Tenaga and IRB

Tenaga Berhad is government linked corporations. It was recently slapped with tax bill of 2 billion ringgit.

It is a big amount for any corporations, and knowing that it is a GLC, it is a very rare incident.

Could not help but think it is related to its lowest bid for the 1MDB assets.

At any instant, there are competing interest within the government, and the tax bill is probably a long time coming, but is not issued until the failed bid.

Some man in the corridor decided that it is time to teach the management who is the boss.

Two reasons I am getting out of Atrium REIT

Atrium has just sent the latest dividend cheque. Instead of the regular 2.2 sen, it went down to 1.8 sen.

Atrium is an industrial property REIT, that pays quarterly dividend. I kept it because it pays higher yield than the fixed deposit, a better option that keeping the money idle.

I started unloading the counter because of two reasons.

Income is deteriorating
One of the property is currently vacant, and management is currently working with the property agent to find a new tenant. The vacancy left the operating income lower by 20%. Now this is part and parcel of the property business and they probably will get a tenant in the upcoming months. But what really puts me off is ...

Operating income is increasing
The manager attributes this to the increase of "management fee" due to the higher NAV, which was due to the higher revaluation gain. A property could go up in value, which is all fine and dandy, but the value will not be realized unless there is a sales transaction. It is like an unreliazed gain in equity investment. Everything is on paper until a sales is done. How could the management rewards itself when the REIT has to cut dividend to its shareholders?

It is of course their right to charge 1% of the management on the asset under management, but when the asset is not performing, which means they are not doing their job well enough, where is the justification for higher remuneration?

I do not know about anyone else, but this is it for me to exit.