The reasons I invested in this REIT was because Japanese Yen has been undervalued for many years. I was hoping that its appreciation will bring about interest in Saizen Reit. The fact is, Japanese Yen can continue to be undervalued for another 20 years.
Secondly, the housing ownership cost in Japan is too high (land scarcity) and risky (frequent earthquakes), hence renting accommodation in Japan is a more viable option in my opinion. This is a valid point as the annual report shows growing revenue and higher occupancy rates.
Thirdly, I was also inexperience and gullible to believe the prospectus of the 6.5% annualized yield! In actual fact, the yield will only be 4.67%.
Fourth point, based on historical records on Singapore listed REITS (at Sept 07), many did not incur losses upon IPO launches. I thought it was a “safe” investment. Again, Japanese property was an unfamiliar property play compared to Suntec, Capitalmalls and F&N commercial properties. It was a poor historical comparison on hindsight. The greed of selling it for a quick gain also did me no good.
Saizen Reit issued units as management fees which means that there will be large horde of selling the units for cash. This is a bad move by the management. This is one of the reasons I can think of for its share price volatility, other than the current bear market.
The good thing is that I will be receiving dividends. I will not be selling it as I want to remind myself of this mistake and also to hold it for its miserable semi-annual dividends. To be fair, the loss is less than $1000 dollars, representing only about 0.3% of my overall portfolio. The loss is unnecessary but I believe I will learn, grow and move on. Also, as long as the return on this investment is higher than 0.5%, it is better to keep it than realise the loss. Afterall the $2,000 I had invested last year will probably be idling in UOB current account anyway. Some consolation for me!
NO IPOs for me for the next 2 years!