, I'm going to take time to re-align my priorities in life. My job is just a means to an end. I am on track to build up my retirement fund. By age 55, I hope to call it a day and travel the world. In the interim, I may find something that stirs my spirit and takes me on a whole new adventure.

On this thought, the stab in my heart isn't so painful anymore.

Till next time!

Portfolio Summary for August 2023

As of 31 August 2023

CDP

Security	# shares	Price S$	%
DBS	400	33.30	3.71
UOB	400	28.44	3.17
OCBC Bank	700	12.55	2.45
SGX	2,700	9.63	7.24
ST Engineering	6,900	3.81	7.32
CapitaLand Investment	7,400	3.24	6.68
SATS	8,200	2.59	5.92
Powermatic Data	8,500	2.80	6.63
TheHourGlass	5,000	1.96	2.73
Micro-Mechanics	14,200	1.89	7.48
VICOM	17,800	1.55	7.69
Sheng Siong	19,100	1.52	8.09
Nanofilm	21,600	1.06	6.38
Genting Singapore	11,700	0.875	2.85
Credit Bureau Asia	14,300	0.925	3.69
HRnetGroup	21,900	0.745	4.55
TalkMed Group	14,500	0.40	1.62
China Sunsine	41,800	0.40	4.66
HC Surgical	35,500	0.36	3.56
Kimly	27,000	0.32	2.41
Silverlake Axis	15,000	0.285	1.19

Portfolio Market Value = $358,937
YTD Dividends Received = $10,229
YTD SBL Fees Received = $801

Trades
- Bought 6,200 shares of Nanofilm.
- Bought 3,800 shares of VICOM.
- Bought 6,100 shares of Sheng Siong.

SRS

Security	# shares	Price S$	%
DBS	100	33.30	2.52
UOB	200	28.44	4.30
OCBC Bank	900	12.55	8.54
SGX	1,300	9.63	9.46
ST Engineering	3,000	3.81	8.64
CapitaLand Investment	2,600	3.24	6.37
SATS	3,800	2.59	7.44
Powermatic Data	3,400	2.80	7.19
Micro-Mechanics	5,400	1.89	7.71
VICOM	5,500	1.55	6.44
Sheng Siong	8,700	1.52	9.99
Nanofilm	5,500	1.06	4.41
Credit Bureau Asia	5,700	0.925	3.98
TalkMed Group	5,800	0.40	1.75
China Sunsine	10,800	0.40	3.26
HC Surgical	19,500	0.36	5.30
Kimly	5,800	0.32	1.40
Silverlake Axis	6,000	0.285	1.29

Portfolio Market Value = $132,332

Trades
None

Singapore Savings Bonds

Security	Amount ($)	Avg Yld %
GX18070N	12,500	2.63
GX22120S	14,000	3.47
GX23010Z	15,000	3.26

Portfolio Market Value = $41,500

Commentary:

I enjoyed August. My family celebrated three birthdays; term tests are over for my kiddos and I took a handful of leave days to get away from work. I was able to take things down a notch and recharge my spirit.

Investments-wise, nothing major happened in my portfolios. As the price of Nanofilm sunk to an all-time low, I took another bite. I find this company to be a good indicator of China's manufacturing industry right now, which isn't performing well. Nonetheless, I'm confident the company fundamentals are still intact. Growth will resume once China is able to revitalize its production-led economy.

I also picked up Vicom and Sheng Siong as their stock prices retreated. I'm eyeing the local banks too. Their prices have steadily declined, despite having achieved stellar Q3 results. Once they hit my entry point, I will accumulate. The banks are the strongest candidates to raise their dividends.

Speaking of banks, I came across a good article in the Business Times titled "Bank customers lose out as industry holds on to rate-hike gains" [link]. Banks do not always pass on the interest rate hikes to savers. That is why there is NIM expansion. IMO, it is better to be both a saver and a bank stockholder.

The year-to-date dividend income from my CDP portfolio has crossed $10k. While it isn't a lot of money (when you average it out per month), I had saved my hard-earned money and invested instead of splurging on stuff. It is the fruit of my frugality. I sincerely hope my dividend income stream will continue to grow over the years.

As mentioned previously, I'm in the midst of adjusting my investment focus. I want to ditch the lower ROE stocks in favour of the few stronger companies. But at present, I don't see an urgent need to sell off those holdings when prices are going nowhere. Moreover, I have sufficient dry powder (cash) to add on positions when a buying opportunity appears. So I'm adopting a wait-and-see attitude. Akan datang.

We are already three quarters into 2023. After spending eight years in my current job, I've decided to apply for a Sales role in another department. The skill set required is way out of my comfort zone. Yet, there is the thrill of embarking on a new challenge and stretching my capabilities further. It has been a long time since I last attended an interview. I sought advice from my former colleagues who are now in Sales. I'm glad to see them enjoying the job and thriving. I hope to follow in their footsteps. I've pored over YouTube videos on Sales interview tips and tricks, so that I can be prepared. I have told myself - Even if I do not get the job, at least I've done my best and benefited from the learning experience. No regrets.

Wish me luck!

Portfolio Summary for July 2023

As of 31 July 2023

CDP

Security	# shares	Price S$	%
DBS	400	34.26	3.89
UOB	400	30.10	3.42
OCBC Bank	700	13.30	2.64
SGX	2,700	9.71	7.44
ST Engineering	6,900	3.73	7.31
CapitaLand Investment	7,400	3.40	7.14
SATS	8,200	2.80	6.52
Powermatic Data	8,500	3.05	7.36
TheHourGlass	5,000	2.08	2.95
Micro-Mechanics	14,200	1.89	7.62
VICOM	14,000	1.70	6.76
Sheng Siong	13,000	1.64	6.05
Nanofilm	15,400	1.14	4.98
Genting Singapore	11,700	0.94	3.12
Credit Bureau Asia	14,300	0.915	3.71
HRnetGroup	21,900	0.73	4.54
TalkMed Group	14,500	0.42	1.73
China Sunsine	41,800	0.41	4.87
HC Surgical	35,500	0.41	4.13
Kimly	27,000	0.335	2.57
Silverlake Axis	15,000	0.29	1.24

Portfolio Market Value = $352,215
YTD Dividends Received = $6,974
YTD SBL Fees Received = $770

Trades
- Sold 5,700 shares of iFast.

SRS

Security	# shares	Price S$	%
DBS	100	34.26	2.47
UOB	200	30.10	4.33
OCBC Bank	900	13.30	8.62
SGX	1,300	9.71	9.09
ST Engineering	3,000	3.73	8.05
CapitaLand Investment	2,600	3.40	6.36
SATS	3,800	2.80	7.66
Powermatic Data	3,400	3.05	7.46
Micro-Mechanics	5,400	1.89	7.35
VICOM	5,500	1.70	6.73
Sheng Siong	8,700	1.64	10.27
Nanofilm	5,500	1.14	4.51
Credit Bureau Asia	5,700	0.915	3.75
TalkMed Group	5,800	0.42	1.75
China Sunsine	10,800	0.41	3.19
HC Surgical	19,500	0.41	5.75
Kimly	5,800	0.335	1.40
Silverlake Axis	6,000	0.29	1.25

Portfolio Market Value = $138,931

Trades
- Sold 2,100 shares of iFast.

Singapore Savings Bonds

Security	Amount ($)	Avg Yld %
GX18070N	12,500	2.63
GX22120S	14,000	3.47
GX23010Z	15,000	3.26

Portfolio Market Value = $41,500

Commentary:

The U.S. Federal Reserve raised the Federal Funds Target Rate by another 25 bps recently. It was the highest level in more than 22 years [news]. Yet, the market hardly flinched. In fact, the local Straits Times Index climbed over 5.2 percent in July alone. Word on The Street is about how the U.S. may be able to skirt around a recession [news]. To think the mood was more pessimistic at the start of the year. Investors are a fickle bunch.

Nonetheless, the relief rally was welcomed by many. iFast Corporation caught a tailwind as the company reversed from loss into profit in 2Q2023. I sold off my position as the share price rocketed nearly 17 percent. The rationale is to consolidate my capital into fewer (but higher conviction) stocks.

On the flip slide, Nanofilm released its 1H2023 profit guidance on 10 July, indicating that the company will report a revenue decline of approx. 34 percent to S$73M and a net loss of approx. S$8M [announcement]. The next day, the stock crashed and burnt, dropping a whopping 15 percent.

It was a good lesson in human psychology, contrasting the market reaction between these two stocks. I suspect the short sellers were hard at work. As a buy-and-hold investor, I'm not too concerned on the price volatility, as long as the company fundamentals remain sound. Nanofilm struck a hopeful tone that 2H2023 revenue ought to be higher than 1H2023 and FY2023 should be profitable.

We shall see.

On the home front, nothing much transpired. July was a lull month. With the hot summer sun blazing, my family wasn't inclined to participate in any outdoor adventure. My kiddos caught the occasional flu bug one after the other. Thankfully, their recovery was smooth.

August will be a happy month, since my wife, my elder son and I will be celebrating our birthdays. (Yes, we are all Leo babies!) Looking forward to the celebrations.

Signing off for now. Until next time!

Portfolio Summary for June 2023

As of 30 June 2023

CDP

Security	# shares	Price S$	%
DBS	400	31.51	3.40
UOB	400	28.00	3.02
OCBC Bank	700	12.28	2.32
SGX	2,700	9.61	7.01
iFast	5,700	4.60	7.08
ST Engineering	6,900	3.68	6.86
CapitaLand Investment	7,400	3.31	6.61
SATS	8,200	2.58	5.71
Powermatic Data	8,500	2.60	5.97
TheHourGlass	5,000	2.00	2.70
Micro-Mechanics	14,200	1.75	6.71
VICOM	14,000	1.71	6.46
Sheng Siong	13,000	1.64	5.76
Nanofilm	15,400	1.35	5.61
Genting Singapore	11,700	0.94	2.97
Credit Bureau Asia	14,300	0.935	3.61
HRnetGroup	21,900	0.74	4.38
TalkMed Group	14,500	0.40	1.57
China Sunsine	41,800	0.41	4.63
HC Surgical	35,500	0.405	3.88
Kimly	27,000	0.345	2.52
Silverlake Axis	15,000	0.305	1.24

Portfolio Market Value = $370,389
YTD Dividends Received = $6,823
YTD SBL Fees Received = $731

Trades
- Sold 421 shares of CapitaLand Ascott Trust.

SRS

Security	# shares	Price S$	%
DBS	100	31.51	2.18
UOB	200	28.00	3.87
OCBC Bank	900	12.28	7.64
SGX	1,300	9.61	8.64
iFast	2,100	4.60	6.68
ST Engineering	3,000	3.68	7.63
CapitaLand Investment	2,600	3.31	5.95
SATS	3,800	2.58	6.78
Powermatic Data	3,400	2.60	6.11
Micro-Mechanics	5,400	1.75	6.54
VICOM	5,500	1.71	6.50
Sheng Siong	8,700	1.64	9.87
Nanofilm	5,500	1.35	5.13
Credit Bureau Asia	5,700	0.935	3.69
TalkMed Group	5,800	0.40	1.60
China Sunsine	10,800	0.41	3.06
HC Surgical	19,500	0.405	5.46
Kimly	5,800	0.345	1.38
Silverlake Axis	6,000	0.305	1.27

Portfolio Market Value = $144,600

Trades
- Sold 148 shares of CapitaLand Ascott Trust.

Singapore Savings Bonds

Security	Amount ($)	Avg Yld %
GX18070N	12,500	2.63
GX22120S	14,000	3.47
GX23010Z	15,000	3.26

Portfolio Market Value = $41,500

Commentary:

This will be a short post. As the stock market struggled to find direction, I stayed mostly on the sidelines. The only trade I did was to get rid of my CapitaLand Ascott Trust units, which I had received as dividend from CLI.

It was the June school holiday. Many of my friends travelled overseas with their families. We chose to remain in SG. We visited the new Bird Paradise at Mandai, which was better than the old Jurong Bird Park in my opinion. The various open aviaries where visitors can walk through are the main highlights, as well as the shows. The hot weather is unforgiving, though it beats heavy downpour when visiting the attraction.

My elder boy is contesting in his school's Student Council Presidential Election. He had to make an introduction video, an election poster, momentos as well as prepare a campaign speech. And he is only in Primary School! I am grateful my boy is given a rare opportunity to serve his school well. This will be useful in building his sense of responsibility and self confidence. Hand-making the momentos at home was such a fun father-son bonding session. I will cherish this memory.

I'm not sure why, but I'm starting to dread going to work. Feels like sheer drudgery these days. I may have lost the motivation to climb the career ladder. It is moments like this when I wish I can quit without financial worry, but I'm still a long way off.

Signing off for now. Until next time, take care!

Portfolio Summary for May 2023

As of 31 May 2023

CDP

Security	# shares	Price S$	%
DBS	400	31.33	3.33
UOB	400	28.06	2.98
OCBC Bank	700	12.22	2.27
SGX	2,700	9.25	6.64
iFast	5,700	4.51	6.83
ST Engineering	6,900	3.73	6.84
CapitaLand Investment	7,400	3.40	6.68
SATS	8,200	2.63	5.73
Powermatic Data	8,500	2.66	6.01
TheHourGlass	5,000	1.99	2.64
Micro-Mechanics	14,200	1.84	6.94
VICOM	14,000	1.78	6.62
Sheng Siong	13,000	1.62	5.60
Nanofilm	15,400	1.49	6.10
Genting Singapore	11,700	1.02	3.17
Credit Bureau Asia	14,300	0.95	3.63
HRnetGroup	21,900	0.75	4.39
TalkMed Group	14,500	0.43	1.66
China Sunsine	41,800	0.41	4.61
HC Surgical	35,500	0.40	3.73
Kimly	27,000	0.34	2.44
Silverlake Axis	15,000	0.29	1.18

Portfolio Market Value = $376,403
YTD Dividends Received = $6,490
YTD SBL Fees Received = $694

Trades
- Bought 100 shares of DBS.
- Bought 100 shares of UOB.
- Bought 2,200 shares of VICOM.
- Bought 3,100 shares of Micro-Mechanics.
- Sold 11,200 shares of ComfortDelGro.

SRS

Security	# shares	Price S$	%
DBS	100	31.33	2.14
UOB	200	28.06	3.84
OCBC Bank	900	12.22	7.52
SGX	1,300	9.25	8.23
iFast	2,100	4.51	6.48
ST Engineering	3,000	3.73	7.65
CapitaLand Investment	2,600	3.40	6.05
SATS	3,800	2.63	6.84
Powermatic Data	3,400	2.66	6.19
Micro-Mechanics	5,400	1.84	6.80
VICOM	5,500	1.78	6.70
Sheng Siong	8,700	1.62	9.64
Nanofilm	5,500	1.49	5.61
Credit Bureau Asia	5,700	0.95	3.72
TalkMed Group	5,800	0.43	1.71
China Sunsine	10,800	0.41	3.07
HC Surgical	19,500	0.40	5.27
Kimly	5,800	0.34	1.35
Silverlake Axis	6,000	0.29	1.21

Portfolio Market Value = $146,186

Trades
- Bought 100 shares of DBS.
- Bought 200 shares of UOB.
- Bought 800 shares of VICOM.
- Bought 2,300 shares of Micro-Mechanics.
- Sold 6,900 shares of ComfortDelGro.

Singapore Savings Bonds

Security	Amount ($)	Avg Yld %
GX18070N	12,500	2.63
GX22120S	14,000	3.47
GX23010Z	15,000	3.26

Portfolio Market Value = $41,500

Commentary:

There is an old adage to "sell in May and go away, come back on St. Leger's Day." (St. Leger's Day refers to a horse racing festival in Britian, happening on 14 to 17 September this year.) It was meant for investors to avoid the stock market's seasonally weaker performance between May and October.

Contrary to this advice, I bought more shares than sold this month. As prices retreated, I added DBS, UOB, VICOM and Micro-Mechanics. I must admit - I'm not smart enough to buy at the bottom. I just thought that at current levels, I can start nibbling bit by bit. We will never know how far (down) the prices can go, so I set aside some capital to buy the shares at pre-set levels. If the market turns up, great because the value of my position increases; if the market continues to tank, no problem too. I get the chance to buy at better prices.

DBS reported another set of record-breaking result [here]. 1Q23 total income was S$4.67b, up 44% YoY. Net profit was S$2.57b, up 43% YoY. ROE improved to 18.6%, up 5.5% YoY. NIM gained 8 bps QoQ to 2.69% while NPL remained stable at 1.1%. 42 cents DPS was declared. CEO Piyush Gupta wrote that the NIM has likely peaked in 1Q, and guided full year NIM to be around 2.05-2.10%. In its latest Investor Day presentation [here], DBS CFO Chng Sok Hui made a bold prediction that DBS will achieve "earnings of $10b+ and ROE of 15%-17% in the medium term, assuming interest rates do not return to unusually low levels".

OCBC reported a good set of results too [here]. 1Q23 total income was S$3.35b, up 27% YoY. Net profit was S$1.88b, up 39% YoY. ROE improved to 14.7%, up 4.1% YoY. NIM dropped 1 bp QoQ to 2.30% while NPL improved 0.1 QoQ to 1.1%. No dividend was declared. CEO Helen Wong guided 2023 NIM to be in the region of 2.2% and loan growth around low to mid single-digit. She also assured that OCBC's robust capital position can support the targeted 50% dividend payout. In a Business Times interview [here], the CEO is confident that OCBC is in a good position to capture wealth and trade flows given its strong links between Greater China and the ASEAN region.

Despite the stellar results, the local bank stocks took a beating in May. The Street consensus is that NIM has peaked and NPL may increase as the economy enters a recession. Some asset managers are even expecting a rate cut by the U.S. Fed in the second half of 2023, which in my opinion, seems to be a premature call at this point in time. This stands in stark contrast with St. Louis Fed President James Bullard's comment [here] that he expects two more rate hikes in 2023 to quell inflation.

And then there is the U.S. debt ceiling drama during mid-month between the Republicans and Democrats. No one truly believes the United States should default on its debt obligations, just that each party tries to leverage on the situation to advance their own agenda. The tussle generated volatility in the market, which is good for opportunistic buying.

May is a good month where I received cash dividends from several companies. Total amount received year-to-date in my CDP portfolio is $6,490.29. Not a lot of money, but it is one step closer to my goal of generating cashflow from investing in fundamentally strong companies.

I signed up for SGX Securities Borrowing and Lending (SBL) Pool some years ago [here]. I can see some of my shares being lent out to other investors. I earn interest (plus owed dividends) after the short sellers return the shares. If you meet the mininum requirements, I recommend to sign up for this programme to earn side income.

I sold my shares of ComfortDelGro (CDG). The rationale was covered in my April blog post [here]. I want to consolidate my capital and make more concentrated bets. CDG share hasn't performed well post-pandemic. With this sale, I'm officially divested of this public transport operator. By the way, CDG recently announced their 1Q23 result [here]. Revenue climbed 2.1% YoY to $906.4m, but Operating Profit dropped 51.6% YoY to $50.9m. The decline was attributed to inflationary cost pressures on Public Transport Services.

I have two AIA saving policies maturing in May and June respectively this year. I signed up for them when I was in N.S. The annual premium was a small sum that I faithfully paid, even when I was hard on cash. I am glad for being disciplined on this commitment throughout my university days and working life. The principal and compounded coupons are a welcome boost to my dry powder for stock investments. (Truth be told, I had forgotten why I took the policies in the first place!)

I had received some units of CapitaLand Ascott Trust from the last dividend corp action of CapitaLand Investment. Quite a hassle to sell odd lots. Will try to offload them at the right time.

Money matters aside, I visited a few secondary schools' Open House this month. I thought it might be good to check out what those schools have to offer. I'm intrigued by the Integrated Programme (IP) [link] as well as the Direct School Admission for Secondary Schools [link]. I hope my boys will be able to qualify for these programmes.

Until next time, take care!

Buy Now, Pay Later for Groceries

I was reading through Bloomberg Businessweek when I came across an article titled, "Americans Go Deeper Into Debt as They Use Buy Now, Pay Later Apps for Groceries" [link].

My impression of BNPL is that it is typically spent on clothing, fashion accessories, electronic gadgets and the like. But this is the first time I've read of people resorting to BNPL for grocery supplies. This speaks volumes of the dire straits that some people are currently facing.

Unlike clothing and consumer products that may still have some residual resale value, there is none for groceries since they are meant for literal consumption. One is getting into debt just to put food on the table.

In Singapore, we have government financial assistance for families living at the poverty line. There are also welfare organisations that provide needy families with help. Admittedly the support is targeted and some families, while barely making ends meet, may not qualify, or the amount isn't enough. Hence, BNPL and payday loan may appear as attractive alternatives.

According to Investopedia, BNPL volume could exceed $3.5 trillion by 2030 [link]. From what I understand, there are lower hurdles to getting BNPL financing compared to credit cards.

I hope the BNPL culture does not spawn another debt crisis in the future.

Challenging Times for Reit Managers Ahead

The Business Times published an opinion article today titled, "Reit managers, take note: General mandate to issue new units is least popular resolution at S-Reit AGMs" [link]. It described how Sabana Industrial Reit unitholders rejected the resolution for the Reit Manager to issue new units and to make or grant convertible instruments without the expressed approval of unitholders.

Sabana Industrial Reit has been embroiled in a hostile battle between the Reit Manager and one of its investors, Quarz Capital. But having a resolution voted down is rare. Other Reit Managers ought to sit up and take notice.

Since the GFC, Reits have prospered in the ultra-low interest rate environment, where debt can be obtained at a relatively low cost. Consequently, Reits have been able to provide enviable returns to investors. With the rapid ramp-up of interest rates, this era of cheap debt is over. The cost of capital is going to creep up, regardless of how much Reit Managers tout that a major portion of their debt is in 'fixed' rates. Eventually, more of the revenue will be needed to service interest expense.

Reit Managers may also face scrutiny when trying to raise money via private issuance of new units.

If Reit Managers cannnot raise rental rates correspondingly at the risk of losing anchor tenants, then investors will have to settle for less.

The next ten years will be nothing like the last ten years.

Do take note.