Analysing REITS

Stumbled on some old articles on SREITs in SGX site. Looks like other regional REITs are giving even lower Yields. Perhaps mainly due to lower borrowing interest rates here??

From 6-Mar article, some extracts,


Singapore REITs maintain region’s highest yield

■ As of 28 February, the FTSE ST REIT Index maintained a dividend yield of 5.32% and twelve-month historical volatility level of 8.41%.
■ As of 28 February, this dividend yield was the highest of the comparative regional indices. In addition, the volatility of the FTSE ST REIT Index was almost half the volatility shown by the FTSE EPRA/NAREIT Hong Kong REIT Index.

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From 4-Jan article, some extracts,


Singapore REIT’s maintained lowest volatility

■ Over 2012, the FTSE ST REIT Index gained 46.05% while maintaining the lowest volatility of the year to comparative regional and global REIT Indices.
■ As of the end of 2012, the FTSE ST REIT Index also maintained the highest dividend yield among the comparative REIT indices.


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(17-03-2013, 01:11 PM)felixleong Wrote: why reputation is impt here?
here is not sammy boy forum wor hehehe

haha, it is interesting cos it is like when you play computer games and you level up, i believe you feel the same

A rather "bullish" reporton S-reits, but if you read closely, the writer does try to "hint" on the risks ahead...

http://www.remisiers.org/cms_images/rese...130328.pdf

(28-03-2013, 11:03 PM)Greenrookie Wrote: A rather "bullish" reporton S-reits, but if you read closely, the writer does try to "hint" on the risks ahead...

http://www.remisiers.org/cms_images/rese...130328.pdf

"Bullish" viewpoints on rising interest rate too - potential benefits could outweigh increase in interest expense.

Debunk the misperception on rising interest rate
Since we are discussing the yield in the context of income stock, one will wonder how rising interest rate affects the price performance of S-REIT. It is conceivable among investors that interest rate hike will crimp profits because of higher interest expenses resulting in lesser DPU. In this instance, some investors may think it is time to take profit and exit from REITs.

On contrary, investors should hang on to their REIT holdings when interest rate “starts” to creep up. Why do we say so? REIT managers usually cap their gearing ratio up to 40%- 45% which limits the extent on borrowing costs. Some of these loan interests are in fixed rate term while floating rate loans could be hedged through interest rate swap to reduce the exposure in interest rate fluctuation. Hence, rising interest rate may not have an immediate impact on the SREIT until the next extension of hedging derivatives and refinancing of loans take place.

In general, the period when a central bank starts to raise interest rate is when the economy is on the road to firm recovery. Further interest rate hike will be used to tame the inflation in the wake of overheated economy. As Singapore economy does not heavily depend on domestic consumption and thus it does not adopt interest rate policy to dampen inflation but rather using currency as a tool to reduce the cost of imported goods. To monitor the possible interest rate hike in Singapore, one has to watch closely to the SIBOR which is closely pegged to US fund rate.

Because of its open economy, Singapore will largely benefit from the spillover effect during a global economic recovery. In such situation, demand for property space is expected to increase and may even outstrip the supply. Thus landlords are emboldened to raise the rents and it should be able to offset the higher interest expense. On the flip side, DPU may suffer in the event of oversupply. However, at the point of writing, we do not see a supply glut in any of the Singapore property sectors

as with every thing with interest rate, what is important is how fast the changes take place for business to make adjustments. usually it is worse when the speed of adjustments become too fast.

All i know is i don't want to hold any REITS if bank interest rate is > than 3%. if it's > 5% than i may start looking at which REITS to buy. (If my guts are still intact).

This article smacks of vested interest! He is lauching a fund targeting REITS in Singapore, to be sold to the RETAIL investor - of course he is bullish on REITS! Someone should really point out such articles as being subtle "Advertorials", rather than being informative.

His target of 10% to 12% returns is also a little on the high side. Expectations for dividends are in line with historical norms but the 5% to 6% capital gains per year is rather aggressive, I feel. Having about 25% of your fund in ONE sector (i.e. Singapore REITS) also doesn't show much risk control.

I welcome other views, whether similar or divergent.

The Straits Times
www.straitstimes.com
Published on Apr 14, 2013
Growth-led inflation a boon to Reits: Expert
Fund manager: Their popularity reflects strong property market fundamentals

By Chia Yan Min

Real estate investment trusts (Reits) in Singapore and the region will keep doing well in an environment of growth-led inflation.

The recent popularity of Reits here reflects strong property market fundamentals, said Mr Patrick Sumner, head of property equities at Henderson Global Investors, in an interview with The Sunday Times.

He expects this positive picture to continue.

"Reits tend to do pretty well during periods of inflation, and will continue to do well in a growing economy where inflation is led by growth," he said.

Reits are funds that operate in a similar manner to unit trusts. But unlike unit trusts, which invest in shares, Reits specialise in income-generating real estate assets such as shopping malls, offices and industrial buildings.

They have become a sought-after investment in the current low-interest rate environment, with the additional lure of high dividend payouts.

While Singapore is "quite a volatile market" for Reits, Mr Sumner said the average dividend yield of 5.5 per cent "fairly reflects the underlying risk in real estate, and the prospective growth".

The veteran fund manager, whose team has US$2.3 billion (S$2.9 billion) in assets under management globally, added that Singapore Reits are still valuable relative to other asset classes.

"The spread of as much as 4.5 percentage points versus government bonds is an all-time high, and this gives investors quite a lot of comfort," he said.

He offered a bullish outlook for global property markets.

Low interest rates - a result of central bank policymaking - have fuelled the residential property boom in markets such as Singapore, Hong Kong and mainland China, he noted.

Property cooling measures introduced in these markets have had limited success given rising incomes and strong economic growth, he said.

"In China, there will continue to be very strong demand... most of the transactions are real ones, that is, first homes or trading up," said Mr Sumner.

He added that until the market cools, more property curbs are likely to be on the way for the Chinese market.

The United States market also appears to be staging a comeback, with strong rates of growth in apartment rentals, he said.

Retail sales have been boosted by a recovering housing market, and "the consumer environment remains healthy" for larger retailers.

"The US is in many respects our favourite market, and Reits are in good shape," he said.

Mr Sumner, who is based in London, was in Singapore last week for the launch of Henderson Global Investors' new property fund, targeted at retail investors.

The Henderson Global Property Income Fund, domiciled in Singapore, aims to deliver a return of 10 to 12 per cent a year, half of that from dividends and the other half from capital gains.

The fund will primarily comprise Reits, but will also include a range of listed property securities from around the world. Singapore Reits will make up about a quarter of the fund.

"We want to give Singaporean investors something they are familiar with," he said.

Henderson is working with AIA Singapore and GYC Financial Advisory as its anchor distributors.

"People want investment income that they can't get from cash and bond yields... if they want a diversified portfolio, Reits are, in our view, one of the most efficient ways of doing it."

chiaym@sph.com.sg

the yield on reits really getting lower and lower, I see very little upside left
the target of 10% returns seems okay, but might as well buy an index fund lol

(14-04-2013, 09:36 AM)Musicwhiz Wrote: This article smacks of vested interest! He is lauching a fund targeting REITS in Singapore, to be sold to the RETAIL investor - of course he is bullish on REITS! Someone should really point out such articles as being subtle "Advertorials", rather than being informative.

His target of 10% to 12% returns is also a little on the high side. Expectations for dividends are in line with historical norms but the 5% to 6% capital gains per year is rather aggressive, I feel. Having about 25% of your fund in ONE sector (i.e. Singapore REITS) also doesn't show much risk control.

I welcome other views, whether similar or divergent.

The Straits Times
www.straitstimes.com
Published on Apr 14, 2013
Growth-led inflation a boon to Reits: Expert
Fund manager: Their popularity reflects strong property market fundamentals

By Chia Yan Min

Real estate investment trusts (Reits) in Singapore and the region will keep doing well in an environment of growth-led inflation.

The recent popularity of Reits here reflects strong property market fundamentals, said Mr Patrick Sumner, head of property equities at Henderson Global Investors, in an interview with The Sunday Times.

He expects this positive picture to continue.

"Reits tend to do pretty well during periods of inflation, and will continue to do well in a growing economy where inflation is led by growth," he said.

Reits are funds that operate in a similar manner to unit trusts. But unlike unit trusts, which invest in shares, Reits specialise in income-generating real estate assets such as shopping malls, offices and industrial buildings.

They have become a sought-after investment in the current low-interest rate environment, with the additional lure of high dividend payouts.

While Singapore is "quite a volatile market" for Reits, Mr Sumner said the average dividend yield of 5.5 per cent "fairly reflects the underlying risk in real estate, and the prospective growth".

The veteran fund manager, whose team has US$2.3 billion (S$2.9 billion) in assets under management globally, added that Singapore Reits are still valuable relative to other asset classes.

"The spread of as much as 4.5 percentage points versus government bonds is an all-time high, and this gives investors quite a lot of comfort," he said.

He offered a bullish outlook for global property markets.

Low interest rates - a result of central bank policymaking - have fuelled the residential property boom in markets such as Singapore, Hong Kong and mainland China, he noted.

Property cooling measures introduced in these markets have had limited success given rising incomes and strong economic growth, he said.

"In China, there will continue to be very strong demand... most of the transactions are real ones, that is, first homes or trading up," said Mr Sumner.

He added that until the market cools, more property curbs are likely to be on the way for the Chinese market.

The United States market also appears to be staging a comeback, with strong rates of growth in apartment rentals, he said.

Retail sales have been boosted by a recovering housing market, and "the consumer environment remains healthy" for larger retailers.

"The US is in many respects our favourite market, and Reits are in good shape," he said.

Mr Sumner, who is based in London, was in Singapore last week for the launch of Henderson Global Investors' new property fund, targeted at retail investors.

The Henderson Global Property Income Fund, domiciled in Singapore, aims to deliver a return of 10 to 12 per cent a year, half of that from dividends and the other half from capital gains.

The fund will primarily comprise Reits, but will also include a range of listed property securities from around the world. Singapore Reits will make up about a quarter of the fund.

"We want to give Singaporean investors something they are familiar with," he said.

Henderson is working with AIA Singapore and GYC Financial Advisory as its anchor distributors.

"People want investment income that they can't get from cash and bond yields... if they want a diversified portfolio, Reits are, in our view, one of the most efficient ways of doing it."

chiaym@sph.com.sg

Hi MW,

Philips Securities had launch a SG Reits fund in 2011. They had been putting their factsheet outside their investor centre near my place, so I took a sheet now and then to see their holdings.

http://internetfileserver.phillip.com.sg...534121.PDF

Ever since I took notice of it, the fund size had grown from $6M to current $42M. This shows the interests in dividend play in the local market. This could be the reason why Henderson also want to have part of this pie. As indicated in many brokers' reports, SG Reits is currently still one with a better yield compare with the rest globally, so I not surprise that they allocate 25% in SG. If this fund grows too, I suppose there will be more upside for REITs performance.

wow a SG reits fund, that's very interesting
thanks for sharing man ^^