On 31 Oct 2023, I wrote a short piece on how there were no adverse news on the REIT front and it was purely a technical move pushing them down
Now that sentiments have improved and fear of further interest rate hikes is reduced, these 2 reits have rallied 30% in share prices in 2 days.
Keppacoak is one of the better managed REITs in Singapore where it has evenly staggered its debt maturities, have well located properties, a leverage ratio and interest coverage ratio that is better than a few local REITs; yet it has been beaten down due to irrational fear. PRIME US Reit on the other hand while indeed has a weak balance sheet, a sale asset of just 01 of its smaller building will do the trick and ensure its survival.
Fundamentally, these 2 REITs have a high chance of survival and realising their 70 US cents NAV. They are dangling an attractive at least 4 US cents dividends and the risk of them liqudating is near zero. What is depressing them is technicals and what is pushing their share price up is technicals. Fundamentally, these are 50 US cents stock which will grant shareholders an 8-10% dividend yield with no tax by Singapore/USA.
I do feel these 2 REITs are offering a special situation upside in terms of their current fundamentals. I will be doing a proper coverage of PRIME when its 3Q results are out in a few days time
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