Analysing REITS

[thor666]

http://www.valuebuddies.com/showthread.p...#pid116898

Just as we were speaking of risk...


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[greengiraffe]

http://www.straitstimes.com/business/inv...-singapore

Reits prospects in US, Britain outshine outlook in Singapore

Two First State Investments executives tell Jeremy Koh about the firm's strategy and the outlook for Reits in our series featuring fund managers and leading market experts.

The real estate investment trust (Reit) market here offers decent returns, but prospects for the markets in Britain and the United States are more promising, according to First State's Mr Stephen Hayes and Mr Tim Shaw.

[SpeedingBullet]

Hey guys got an accounting question:

In the US, REITs are subjected to GAAP metrics so the D&A charge on their cash flows are massive(on their investment ppties), that's why they have to use FFO to get rid of the noncash distortion.

For SG, I see that many REITs' D&A charges being very small, CMT for example has a D&A charge usually abt a million or two. So is our accounting treatment for depreciation of ppties different from American REITs? Thanks

[Boon]

Hey guys got an accounting question:

In the US, REITs are subjected to GAAP metrics so the D&A charge on their cash flows are massive(on their investment ppties), that's why they have to use FFO to get rid of the noncash distortion.

For SG, I see that many REITs' D&A charges being very small, CMT for example has a D&A charge usually abt a million or two. So is our accounting treatment for depreciation of ppties different from American REITs? Thanks

Hi SpeedingBullet,

Please refer to post #305

http://www.valuebuddies.com/thread-422-p...l#pid88529
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[Boon]

Pressure seen on property trusts after buoyant year

Grace Leong
[Image: st_pub_logo.png?itok=Z0_RHaLC]
Saturday, Jan 2, 2016

http://news.asiaone.com/news/business/pr...oyant-year

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[Bw2015]

Junky analyst trying to talk down the prices only lah .

All the S-REITs are still solid as a ROCK !
The average return of 5% to 8.5% is so much better than the
propaganda Singapore Saving Bond with miserable 1 ~ 2.2% return.

Is the S-REITs so bad now?

OCBC warns S-REITs may reap 'almost no total return' until end 2016

SINGAPORE (22 July): OCBC Research warned investors on Tuesday about the performance of S-REITS, urging them to reallocate their capital as they may achieve “almost no total return” from now until the end of next year. More worryingly, investors may be hit by a rapid initial capital loss as prices fall, before subsequently recovering to par on dividend gains.

The broker expects rising interest rates in the US and declining distributions growth to make the risk-reward of the REIT sector "unfavourable”. The prospect of rate hikes will prompt investors to shift from seeking yields to capital preservation.

With this in mind, it recommends that investors practise bottom-up stock picking in the sector and "active capital reallocation into high-end developers and real estate players in strong growth segments" such as high-end homes, logistics facilities and data centres. It likes developers of high-end properties such as Wing Tai, Wheelock and OUE instead. It also likes Global Logistics Properties, which builds modern logistics facilities in China and Brazil where supply is not enough to meet demand from rising e-commerce.
...
http://www.theedgemarkets.com/sg/article...l-end-2016

I am in between on this. Hold both ascott and mlt and seeing their gearing go up, revenue per unit/sqft go down. Not likely 0 return for particular reit but if looking at s-reit sector as a whole, there might be that possibility. Some of the reits are particularly weak... Take caution.

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actually looking back to 2011, 2013, when people fear interest rate hike that could kill reits...
till now 2016, people still fear the fed might rise hike..


but when we look at 60-70% of the reits, if not more - they are holding on well (in fact so well)

by looking into the quarterly reports, we already know how many reits manager already taken mitigation actions. very low percentage of the loans are expirying within 2016/17. and most of them are in fixed rate.
fed for the whole of 2015 increase the interest to 0.25%..
if fed want US to collapse, they try 3 shots of 0.25%... - one more shot in dec is already enuff.

[Bw2015]

Not sure this table helps in this context. Why are we measuring REITs by capital gains ? People who invest in Reits go for yields. We can try to time our entry but if you are out for a period of time such as cash, the time for waiting is your yield loss too.

Furthermore for Fed to taper, the economy has to be much stronger which may also mean better rental price to keep a closer pace with rates up.

thank you for the insight. i went to your passive income page
very impressive.
30,000 is like a normal person salary

[swakoo]

actually looking back to 2011, 2013, when people fear interest rate hike that could kill reits...
till now 2016, people still fear the fed might rise hike..

Over the past 5 years (2011-2016):
- the STI index (green line) is down about 12%
- the Singapore reit index (blue line) is up about 10% (before dividends), not too bad for all the fear of interest rate hikes over the 5 years

[Image: sg%20reit%20vs%20sti%20chart2_zpsk1j4hzta.gif]

[Bw2015]

actually looking back to 2011, 2013, when people fear interest rate hike that could kill reits...
till now 2016, people still fear the fed might rise hike..

Over the past 5 years (2011-2016):
- the STI index (green line) is down about 12%
- the Singapore reit index (blue line) is up about 10% (before dividends), not too bad for all the fear of interest rate hikes over the 5 years

[Image: big.chart?nosettings=1&symb=FSTAS8670&uf...mocktick=1]

[CityFarmer]

I read the article, which might be interesting to some VB here.

(not vested in any REITS)

15 Singapore REITs that made you money if you invested from their IPO

In 2011, Teh Hooi Ling wrote an intriguing article ‘The REIT Myth Busted’ on The Business Times. She pointed out among 17 REITs with a listing history of four years, 14 of them issued a cash call (rights issue). Teh stated that for many of the REITs, their cash calls exceeded the dividends paid to shareholders. In other words, whatever the REITs pay out in dividends, they ‘take it back’ in the form of rights issues.

Calvin Yeo, a REIT investor, responded to Teh’s article with his own ‘Is the REIT Myth Busted?’. He pointed that Teh’s article does not consider that an investor can choose not to subscribe to the rights issue. An investor basically also has the option to sell the nil-paid rights, which are given free, to earn additional income. Of course, by doing that, the investor must be prepared to have his shares diluted.

So do REITs really offer a steady stream of dividends and overall gains – even if they issue rights time and again?
...
http://www.theedgemarkets.com/sg/article...-their-ipo