Analysis of ESR REIT – Transiting into the league of big boys.

ESR-REIT is currently my biggest holdings with about 329,000 shares worth about $166,000. It is earning me a monthly dividend of $1,100 which helps to pay a lot of my bills. This is because of the merger earlier with Viva Industrial Trust where most of my holdings in Viva Industrial Trust is converted to ESR REIT (and coupled with my original holdings). It looks a lot so may pare down but let’s take a look at the statistics first.

With a yield of 8.37%, it is quite attractive. In fact, REITs with similar size (Ascendas REIT, Mapletree Logistics Trust, Mapletree Industrial Trust and Frasers Logistics Trust) are yielding at a range of 6-7%. Moreover, they are trading at a slight discount while its peers are trading at a premium of 20% on average. Thus, looks like when the synergies are completed, the market will realize its value of being among the big boys and its price should move upwards. A comparative price level should be about 60 cents which gives an upside of about 20%.

I am more concerned whether there are downsides which I still can’t find any as of now so I am holding on to my shares at the moment. They are giving a nice dividend so no complaints about it. Maybe after the price increase then we look at offloading. Do note that it will take some time and I believe it is about a year for it to go up to 60 cents.