Question on war chest and market timing

[Temperament]

^ REITS is dying if there is no fresh acquisitions.
In the real world, things wear and tear. If you pay out
your income without upkeep, things will go down.
Only thing keeping asset prices is rising asset prices. If
Asset prices goes south, income cannot mitigate asset deflation
and depreciation. Then that when they ask shareholders to cough up.

Yes! See what happened in 2008/2009 to Reits. Many of them asking for money aka rights issue. And i was daring to subscribe to them all. Some of the Reits, i even dare to subscribe for "extra rights issue". It was done with much trepidation and sickening feelings in the stomach. Now what about those who at that time had no or much capital reserve. i was sure their holdings were diluted then or forced to sell.
So be wary and be prepared if you want to invest in REITS. Though it's nice to have regular DPUs.
Vested in Keppel DC & SPH Reits now.

[specuvestor]

Maybe a good time to discuss my oft mooted 3 layer structure I'm defining self-owned as stay-in HDB, rather than investment properties to simplify. I have stated many times that IMHO REIT is a good disintermediation product between corporate cashflow needs and mass consumer investment needs but we do need to know what it means.

Asset: The assets behind self-owned residential is very different from the REITS, though both can be said "rental" driven, the former being "prepayment of 99 years rental" for self-use, where the latter can be commercial assets of different tenors and subject to different demand/ supply economics.

Business: self-owned residential is basically a roof over the head and very sticky. It's a necessity with relatively low interest rate as collateralised. REIT business involves having a diversified porfolio of tenants with varying rental rates due to bargaining power and general economics. Some are good assets, some are not so good. You can't choose which one to ignore, ie ex-this ex-that, which some are in the habit of doing. You need to get a good property manager to handle the assets, which you can see in our neighbouring countries are sorely lacking.

Structure: This is probably the most important one as one is a direct investment while REIT is a structured product. What that means is that the cashflow profile and shareholder interest may differ. In both cases renovation and maintenance capex is involved but in the latter it will depend on how much they pay out and subsequently raise. We have to consider if the latter has a "sinking fund" consideration for future capex (ie not maxed out payouts) and monies raised for maintenance capex or delevraging vs acquisition has very different connotations. In addition the major shareholder may have other considerations as well, which is the oft discussed acquisition and disposal fees, AUM based remuneration, etc. IIRC CIS is also not a legal entity so there are implications because one needs to exercise authority via the trustee to the manager.

[CCUV]

I believe the buffettway doesn't apply in our market. We just don't have a business which is a world beater. I am a strong believer of cash on hand. Every 3-4 years we can expect one crisis. It works wonderfully for Singapore market timing. 1997,2000,2003,2007....