Saizen & Sabana: Initiated Long-term Holding

Saizen

I invested in this REIT for the first time. I like Saizen for its investments on rented apartments in Japan. Majority of the population in Japan lives in rented houses because housing prices are too high for the working class to afford. From the economist's point of view, Saizen does have an economic moat in this area as the market for rented apartments is relatively inelastic in demand. In addition, the REIT is also trading low to its NAV. At $0.143, I am enjoying an above-8% DPU annually.

However, there are downsides to Saizen. First of all, it is to my knowledge that the Japanese government is depreciating its currency to make its economy more competitive. As rental income generated from Saizen is in JPY (Japanese Yen) before converting to Sing dollars, I could see a drop in the DPU if there is a sharp depreciation in their currency. Secondly, tectonically speaking, Japan is sitting on top of two earthquake-prone plates. In another sense, any major earthquake that strikes Japan like the one in March 2011, could potentially damage Saizen's income and resulting in a lower DPU. And lastly, there are still unexercised warrants waiting to be used on Saizen. Should all warrants be exercised, we will see Saizen's DPU dip down to 7% or mid-6% in the worst case.

Taking all the negative points into consideration, I am keeping a small holding on Saizen. It only occupies 20% of my portfolio. Still, with an DPU of above-8% at current, very undervalued prices, it is attractive to buy and hold it for dividends in the next few years.

Sabana

I am back again on this REIT. But this time, it is not meant for quick trading. Sabana's consistent rise in its DPU has made it very attractive to hold it for a long time, purely for passive income. It has also surpassed AIMSAMPI as the highest-dividend yield REIT in the list.

I have balanced my industrial REITs with equal shares of AIMS and Sabana. With both REITs set to increase their DPUs in the next few quarters, I am excited about the rate of growth in my passive income.

What's Next?

Singpost, a blue chip stock. This will be the return to non-REIT stocks. But instead of investing in risk-filled cynical stocks, I am into blue chips which is less volatile. Currently, all of my TA indicators have confessed that Singpost is riding on a downtrend. At current prices, it gives 6% DPU to its stockholders. Not bad, considering few blue chips give more than 6%. It also pays out dividends every quarterly, like an REIT.

Currently, it is hovering somewhere between $0.995 to $1.01 which means this price range is a strong support to overcome. Falling which, I could see prices reaching somewhere at the next support of $0.985. My entry to Singpost will be at these prices.