$APAC Realty(CLN.SI)
Exited 40,000 shares at $0.68, for a 13.3% ROI in a mth
Fair value IMO is closer to $0.74 or so, probably next week’s ER will be a catalyst... but decided to leave some gains on the table.
Also exited for portfolio management reasons... will need to have capital buffet for some options that I’m intending to get into tonight or this week
Good luck to SHs... it’s still looking gd for the money.

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26 comments
TUBInvesting

Haha you sold and the price went down!

losemoneyinvestor

Reply to @ThumbTackInvestor : I'm a little depleted as well hence the recent divestment to refill. Mine is just water gun. Haha

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bighero

Hi @ThumbTackInvestor , what is next week ER? thanks

ThumbTackInvestor

Reply to @Sella : Not really a clue.
I was just playing the rebound cos I thought it had fallen too fast too soon.
Since it rebounded about 13%, it seemed like a good time to take profit.
In a way, I was lucky too cos I needed to find things to divest to reallocate capital to US opportunities.
I did think of the upcoming results release... I do think it'd be good.
The problem though, is that everybody knows that. So I suspect "good results" will not bump up the share price, unless they paint a rosy forward picture.

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FeelsBadMan

JSKM!! Keep doing what you do! Got good lobang must share!

sysy

nice gain lei ... gratz :)

cpa

DBS buying in large quantities.

ThumbTackInvestor

Reply to @cpa : yea, they bought from me.

muhdhazman

Still got more room to play...
bot @ 0.615

ThumbTackInvestor

Reply to @muhdhazmanmoh : Sure.
Probably.
Good luck!

Opportunist

Congrats. Huat to you bro. Money in pocket always good.

ThumbTackInvestor

Reply to @Opportunistic_Investor : yep.
thanks.
Gd way to start the week. lol


Recommended & Related Posts

APAC Realty – Acquisition Of ERA Centre Is Cashflow Negative
- Original Post from SG THUMBATACK INVESTOR

Well, at least until October 2023.


But first, let me state that this post is not exactly a discussion on APAC Realty. I don’t own APAC Realty’s shares, I traded it twice, and was fortunate to walk away with a mere couple of grand in profits, but that’s about it.


This is specifically, a discussion of APAC’s recent acquisition of Hersing Centre. (And the numbers behind it)


On the 10th Sept 2018, APAC completed the acquisition of Hersing Centre, situated in Toa Payoh, and renamed it ERA Centre.


The plan is to use ERA Centre as the headquarters, while simultaneously generating rental income from leasing out the retail units.


“The Property is a leasehold commercial property with a site area of approximately 1,392.4 square metres and a gross floor area of 4,121.4 square metres. Its 99-year lease from the Housing and Development Board (“HDB”) commenced on 1 August 1970. The Property has three levels: the first and second levels are currently leased to retail businesses, while the third level and the mezzanine are currently leased out as office space. There are also two auditoriums on the third level which are leased out. Total lettable floor area is approximately 2,155.3 square metres, excluding auditorium space of 441.34 square metres.”


ERA Centre’s location is not too bad actually. It is just a little off the main road, but enjoys pretty good frontage. It’s also not exactly smack in the Toa Payoh town hub per say, where all the buzz is, but is pretty close… I’d say, just 5 mins walk away.


Aside from using it as a HQ, the company plans to use the auditoriums in the 3rd floor for internal training and lectures for their own agents. (that’s what I’m told by an agent that I checked with)


The consideration for the acquisition is a cool $72.8 million, of which $58 mil is a property loan from DBS bank (according to FY18Q3 earnings release).


“The loan bears interest at the prevailing 1-month SIBOR plus 0.9% per annum for the first 2 years and 1-month SIBOR plus 2.0% per annum thereafter. The loan is repayable over 59 equal monthly instalments of $241,667 per month with a final bullet principal payment of $43,741,647 on the final maturity date, 19 October 2023. The first monthly instalment repayment of the loan is on 19 November 2018.”


Yup. So APAC has to cough up repayments of $240k every month, all the way till Nov 2018.


Being the curious cat, I rolled up my sleeves to investigate as I wanted to figure out if ERA Centre is going to be cashflow positive every month.


TBH, it’s not so much cos of interest in APAC Realty… but rather…. hey, if commercial premises in TPY town centre was going to be CF positive, I might jump in (on a much smaller scale of course), and pick up a few units somewhere there as well. I happen to be offered another commercial unit that’s even closer to the town centre than Hersing Centre.


It’s been almost half a year since the completion of the acquisition of ERA Centre though, and thus far, it doesn’t look good.


The ground floor is leased out to the “Hawker Chan” restaurant, which is famous for being the 1st 1 Michelin starred hawker. That certainly does brisk business, so they’d probably be around for a while longer.



That’s where the good news end.


After almost 6 months, the building is still terribly empty, with little traffic. Many units are empty too.


Even the road facing unit on the ground floor, which certainly enjoys pretty good roadside frontage, is empty.


I’d let the pictures do the talking.



I’d certainly think this should be the easiest unit to lease out.


Ground floor, just beside the road that many people use to cross to reach the HDB hub.


But it’s empty.


And empty for several months already.


I’ve been down to assess twice. Cos the 1st time was right after their announced acquisition and… well, maybe the company needed more time right?


But these pictures are recent. And it’s kinda disappointing I think (not to me, I’m not a shareholder!) that they still can’t get it leased out.


The 2nd floor is worse. There’s a hairdresser and a law firm on the 2nd floor.


These 2 are the only 2 non-F&B businesses in the entire building I think. I won’t put pictures of these cos the staff faces are in it, and it’s maybe not very nice if they suddenly find themselves plastered over an investing blog.


The rest are all small sized eateries selling F&B.


And yes, there are yet some more vacant units.



And finally, THIS.


I actually found this to be quite funny.



LOLOL! Check that out.


The sign btw, says “ACCESS TO LEVEL 3 ARE STRICTLY FOR TENANTS ONLY”


OK, firstly, it should be “is” and not “are”.


And they didn’t need to put that sign up. I wouldn’t have dared to go up anyway!


LOL!


The escalator was not working, and it’s almost like a pathway to hell with the darkened corridors and the eerie red light! Maybe they can lease this part out to film ghost movies.


Anyway, I’m told that it’s just 2 auditoriums on level 3. They certainly don’t have retail units there since the public is not allowed to go up.


Initially, I thought that since the total lettable area is a known fact, I’d just have to guesstimate occupancy rates, and crunch in the average psf numbers (can call agents to find out easily)… but looking at how unoccupied it is, I think we can safely conclude that ERA centre sure isn’t going to generate $240k in rent every month.


In other words, expect this to be CF negative every month until the end of the lease. (unless they find tenants)


I’d also point out that with this acquisition and the accompanying loan, the company no longer has an “asset light” model. As a matter of fact, they further increased their exposure to rate hikes, as the loan is pegged to Sibor.


Rate hikes are of course, always going to be a dampener for the property market, both price and volume wise, but with this loan, APAC would also be further directly impacted by rate hikes, or the lack of it.


Again, this by no means, indicates the current investment merits of APAC Realty.


I’m just sharing some observations, thoughts and photos of their acquisition of ERA Centre.


$APAC Realty(CLN.SI)

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Expiry:
Target Price
$0.55
(+13.40%)
NOW:

$APAC Realty(CLN.SI)

Been building up a new position at ave price of around $0.47 - $0.48.
This is TTI's 2nd time buying APAC, having taken profit successfully previously. (somewhere nestled within old posts)

As of 9M2018, current assets < current liabilities due to a $58mil loan taken out to finance the acquisition of HC Homes, within which, the main asset is a building in Toa Payoh, 450 lorong 6.
I've been down to assess it myself, the building, Hersing Centre, is a mature asset with units all fully leased, primarily to F&B establishments.
Some famous F&B reside within the building (there's some famous chicken rice restaurant, I ate there a few times and it's perpetually crowded). Crystal Jade enjoys massive frontage at the ground floor too.
More importantly, as the deal concluded only in end Sept, I expect to see the contribution of this acquisition to both the top and bottomline.
Management has stated that only part of Hersing will be used for their office space, the rest continue to be leased out and will contribute to covering the monthly instalments of approximately $200k +.
I also like that the loan is only up till Oct 2023, meaning that the company is forced to be disciplined in their CF management to pay up the loan, since the loan tenure is so short.

CF has always been +ve, as the company has minimal to zero capex to talk about.
Expecting the contribution from Hersing to further boost the operational CF and by extension, FCF.

Having said that, I don't intend for this to be a long term holding, just think that it's been oversold and think that the markets haven't priced in the contribution from Hersing, starting in Q4 2018.
At the very least, it does look like the share price has bottomed so my downside is fairly protected.
Risk reward is pretty favorable here for TTI to take a bite
Reason for not being a long term holding is nothing to do with the company. Would just like to maintain a light equity position.
Am not optimistic, macro wise.

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