Investment Moats

Singapore Savings Bonds SSB December 2019 Issue Yields 1.71% for 10 Year and 1.56% for 1 Year

by Leave a Comment

Here is a higher yielding, safe way to save your money that you have no idea when you will need to use it, or your emergency fund.

The December 2019’s SSB bonds yield an interest rate of 1.71%/yr for the next 10 years. You can apply through ATM or Internet Banking via the three banks (UOB,OCBC, DBS)

However, if you only hold the SSB bonds for 1 year, with 2 semi-annual payments, your interest rate is 1.56%/yr.

$10,000 will grow to $11,713 in 10 years.

This bond is backed by the Singapore Government and its available to Singaporeans.

A single person can own not more than SG$200,000 worth of Singapore Savings Bonds. You can also use your Supplementary Retirement Scheme (SRS) account to purchase.

You can find out more information about the SSB here.

December 2019 Singapore Savings Bonds Interest

Note that every month, there will be a new issue you can subscribe to via ATM. The 1 to 10 year yield you will get will differ from this month’s ladder as shown above.

Last month’s bond yields 1.74%/yr for 10 years and 1.62%/yr for 1 year.

Here is the current historical SSB 10 Year Yield Curve with the 1 Year Yield Curve since Oct 2015 when SSB was started (Click on the chart, move over the line to see the actual yield for that month):

The Application and Redemption Schedule

You will apply for the bonds through the month. At the end of the month, you will know how much of the bond you applied was successful.

Here is the schedule for application and redemption if you wish to sell:

Click to see larger schedule

You have 02 to about 25th of the month (technically the 4th day from the last working day of the month) to apply or decide to redeem the SSB that you wish to redeem.

Your bond will be in your CDP on the 1st of the next month. You will see your cash in your bank account linked to your CDP account on the 1st of next month.

How does the Singapore Savings Bonds Compare versus SGS Bonds versus Singapore Treasury Bills?

Singapore savings bonds, is like a “unit trust” or a “fund” of SGS Bonds.

But what is the difference between you buying SGS Bonds and its sister the T-Bills directly?

Both the SGS Bonds and T-Bills are also issued by the Government and are AAA rated.

Here is an MAS detailed comparison of the three:

SGS Bonds versus Singapore T-bills versus Singapore Savings Bonds
Click to see bigger comparison table

What is this Singapore Savings Bonds? Read my past write ups:

  1. This Singapore Savings Bonds: Liquidity, Higher Returns and Government Backing. Dream?
  2. More details of the Singapore Savings Bond. Looks like my Emergency Funds now
  3. Singapore Savings Bonds Max Holding Limit is $200,000 for now. Apply via DBS, OCBC, UOB ATM
  4. Singapore Savings Bonds’ Inflation Protection Abilities
  5. Some instructions how to apply for the Singapore Savings Bonds

Past Issues of SSB and their Rates:

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
  2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for first meeting to understand how it works

Some Thoughts on CPF Rants, Bond Tents and New Financial Adviser Money Management

by 9 Comments

After a tiring day, I don’t really feel like putting out an article that was supposed to be meant for this Sunday.

However, there are some comments to be made.

How Should A Financial Adviser Manage His Own Money?

My friend Jason here heeded my call to have more self-employed folks show us how they manage their variable income, or how they kick start their business in the initial years.

Jason applied my Phase 1 and 2 planning. He worked out how much is his Essential expenses ($24,000 a year).

He would have a 1-year runway to proof that he could get business off the ground.

You can see how he is going to get a diversified stream of advisory income going forward. I think the family (his wife and himself) is being pragmatic about it.

To be fair, if phase 1 for this kind of business lasts 1 year, then setting aside $50,000 before taking the plunge would be adequate. If Jason is a fresh graduate, then he may not have the luxury of such a safety net. But then again, as a fresh graduate, Jason would also have a much more frugal lifestyle (this is not to say that Jason is not frugal).

I think he has a lot of buffers but he chose to compartmentalize it away. For the time being, he could cash flow from his dividend portfolio. However, he is pretty clear that he is in the stage where he would rather reinvest the dividends so that the portfolio will be able to grow.

I do wish Jason all the best in his new job. If you look at his finances, it is in tip-top shape. Cleared off his mortgage, build-up a portfolio that allows him to do career transition.

If You Solely Depend on CPF for Your Retirement, You May Not Be the Best Person to Manage your CPF

A certain Clifford Theseira decided to follow a certain Toh Thiam Hock’s footsteps by complaining about his CPF on social media.

Mr. Thesiera complained that his CPF payout of $575 a month is rather measly and not enough for his wife and himself to live on. He would have to drive Grab to supplement and at 72 years old, he might not be able to drive for long.

So CPF came up with a swift rebuttal on a Sunday (!)

There were some who felt that CPF should not be opening up the people’s details to respond this way. However, what were they suppose to do when it seems Mr. Theseira wishes to use his own situations as evidence of our CPF’s failure?

CPF revealed that $140,000 was withdrawn from his CPF since he turned 55 and that the Medisave contribution from his pay would be 1% of his monthly income.

Here is my guess. There is a few information not reveal to us at this point but I believe Mr. Theseira pledge his 5-room flat so he set aside half his minimum sum (the old scheme) which goes into his CPF retirement account. Upon turning 55, about $140,000 was taken out. At the same time, he also had $60,000 in his CPF Medisave.

If you ask me, that does not seem like a person who does not have much money.

In February this year, Josephine Teo provided some figures on how much older Singaporeans are getting from CPF Life and Retirement Sum Scheme. It looks like what Mr. Theseira got is much higher than the average.

To top that, the Medisave is super healthy.

I think Mr. Theseira have inevitably showed what a “success” the CPF has been for Singaporeans like himself.

TOC came up with a rebuttal to CPF’s response:

Of course, the CPF Board did not disclose that from 55 to 65, there is no payout from one’s CPF Life. To survive, one will either have to work, assuming he can find a suitable job at the age of 50s to 60s, or to start using his withdrawn CPF funds from 55 to 65 to survive.

Assuming Mr Theseira used up the $140,000 from 55 to 65 before getting his monthly payouts of $575 after 65, on average, he would be surviving on $1,170 per month for both himself and his wife during the “lost decade”.

This is, in fact, a sum already less than the minimum $1,379 a month by a study for a single elderly aged 65 and above, in order to attain a “basic standard of living” in Singapore

– The Online Citizen

Even the SDP decided to jump on this bandwagon and criticize the government on the CPF:

The SDP also questioned, “To date, the Government has refused to provide data on how many individuals squander their savings and turn to the state for help. Does the number warrant a blanket punishment for the vast majority of retirees like Mr Theseira who are responsible and astute managers of their own funds and lives?”

“Another crucial question that the PAP must answer is why at the age of 72 must Mr Theseira and others like him continue to work to support himself and his wife?

The answer, if the PAP cares to admit, is that many retirees are now asset rich but cash poor. In simple words, Singaporeans have had little choice but to use their retirement savings during their working years to pay for their HDB loans.

These loans are often stretched to 25 to 30 years because of the inflated prices of the flats. When they now have to retire, they find themselves with insufficient savings”, they added.

– SDP

SDP brought up some good points. Home too expensive. Asset Rich Cash Poor. Both are not the CPF’s problem.

It is an Asian mentality problem. We just love properties. And the HDB can be purchased at less than 5 times price to combined income. If you are conscientious, you can finish paying in 12 years.

In fact, I am 39 this year. Most of my friends are like finish paying, almost finish paying and thinking of upgrading to EC. They have a choice. Yet they choose to upgrade. They finish paying for their HDB and decided to upgrade.

I will tell you of another group of people that have to work at 70-year old to support their lifestyle. These are the friends who need $5,000 a month to have “bare minimum living”. They have no choice because that is what they believe in. Whether you are 70, 50, if your CPF is not enough, you gotta find a way to have a residual stream of income.

The beef that Toh Thiam Hock, Mr. Theseira have with the system would always be the shifting goal post, not allowing them to withdraw all their money at 55 years old. Whether they die or not die is none of the government’s business.

But the problem is real. For the better part of 30-40 years, if they have not been able to engineer a more comfortable situation for themselves at age 50 or beyond, what are the chances that they are likely to be able to manage their wealth well when they get all their money at age 55?

Put it another way, if you complain that you can only depend on your CPF money, I shudder to think if I were to let you have all your money at age 55, where would you put it to, so that your savings interest can beat the 4.78%?

The 2 Main Problems of FIRE in Singapore

Someone asked me about my thoughts on a Financial Trainer’s hard-hitting article on 2 main problems of FIRE in Singapore.

Here is the summary:

  1. You cannot estimate your expenses. Your expenses will rise from $50,000 to $100,000. You need other residual income
  2. Inflation in Singapore have been rather low. We are underestimating. You need to have 20-30% buffer
  3. 4% withdrawal rate based on the fact that the USA is a superpower. When you live in Singapore and you are not a superpower, your returns may be drastically different. If you use 4%, you are being lured into thinking your framework is sound
  4. Bond rates are low. How low can it go? Most likely it will go up
  5. SGD is strong. If you are in a portfolio of S&P 500 and 20 Year Treasury index, your returns may be cut due to forex risk
  6. His solution is an actively managed all-weather portfolio

I think the are valid concerns.

I do wonder how many people really understand how that safe withdrawal rate methodology work.

You might want to find out how to tackle FIRE from him. He has a course and have a solution to this tough monster.

Bond Tent in Singapore Context

Life Finance put out a good article discussing the traditional glide path during wealth accumulation and the bond tent.

The Traditional Glide Path happens when you increase your bond allocation as you approach retirement. This will gradually reduce your portfolio’s volatility over time.

The Bond Tent is a strategy to tackle the negative sequence of return risk.

Life Finance tries to test the bond tent out with Singapore data. I am not sure how much sample he has, but his conclusion is the traditional glide path does not work so well, the bond tent does not work so well.

Based on my research, the bond tent, as elegant as it sounds, does boost the success rate by a lot.

The overall idea is that you need adequate stocks to have a greater chance of lasting a longer retirement duration. But if you have too much, the volatility reduces the success rate. So the allocation tends to vary between 40% to 80% equities. The best result happens when we can ramp up to 60-80% equities in a smaller window.

Overall I think the 60% equity 40% bonds is still the preferred allocation.

Lastly, most people need to look at bonds, not in the traditional sense, but bonds from a total return perspective. Active bond managers are able to gain certain returns by switching to different bonds when the yield curve flattens or steepens. They can choose to find a higher-yielding bond with the same credit quality.

What this means is that it is not a buy and hold, collect coupon game. This means your return will look like an equity fund, which fluctuates year to year.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
  2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for first meeting to understand how it works

How to Generate Regular Income from No-Income Funds

by Leave a Comment

On some occasions, I feel the need to write some articles over at Providend.

If they benefit Investment Moat’s readers, management is OK for me to share them over here.

We observe certain misconceptions that are rather pervasive when it comes to funds our clients held, what we recommend to them, and what they are considering to purchase.

The really popular produces are the First State Dividend Advantage kind of distributing unit trusts. This is pretty similar to a Lion-Phillip S-REIT ETF, which is a distributing ETF.

What is common among the unit trust and the ETF is that both provides a dividend income. For investors that are nearing retirement, they have this idea that their portfolio would need to be filled with stocks, bonds, unit trust, ETF that distributes income.

That is why endowment/whole life that provides a cash flow is massively popular as well. Such as this and this.

In my post this week, I have laid out my argument of using a dividend only income strategy.

This post explains to readers how an accumulating fund can also provide regular income that you need in your financial independence days. An accumulating fund is a fund that does not pay out an income. The dividend income or interest income the underlying shares earned are reinvested back into the fund.

The way to do it is to sell the units when you need them.

Suppose we have a $1 million portfolio, and we spend an initial amount of $35,000 in the first year. For subsequent years, the previous year’s spending is adjusted to prevailing inflation rates.

We invest this portfolio in a 100% DFA Global Core Equity Index with a total annual all-in cost of 1%.

We start off with 1,000,000 units valued at $1 each.

Every year, we sell the equivalent of the annual expense worth of units.

The following illustrates how this portfolio will live through the 29-year period of 1989 to 2018:

Click to view larger image

This period has 3 bear markets. The average compounded returns is 5.68% net of cost. Average inflation is 2.5%.

The portfolio ends up back with $1.1 million.

The investor enjoys inflation-adjusted income from $35,000 to $71,634 at the end of 2018.

I doubt its easy for you to find a low-cost product that gives you inflation-adjusted income over such a long period.

We can see that the 1 mil units held gradually fell to 237k units but the price rose from $1 to $4.96.

The point I wish to drive across is: Separate the financial planning function from the investing function.

The fund does not know you so why should it carry out the financial planning part of figuring out how much income should it give out to you be sensible?

It should focus on the execution of the strategy, keep costs low, rebalance in the most efficient manner.

Read the Rest of the Article here >>

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
  2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for first meeting to understand how it works

The Story of One Sibei Old Ship

by 9 Comments

There is a ship in trouble and everyone seem to be talking about it.

The Edge Magazine ran an article titled Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair.

Basically, Eagle Hospitality Trust (EHT) a REIT with full-service hotel assets in the United States owned a ship called The Queen Mary. It is an old ship. If you multiply Kyith’s age by 2 and it will still be older than Kyith.

Anyway, the ship is moored in the harbor and tourists, locals can stay in the 347 rooms and have fun there.

The Queen Mary Long Beach was acquired in Apr 2016 by Urban Commons and this year sold into Eagle Hospitality Trust.

There are 347 rooms, 1600 parking lots, 80,000 sq ft of meeting room spaces.

Owning the ship is one thing, but another aspect is the land surrounding where the ship is anchored.

The City of Long Beach holds the land title and lease it to Eagle Hospitality Trust (EHT) for 66 years. This land has the potential to be developed or subleased for other purposes.

Urban Commons (UC), EHT’s sponsors, lease the ship and the areas around, from EHT as a master lease (officially Urban Commons Queensway LLC).

The master leased tenure is 20 years + 14 years. The ship is moored at an X flood zone area which means there is minimal to moderate chance of flooding in this region.

The majority of the rent is fixed, with escalation, plus a variable component computed as 8% of the Gross Operating Profit.

The Queen Mary is a significant contributor to EHT’s bottom line and net asset value.

Unlike the rest of the hotels in the trust, Queen Mary is operated independently and the operator is Evolution Hospitality, a subsidiary of Ambridge (which operates the other EHT hotels)

In Nov 2016, Urban Commons and the City of Long Beach started a large scale improvement plan addressing both structural items at the property as well as repositioning and reopening unused public and revenue-generating spaces. This includes meeting spaces, restaurants, and attraction venues.

A total of US$23.5 mil is spent by Urban Common before the IPO. This was matched by US$23 mil spent by the City of Long Beach.

The money is spent repurposing of unutilized public spaces and structural works.

There was disruption during this period to both business and therefore, revenue. However, as work slowly competes, the revenue and profit margin slowly got better.

EHT’s purchase consideration was US$ 139.7 mil. The valuation is US$159.4 mil. (looks like we got a steal there, or….)

What is the Fuss About?

In the Edge Article, the City of Long Beach’s economic development director John Keisler said the operator (Urban Common) may lose its 66-year lease agreement if it fails to meet its obligations.

Since 2016, both the City of Long Beach and Urban Commons have sunk money into repairing it. However, inspection done by Independent inspector Edward Pribonic has shown that the condition of the ship is getting worse.

The article also states the following:

Three years ago, Urban Commons is reported to have taken on the lease despite a marine survey that unveiled that the ship’s deteriorating condition was “approaching the point of no return”.

 According to that report, the total cost of ship repairs could range from US$235 million ($320 million) to US$289 million. In addition, it estimated that the work would take approximately five years to complete, with some 75% of repairs deemed “urgent”.

Keisler keep sending a letter to Urban Commons’ CEO but he had yet to respond.

Now if EHT loses this 66-year lease, it will effectively means US$159 million (the Queen Mary’s valuation) goes up in smoke.

Thus there is volatility in the share price.

How Should We Look at This

This is a tough cookie and in investing, we have to make decisions like these (so it makes you wonder how passive this income is).

The thing we need to ascertain is whether this is a long term problem or not. My take is, I don’t think it is.

But I cannot be totally sure, like most of the things I come across.

The first thing I think about is just write off the whole ship and see whether the valuation is attractive.

How the Financials if we Take Out Queen Mary

In the 2nd quarter result, EHT’s distributable income records about 36 days of operation. If we annualized it, we get around US$56.7 mil. Queen Mary is forecasted to contribute US$12.5 mil in rental income for FY2020.

This works out to be US$44.2 mil.

With 868 mil outstanding shares, the dividend per unit after excluding Queen Mary would be about 5.1 cents. The dividend yield based on the last share price of US$0.545 is 9.3%.

Hospitality properties tend to have more volatile rental earnings because a large part tends to be based on revenue. Thus, they should command a higher yield for margin of safety. Perhaps 7-8%.

Given the overseas property and difference in currency, we can add 1% to it.

Thus 9.3% in dividend yield looks fair.

The other aspect is the net asset value.

EHT has a total asset of US$1353 mil and total liabilities of US$579 mil. Out of this liability, US$497 mil is debt. Cash comes up to US$67 mil. The investment property comes up to US$1200 mil

Queen Mary is last valued at US$159 mil.

The debt to asset of the whole trust is 48%. If we take out the cash then it’s 46%. If I don’t take all the liabilities but only interest-bearing debt, the debt to asset is 41.6%. From what I can see, Queen Mary was not used as a collateral to secure any of EHT’s loan.

But from the prospectus, there should be loan covenant should the trust breach certain debt to asset ratios. This will eat into the dividend. There is also the need for a REIT to try their best not to be overly leveraged.

The revised NAV is US$0.70. Thus EHT is currently trading at a 22% discount to this NAV.

Based on this, it is a bet whether someone is making a mountain out of a molehill.

Urban Common may have Realize this is Bigger Than

What they originally anticipated. Keisler explained more about the situation in an Oct 10 article.

Keisler said Urban Commons has pushed back the timeline as it works to navigate the complicated regulatory process, but the company has been clear that it intends to move forward with the project.

“One of the challenges in the short term is they’ve realized how complicated and expensive the ship is and how complicated the development environment is,” he said. “But they’re indicating that they’re still all in, and now they’re looking at how they can make it work.”

Sometimes I feel that folks like Keisler are trying to put this in the news so that Urban Commons can expedite things. I wonder how this would look on his resume if this whole thing fails on his watch. It is as if he is trying to show his guys or the people that “Hey, look! At least I am trying to do something to expedite the thing!”

After the update yesterday evening (28th Oct), I am still very confused about what is Mr. Keisler trying to do. Is it because Urban Commons is not doing a good job keeping up with the repair timeline or they have a change of heart and Mr. Keisler would like some public pressure to keep them obligated to go through with this.

Responsibilities of EHT and Urban Commons

How much contingent liabilities could EHT suffer from?

Here are some information on termination of agreement gathered from the EHT IPO Prospectus:

Termination Events

The master lessor and lessee can both terminate the agreement, in the event of the following:

  1. material damage to the premises or
  2. the whole or part(s) of the premises is condemned by any public or quasi-public authority, or private corporation or individual, having the power of condemnation so as to make it impracticable or unreasonable in the Master Lessee’s reasonable opinion to use the remaining portion as a hotel of the type and class immediately preceding such compulsory acquisition

EHT, the master lessor can terminate in the following conditions:

  1. EHT sells and assigns its interest of the premises and pays the master lessee a termination fee equal to the fair value of Master Lessee’s remaining term
  2. In the event of default of rent
  3. In Queen Mary case, termination of the ground lease

It feels to me, that UC can terminate this master lease agreement if the City of Long Beach condemns them.

The question is after that, the ship is returned to EHT. Is EHT liable for anything else (such as their commitment to repair the Queen Mary)?

This is an area that shareholders can seek clarification from management.

Update on 28th October: Eagle Hospitality Trust provided some answers to the queries by SGX. In the answers, EHT updated that should Urban Commons break the master lease, the amount of repair that EHT is liable for contractually is US$7 million.

That is a pretty manageable sum.

Someone at Valuebuddies also posted an update from Kiesler to the Acting City Manager of Long Beach on the progress of Queen Mary projects and Long Beach Cruise Terminal Domes. This was sent in September 2019. You can read it here.

It contains much information about the background of these repairs, what was completed, what is in progress and how much it cost.

The total projects that were completed and are in progress is valued near US$23 million.

In the above section, we can see what the inspector has identified as critical and have asked the lessee (Urban Commons) to start scoping. It comes up to US$7 million.

In the 2 slides above, we are able to see the projected cost of the individual projects and the actual cost.

Looking at this brings back some haunting memories of my old engineering life. We can see there is a fair bit of cost overrun. This would probably be what Mr. Keisler mentioned as a more challenging task than anticipated.

I am no expert but based on this, it looks like this is work in progress in an effort to ensure the ship does not sink. While there are many red areas, I guess this is what the repair is supposed to achieve.

Here are some of my conclusions:

  1. The CAPEX required is not to get the ship into sailing state. Rather it is to ensure that the whole thing is safe
  2. There is a lot of work to be done
  3. Majority of the work is work-in-progress or completed
  4. There are some cost overruns
  5. These should be funded by the existing CAPEX of US$23 mil. Not sure who will bear the cost overrun. Based on my project management experience, costs should be shared by the vendor and the client. In this case the City of Long Beach and Urban Commons
  6. Urban Commons have just received money from the IPO of EHT. They should still have funding for this
  7. Based on the agreed work-to-be-done it does not seem like it will come up to US$200 mil.

How Eagle Hospitality Trust Could Recover or Die

In investing is not just about looking at things in a dualistic manner. It is thinking through what are the outcomes and how we can benefit or risk manage our position.

So here is how I look at things.

I think the repair job keeps progressing it should be OK. I am not certain Queen Mary is going to be a good experience. If you read the next section, I wonder if Evolution Hospitality, a subsidiary of Aimbridge, the operator of the hotels are the kind of folks you want to provide good customer experience.

The one who appointed them should be the sponsors. At this moment, these issues would result in investors giving the management negative points. And management is one of the key factors in assessing whether a REIT is quality or not (along with the future business, economic outlook of the area of operation and valuation)

I lean towards that EHT is not a good long term hold there.

Next, we think about the short term. How would this play out?

If the Queen Mary defaults, and EHT loses the 66-year land lease, then we can write off that part of the value and rental income.

Share price might spiral when there is dilution without accretive acquisition.

Even without the contingent liability, EHT is also very close to the 45% gearing limit. To be more sound, they might need to call for a rights issue to deleverage. That would kill the share price as well.

In this scenario, management would not be seen in a good light. It will be challenging to get any form of share price support.

The above scenario at this point seems unlikely to me.

The opposite is the share price will stage a recovery. But to what level? This will depend.

EHT’s share price is at a stage where people are asking a lot of questions about it and they are not giving good answers. Without strong support from investors share price will continue to languish.

Over the long term, even if this issue is behind us, the hotels in EHT would have to show some great results. This is to give investors confidence this is not a scam REIT or someone dumping assets into it.

Good results leads to share price recovery. This would make acquisitions easier. This is a favorable scenario.

So How is the Actual Condition of Queen Mary?

I have no idea. The air ticket to America is a bit pricey plus I do not have much leave days.

But if you are interested, take a look at TripAdvisor and see what the visitors say.

Here are some interesting ones:

I was a little bit anxious about staying on the ship. I’d heard reports that it had been ruined a bit and lost some of it’s character but that’s not the case at all. You actually feel like you have stepped back in time as you walk on board.
Sir Winston’s Restaurant is very good and the bar is adequate and there is plenty to see on the ship in the way of history. I didn’t take a guided tour but the ones I happened upon seemed very informative.
The bed was super comfortable but the room was not very soundproof. We endured the ecstasy of a couple in the next room for the best part of a minute. We almost applauded.
I think you could describe the stay as an experience rather than out and out comfort but we did enjoy the stay.

Sep 19

The Queen Mary was a beautiful ship, especially the elegant wood used everywhere. A gorgeous piece of history has descended to chairs with holes, duct taped floors, dirty carpeting. I only hope that future plans for this stunningly appealing ‘idea’ (who doesn’t like the ‘idea’ of visiting wonderfully restored parts of history?), are to completely refurbish the entire place. That would be a great thing!

Oct 19

Great experience! – Check in very smooth. We stayed in an outer stateside room and what you would expect from the time very traditional fittings and decor. Room spacious and quirky. The ship itself steeped in history. Observation deck great for a drink. We ate in Winston Churchill restaurant and couldn’t have been treated better. Beef Wellington was amazing. Celebrated wedding anniversary and they brought cake, chocolate strawberries and decorated chocolate which was a lovely surprise. Check out was seamless.

– Oct 2019

No hot water and staff lied to me about it – At check-in I inquired about upgrading to a harbor view room. I was told I could for $20 a day. I gladly paid the $20 and upon arriving to my room discovered that there was no hot water. I went back to the front desk to ask about this and was told all cabins in my section had no hot water and that they’ve been working on it all day. The next morning on before checking out we left our room and overheard an employee asking on the radio when they are going to start fixing the water because people have been asking him. So it turns out they never had anyone working on it and lied to me at the front desk when I went back to inquire about it. On top of that the front desk agent failed to even mention to me there was no hot water if I upgrade and just allowed me to upgrade to presumably boost her numbers. This is insanely bad customer service and I would urge everyone to not stay here.

The no hot water can be excused because it’s an old ship and stuff happens. What bothers me is that the lady at the front desk never once thought to tell me that there was no hot water if I upgrade and pay more and also lie to me about it being fixed.

Oct 19

I will say first that if you want to experience staying on the ship you should. But we found the bed was super small and the walls were super thin. The room was clean, but the shower was too short, which I feel like is more the era but worth knowing. We also got so many hidden fees it wound up costing quite a bit more than the original quote. It was unique and the ship itself is very beautiful and full of so much interesting history.

Oct 19

The general feeling you get is that this ain’t the best functioning hotel, this ain’t the best experience when it comes to hotel stay and people tend to really like visiting it and staying there.

Ok that is enough blabbering about this ship.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

  1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
  2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
  3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
  5. Free Stock Portfolio Tracking Google Sheets that many love
  6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
  7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for first meeting to understand how it works