Long story short of what has happened on 28th Dec 2020, refer Journey to Retirement (CPFIS) Part 2.1 -- First REIT. Divested all of the holding at S$0.39/unit after holding since 2007, 13-years period, a year short of SingTel duration of 14 years.
SingTel was my first stock in stock market and was a Day 1 investor. For those who have yet to born or still not in stock market then, IPO at that time apart from the normal application, you can in addition bid for it. The final bidding price if on high demand will be higher than the IPO price for sure. I managed to get the bidding part and on top of the normal application.
Selling off at S$0.39 and with a holding price of S$0.5973, that resulted in a capital loss of -34.91% on top of a dividend return of +138.36%. Net of, the investment return a +103.45% and that translates to an annualized return of +5.62%. Not something impressive BUT that was just 1 part of the story. In Apr 2013 I divested 28.57% of First REIT at $1.35/unit and if including that the overall return for First REIT investment was capital gain +8.45%, dividend return +110.57%, net return +119.02%, translating to annualized return of +6.22%. Well that looks far better nevertheless.
Here comes the second part of the story. Many might have wonder why didn't divest earlier (perhaps in 2017 or 2018) when the first piece of bad news regarding Lippo group debt worries surfaced and share price was still trading above S$1.20 -- 3 times higher that now. In 2017, the dividend return for the remaining part of the First REIT has hit 100% that of vested capital, as such the investment was already considered "mathematically impossible to lose money", whatever the share price in the open market is just floating profit. Then, I decided to turn First REIT into a tools to generate capital gain while still holding on to collect dividend. Dividend yield at that time was still above 10% for me. The amount of capital gain that I have achieved since 2017 was quite impressive despite not documenting for it. It was like able to generate the same amount of dividend for a quarter within a month for the best case. If on the days of being lazy, I still able to generate almost the same dividend amount for a 3-month period.
So, why not continuing using First REIT as a tools ? The newly proposed master lease renewal term is no longer attractive given it is no longer locked in to SGD for the rent received. Hence, the amount of dividend would expect to be less. At its prime, the dividend yield I get is like 14% and given the new master lease term, even if dividend yield drop by half, I be getting like 7%, still not a bad dividend yield though. However, with the proposed right issues, a very dilutive one and I have no intention to subscribe to it meaning the dividend yield could fall to like 4% for my case. Don't think you need a rocket science brain to figure out that is a very bad deal if continues to hold on.
