Analysing REITS

[peter88]

Guess many companies will consider WFH to save costs in office space , utilities and etc. If now during lock down is workable , why not in the future ?

[moneywormhole]

Mainly look at yield as I only invest in REITs as a safe haven. However, lately i dont think many are in good enough shape to distribute. Thinking of going to cash unless there are better options!

[donmihaihai]

REITs look interesting and provide better return now even with some recovery of price compare with before covid 19. Yield is a function of payout and price. Price is what we can buy now and yield is what REITs can distribute in the future.

[weijian]

This article contains a snapshot P/B for most of S Reits and so I thought it might be beneficial for VBs.

Challenges and opportunities for hospitality Reits in the post-Covid race

https://www.businesstimes.com.sg/propert...covid-race

[CY09]

I have my own coverage on the office spaces REIT and based on SGX data, some are much lower.

On a P/B basis, it seems UK is priced at the least discount while both Singapore and US office space are priced at fairly distressed level with the US office REIT pricing at an additional factor of having dividend yields greater than 10%. For example, PRIME REIT is being priced at a forward dividend yield of 14% (assuming they only distribute 90% of income avaliable for income distribution)

Elite Commercial Reit
0.8
Keppel Pacific Oak US Reit
0.6
Keppel Reit
0.6
IReit Global
0.6
Prime US Reit
0.45
Manulife US Reit
0.45 (after reported revaluation loss of 10.9%)

[dreamybear]

Personally, I am of the view that we are going into an extended period of "not as low" interest rates.

Might be useful to consider the "Sea Change" memo in conjunction with REITs investment.

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S-Reits losing appeal: Average yield of 6% is not good enough
https://www.businesstimes.com.sg/wealth/...ood-enough
"....Also, the yield spread between the S-Reit sector and the Singapore 10-year government bond remains at a multi-year low, implying that investors are compensated with a lower risk premium.

In our view, investors should be expecting a yield of over 7 per cent from S-Reits overall, based on the historical yield spread and the 10-year government bond yield. Today, S-Reits offer a forward distribution yield of only 6 per cent. The downside is that share prices could correct by at least 10 per cent....."

https://www.oaktreecapital.com/insights/memo/sea-change

[EnSabahNur]

A list of upcoming REIT results/updates announcements

https://adragonhoard.blogspot.com/2023/1...ments.html

[Choon]

Personally, I am of the view that we are going into an extended period of "not as low" interest rates.

Might be useful to consider the "Sea Change" memo in conjunction with REITs investment.

----------------------

S-Reits losing appeal: Average yield of 6% is not good enough
https://www.businesstimes.com.sg/wealth/...ood-enough
"....Also, the yield spread between the S-Reit sector and the Singapore 10-year government bond remains at a multi-year low, implying that investors are compensated with a lower risk premium.

In our view, investors should be expecting a yield of over 7 per cent from S-Reits overall, based on the historical yield spread and the 10-year government bond yield. Today, S-Reits offer a forward distribution yield of only 6 per cent. The downside is that share prices could correct by at least 10 per cent....."

https://www.oaktreecapital.com/insights/memo/sea-change

Doing a quick survey: If SG Govt 10-yr Bond is giving a 4% yield, how much would VBs require for a dividend yield for stocks / reits?

[weijian]

Doing a quick survey: If SG Govt 10-yr Bond is giving a 4% yield, how much would VBs require for a dividend yield for stocks / reits?

As per Prof Aswath Damodaran, the equity risk premium for Spore is ~5%.

https://pages.stern.nyu.edu/~adamodar/Ne...yprem.html

So on average, the average yields (whether dividend or earnings yield) would probably be risk free rate + 5%.

[specuvestor]

When the world was at zero interest rate, equity return doesn't seem to be lower. In fact anything that SOUNDS like an asset went up. So I am not a fan of Risk Free rate + equity premium

As risk free rate goes up I think annual return would actually come DOWN but also normalises to sustainable real return

On a theoretical basis I don't think 10 year risk free is good gauge in any case. I think 12 months sounds more reasonable for an average equity investor nopportunity cost timeframe

But for REITS they do have a mathematical link with bond return as opportunity cost. In theory it should be higher than bonds not because of equity premium but bonds go to par while lease go to zero