Sour lemons🍋 + Sweet cherries🍒(shared in previous post) = Balanced drink (or investment portfolio)😂
- ckcbiz40
- Apr 27
- 4 min read
Updated: May 10
After my previous post on the 2 bright spots in the Singapore REIT market (and Mr MH's portfolio) here: (Amidst recent trade war, tariffs doom & gloom, recession fears, there are bright sparks here and there!😁), a good friend, Ms ZW lamented on the lemons stocks in her portfolio.
That triggered this post of mine, perhaps I should mix some of my own lemons 🍋 into the cherries 🍒 shared in my previous post, to balance out the drink (or my portfolio).
Afterall, investors are bound to have and should be prepared for lemons and cherries in our portfolio; of course hopefully more sweetness than sour taste 😂!
Mapletree Pan Asia Commercial Trust (MPACT)
See the Business Times article above from MPACT's latest quarter results. Where do I start with Mapletree Pan Asia Commercial Trust (MPACT)? 🤔
Those who have been invested in or following MPACT over the years would agree that this WAS one of the pedigree REIT to own (alongside the Capitalands and Frasers) yielding unitholders steady 5% to 6% dividends backed by their great assets (Singapore's Largest Shopping mall - Vivocity and office buildings such as Mapletree Business City and Bank of America HarbourFront) ALL located in Singapore until that fateful merger. The rest as they said are history.
Fast forward to today, MPACT's situation is like 四面楚歌 - 四面受敌, 孤立无援, 陷入困境 (essentially depicting the history of the Chu army (楚军) being surrounded by the enemy Han army, besieged on all sides, without reinforcements and fallen into a desperate situation.
In MPACT's case:
1) High interest rates that shot up over past 2 years causing stubbornly high cost of debt till now;
2) Lower occupancy and poor sentiments in their North Asia properties: Hong Kong's Festival Walk mall, China's Beijing's Gateway Plaza and Shanghai's Sandhill Plaza offices, Japan's and South Korea's Office buildings;
3) Rising vacancy leading to negative rental reversions and affecting property valuations;
4) Currency devaluation/losses from rental earned in Japanese Yen, Korean Won, Chinese Yuan, HK Dollar against Singapore dollar (which MPACT distributes dividends to unitholders like us); and now
5) US Tariff craze, Trade Wars, Possible recession and belt-tightening - Up and coming!
Makes one wonder, how long can MPACT's crown jewel, Vivocity bear the burden of keeping the dividend juice going for MPACT unitholders? Even if it's the largest mall in Singapore, and the only significant mall in the South, there is only so much asset enhancement initiatives (AEI works) they can do to spruce up Vivo to create more NLA, only so much rent they can squeeze out from tenants.
Other than the long-term vision of the Southern Waterfront living+working vision and the even longer term plans of Pulau Brani's redevelopment, not sure if there are any positive factors in wait for MPACT. Notwithstanding our knowledge of how the Chu Army (楚军) ended up, How do you think our MPACT army will fare in the face of all round threats from here?
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Mapletree Logistics Trust (MLT)
See the latest earnings results for Mapletree Logistics Trust (MLT) below. MLT's situation is slightly different from MPACT and its fortunes could perhaps be explained from its price movement in the 2 Trading View charts below.
1st chart (Zoom-out 5 years):- MLT's price fell off the cliff briefly in March 2020 following the sudden Covid-19 outbreak and the fearful circuit breaker and global panic into the unknown. However, MLT recovered swiftly thereafter and hitting a new high, which could be attributed to the spike in cargo (air and sea) which required warehouse assets that MLT specializes in even though human traffic flow ceased
It was boom town charlie during the period thereafter, when the world saw air and sea freight rates spiking, warehouse spaces/assets/properties were highly sought after, which arguably could be 1 of the several factors resulting in a big jump in inflation rates resulting in the painful period of FED's CPR sharply hiking interest rates which knocked the wind off MLT's sails in order to curb global inflation.
Unsurprisingly, MLT's prices (and many other REITs) fell off the slippery slope over the period of 2022 to 2023. Notwithstanding the several false starts of potential rate cuts by FED with inflation falling gradually, but the BIG cut did not come (albeit the 1% rate cuts comprising 0.5% in Sep 24, 0.25% in Nov 24 and 0.25% in Dec 24 resulting in many ups and downs in MLT's prices).
Alas, Grandpa Trump stabbed a knife into the recovering patient MLT with his tariffs threats on "Liberation Day" throwing world trade into havoc and causing global fear, uncertainty and doubt. As can be seen in the 2nd chart (Zoom in last 1.5 years):- MLT's price fell even lower than the Covid lows of March 2020, and hit more than 20% below the 200 SMA indicating likelihood of a long term downtrend, at least for now.
And now with MLT's latest result earnings of falling DPU >11% and business/manufacturers uncertain about more flip-flop pratas that Grandpa Trump will dish out to the world, what will become of MLT's dividends, price movements and unitholders? As investors, we would have to evaluate: (i) our options, (ii) threshold for pain, (iii) investment time horizon and objectives, (iv) any foreseeable upsides/positive factors, (v) what are the opportunity costs and (vi) our alternatives moving forward.
The writer, Mr MH owns both MPACT and MLT from a long time ago. Whilst both have brought him dividends over the years, I will have to ponder my moves forward from here. I hope this article above brings some insights and also sets us thinking not just what to do next (if we own MPACT and/or MLT), but also what we should look out for in the future and cater for scenarios whenever we invest.
Disclaimer: The above article is just the author expressing his layman views. It is NOT financial advice, and NOT a recommendation to buy or sell any stocks or REITs. Pls do your own due diligence and/or consult a qualified financial advisor before making any moves or taking any actions.
To our financial literacy;
Mr MH
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