Jack (not his real name) feels his quads straining as he and his cycling kakis approach the end of the long climb along the reservoir. As they turn into Mandai, they ease up to catch their breath. It is 5:25 am on a cool Saturday morning. Jack and his friends are training for the double century ride to Mersing with the 2010 Charity Bike and Blade this September. 320 km over two days.
Aaron is struggling a little today, Jack notes to himself. The group slows down and is passed by another group – the JoyRiders. Aaron is at a cross road of sorts. He and his wife have been planning to pursue MBAs in the US, even though both are doing well in their respective careers. They must be grappling with their financial resources, after all, a full time MBA is a huge commitment. In addition, the pickup in the property market has prompted Aaron and his wife to consider upgrading their current walk-up apartment. Heavy issues, indeed, weighing on Aaron’s mind.
Jack is an investment manager with a real estate investment trust with a regional mandate. His job requires him to travel more often than he likes. And traveling does not go well with training for a double century. Neither does a family with two young children. Nevertheless, Jack – who took up cycling only two years ago – is determined to train hard to raise funds for the St Luke’s Eldercare Centre.
As the group picks up speed along Mandai Road, Jack’s thoughts returned to the task at hand. Never let up and lose concentration when riding. Too many cycling accidents have occurred on the roads, some of which are caused by errant and drunk drivers.
After the rest stop, Jack takes the opportunity to chat with Aaron as the group takes it easy up Kranji. As it turns out, Aaron is looking to Jack for some financial advice pertaining to the use of CPF funds for property purchases and different financing packages. When they reach Lim Chu Kang Road, Jack can see that Aaron is more upbeat and getting into the groove. Which is a good thing, as the group rides in tight formation to enjoy the benefits of drafting along this windy stretch.
The industrial warehouses along Jurong remind Jack of his recent investment deal that involves a sale and leaseback of a logistic warehouse in another country. The market for industrial and logistic properties is probably ripe for the picking. The past year has been tough for REITs globally. The financial crisis and credit crunch did not leave his company unscathed. There were long meetings with bankers to restructure and renegotiate their debts. Prudent capital management was the key to survival.
In addition, investors were unhappy with the large discounts in REIT price to NAV last year. Acquisitions were challenging as the investment environment made yield accretive acquisitions all but impossible. Which was just as well as deleveraging was the buzz word last year.
This year is a huge contrast by comparison. With the upturn in the stock market, REITs are perceived as good value picks with their attractive yields. The upturn couldn’t have come at a better time, as Jack’s investment team dwindled from 5 to 2 last year as a result of inactivity and rationalization. In the current environment, there are still attractive opportunities to seize if one can manage well the overall weighted cost of capital. If the current level of activity escalates, Jack may have to hire another analyst later this year.
The peloton climbs up the Keppel viaduct. This is one of Jack’s favorite stretches. The elevated ride provides a scenic view, passing the luxury condos and Vivocity. The sunrise is spectacular this morning. It has been said that it is the darkest just before dawn. How apt even for the real estate industry.
Another of his friends, Tim, is unable to ride today as he is busy with viewings. Tim is a successful real estate agent, and the pickup in property prices, especially in the broader residential market, has meant that Tim has his hands full, especially on weekends. How long would the current uptrend last? Is foreign demand fuelling the property market? Are prices too speculative? Is the government intervening too much? Jack makes a mental note to ask Aaron to talk to Tim.
It is now 7:30 am. The ride through the CBD is nice because there’s little traffic on a Saturday morning. The high rise gleaming offices remind Jack of his earlier years as a fresh real estate graduate when he was cutting his teeth in the industry. Those days he spent long hours in his small cubicle in one of those buildings, running and rerunning the numbers on his excel spreadsheet, worrying about all the details that he might have omitted. But Jack has no regrets. He is thankful that he has the good fortune to be in the real estate investment and finance business.
It is now his turn to give back to the less privileged. Which is why he is training so hard on the 100 km round island ride this morning.
It is good to feel the sweat roll off the chin, his heart thumping, his legs spinning and the wind on his face. It is turning out to be a good ride.
*the above account is entirely fictitious and is not intended to reflect any persons, company and events*
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