CapitaMall Trust

[KopiKat]

The grandfather reits which are very liquid (cmt - blue, areit - green, suntec - purple, cct - yellow) have all been trending up together in recent days on high volumes (which from time to time they do together up or down). Wonder if this recent trend is indirectly due to actions of the latest member of the troika (bernanke, draghi, kuroda)?

[Image: z?s=C38U.SI&t=1y&q=l&l=off&z=l&c=A17U.SI...&region=US]

Admittedly, cmt is a real laggard in the past year probably because of poor dpu growth due to:
1) plenty of downtime associated with AEIs at Bugis+ and Atrium
2) downtime due to repositioning at IMM
3) funding of cmt's share of westgate mall and office development at jurong east
4) management's decision to retain distribution from CRCT permanently for working capital and general corporate purposes
5) yield dilutive private placement done in Nov 2012

Since
1) AEIs already completed by Nov 2012
2) repositioning nearly done, end May 2013
3) westgate mall targeted to open end 2013
the degree of success of these endeavors will determine if dpu growth becomes more healthy this year - we will get the first inkling next friday when 1Q results are released.

Nice charts!

I was under the impression that the grandfather reits would be like the dinosaurs by now. No, not going extinct but had become super-heavyweights with Assets ranging from $6.7B to $9.9B and any effort to grow the DPU would require super-efforts. Very much like CISCO, Microsoft or the IBM of old.

At least your charts proves that they can still run faster than the STI...

As for the latest member of the troika, yes, I did notice some tiny spikes in some of the reits recently. Most noticeable was of course Saizen as it has the most direct exposure to the new money printer's market. It's spike is however being mitigated by their managing shareholders happily selling down their stakes (via their funds)...

PS. You ought to get a long serving award for holding some (if not all) of the grandfater reits since I don't know when... I still remember your postings from Wallstraits days...

[swakoo]

I was under the impression that the grandfather reits would be like the dinosaurs by now. No, not going extinct but had become super-heavyweights with Assets ranging from $6.7B to $9.9B and any effort to grow the DPU would require super-efforts. Very much like CISCO, Microsoft or the IBM of old.

Yes, it's harder for bigger reits to grow dpu than the smaller ones. So for young investors like yourself who favour income growth over income stability due to better diversification of a bigger portfolio, the newer smaller ones are more attractive.

However reits can embark on greenfield projects capped at a certain % of asset size, so the older bigger reits can do something more meaningful. IIRC areit is the only one that has completed a greenfield project and cmt is the only other one doing it now.

The dinosaurs are usually also a lot more liquid. So the opportunity for yield arbitrage or pure trading can be better.

At least your charts proves that they can still run faster than the STI...

STI is 15% below all time high while wall street already broke all time high records. So I added the msci u.s. reit index (light yellow) to the chart to see how they compare over the past year.

[Image: z?s=C38U.SI&t=1y&q=l&l=off&z=l&c=A17U.SI...&region=US]

The grandfather reits beat the msci u.s. reit index too. Notice that the msci u.s. reit index has also been on uptrend in recent days.

PS. You ought to get a long serving award for holding some (if not all) of the grandfater reits since I don't know when... I still remember your postings from Wallstraits days...

Actually, I have taken a leaf from you and have been doing yield arbitraging too (perhaps, we shouldn't be talking about this in a value investing forum like this one ) so don't really deserve such an award.

[KopiKat]

Yes, it's harder for bigger reits to grow dpu than the smaller ones. So for young investors like yourself who favour income growth over income stability due to better diversification of a bigger portfolio, the newer smaller ones are more attractive.

Altho' it's good to feel myself getting younger (based on my preferred REITs), since when did you start classifying your stocks based on age? I wonder if the late Walter Schloss or Irving Kahn classifies stocks suitability based on their age??

However reits can embark on greenfield projects capped at a certain % of asset size, so the older bigger reits can do something more meaningful. IIRC areit is the only one that has completed a greenfield project and cmt is the only other one doing it now.

Have not been following the REITs with greenfield projects as their yield stays below my target minimum. CCT Golden Shoe project considered as Greenfield? or just refurbishment?

Thanks for the new addition of msci u.s. reit index to the chart. I suppose it's getting scarier by the day for those who abhors REITs?

Actually, I have taken a leaf from you and have been doing yield arbitraging too (perhaps, we shouldn't be talking about this in a value investing forum like this one ) so don't really deserve such an award.

Tsk..tsk.. tsk...
When I recently read the bootlegged pdf copy of 'Margin of Safety' by Seth Klarman, I was very surprised to read about very similar (if not the same) 'tricks' being used...

[Temperament]

Yes, it's harder for bigger reits to grow dpu than the smaller ones. So for young investors like yourself who favour income growth over income stability due to better diversification of a bigger portfolio, the newer smaller ones are more attractive.

Altho' it's good to feel myself getting younger (based on my preferred REITs), since when did you start classifying your stocks based on age? I wonder if the late Walter Schloss or Irving Kahn classifies stocks suitability based on their age??

However reits can embark on greenfield projects capped at a certain % of asset size, so the older bigger reits can do something more meaningful. IIRC areit is the only one that has completed a greenfield project and cmt is the only other one doing it now.

Have not been following the REITs with greenfield projects as their yield stays below my target minimum. CCT Golden Shoe project considered as Greenfield? or just refurbishment?

Thanks for the new addition of msci u.s. reit index to the chart. I suppose it's getting scarier by the day for those who abhors REITs?

Actually, I have taken a leaf from you and have been doing yield arbitraging too (perhaps, we shouldn't be talking about this in a value investing forum like this one ) so don't really deserve such an award.

Tsk..tsk.. tsk...
When I recently read the bootlegged pdf copy of 'Margin of Safety' by Seth Klarman, I was very surprised to read about very similar (if not the same) 'tricks' being used...

Capitalmall is one of my favourite reits. Just waiting to buy some again.

[swakoo]

Altho' it's good to feel myself getting younger (based on my preferred REITs), since when did you start classifying your stocks based on age? I wonder if the late Walter Schloss or Irving Kahn classifies stocks suitability based on their age??

I can't tell your chronological age but from your postings, I can guess your mental age which is what I'm referring to...

Have not been following the REITs with greenfield projects as their yield stays below my target minimum. CCT Golden Shoe project considered as Greenfield? or just refurbishment?

I stand corrected. CCT is redeveloping it's Market Street carpark into CapitaGreen. AIMSAMPI reit and Keppel reit also have development projects, the former is within your target minimum.

Speaking of which, it is likely that CMT will announce a major redevelopment of either Funan or Tampines mall at next earnings release.

Thanks for the new addition of msci u.s. reit index to the chart. I suppose it's getting scarier by the day for those who abhors REITs?

The last time the bottom fell out of reits in 2008, it was shortly after CMT's implied yield remarkably dropped below the 10 year SGS around 3% IIRC.
Right now, it's 4+% vs 1+% so reckon there's still some breathing space, if the same paradigm holds.

Tsk..tsk.. tsk...
When I recently read the bootlegged pdf copy of 'Margin of Safety' by Seth Klarman, I was very surprised to read about very similar (if not the same) 'tricks' being used...

Is Seth Klarman a value investor?

[KopiKat]

I can't tell your chronological age but from your postings, I can guess your mental age which is what I'm referring to...

Being in the rat race ages one both physically and mentally... My mental age was stuck at the age I left the race and it regressed from there as my main daily interactions were with young kids... Unfortunately, the physical part continues to age and I wonder who's the person in the mirror...

AIMSAMPI reit and Keppel reit also have development projects, the former is within your target minimum.

As a matter of fact, I'd sold off all my AIMSAMPreit. I didn't quite like the way they handled the incident with Cambridge way back but stuck with it for a long while before I finally decided to move on... too early, of course..

Speaking of which, it is likely that CMT will announce a major redevelopment of either Funan or Tampines mall at next earnings release.

IIRC, they'd previously done some extensive upgrading at Funan? That's why there're now a lot more eating joints at Lvl1. Time to do a more major one?

The last time the bottom fell out of reits in 2008, it was shortly after CMT's implied yield remarkably dropped below the 10 year SGS around 3% IIRC.
Right now, it's 4+% vs 1+% so reckon there's still some breathing space, if the same paradigm holds.

There're 2 variables in play here. Remote as it may be (with all the free money printing and thus almost zero interest rate), remember to monitor SGS also.

Is Seth Klarman a value investor?

He's my kind of Value Investor. If you'd not read his book, I'd strongly recommend reading it.

[swakoo]

Being in the rat race ages one both physically and mentally... My mental age was stuck at the age I left the race and it regressed from there as my main daily interactions were with young kids... Unfortunately, the physical part continues to age and I wonder who's the person in the mirror...

Bill Gross has been looking in the mirror too recently... and wondering if Buffett is that great an investor after all: A Man in the Mirror

IIRC, they'd previously done some extensive upgrading at Funan? That's why there're now a lot more eating joints at Lvl1. Time to do a more major one?

Yes I remember the previous AEI done on Funan but am talking about something more major. What happened is that pre GFC, CMT discovered quite a lot of unused plot ratio at Funan and Tampines Mall, applied for permission to use and got it approved for a mix of office/retail use. The plans were put on hold with the onset of the GFC. At the last webcast for analysts and others, management alluded to giving more details at next results release, which is next Friday.

http://www.maybank-keresearch.com.sg/Dow...261112.pdf

There're 2 variables in play here. Remote as it may be (with all the free money printing and thus almost zero interest rate), remember to monitor SGS also.

Tsk, tsk, tsk

He's my kind of Value Investor. If you'd not read his book, I'd strongly recommend reading it.

OK, already downloaded pdf.

[KopiKat]

Bill Gross has been looking in the mirror too recently... and wondering if Buffett is that great an investor after all: A Man in the Mirror

OMG! Let's hope the epoch doesn't change in our lifetime...

Yes I remember the previous AEI done on Funan but am talking about something more major. What happened is that pre GFC, CMT discovered quite a lot of unused plot ratio at Funan and Tampines Mall, applied for permission to use and got it approved for a mix of office/retail use. The plans were put on hold with the onset of the GFC. At the last webcast for analysts and others, management alluded to giving more details at next results release, which is next Friday.

http://www.maybank-keresearch.com.sg/Dow...261112.pdf

Thx for the info! 19-Apr results will be interesting. But if they do proceed with the major upgradings, DPU will be back to square-1 (after the expected increase from recently completed AEIs you'd mentioned in a previous post).

[kayhian]

CapitaMall Trust: Results from AEIs now apparent
CapitaMall Trust (CMT) turned in a strong set of 1Q13 results last Friday. DPU increased by 7.0% YoY to 2.46 S cents, despite a retention of S$8.4m in income for the quarter. This is slightly ahead of our expectations, as S$6.6m in taxable income may be distributed in FY13 (1Q DPU already formed 25.2% of our FY13F DPU). Operationally, we note that CMT continued to deliver on various fronts. CMT also updated that the repositioning of IMM Building has been gaining traction, while the space vacated by Carrefour in 4Q12 at Plaza Singapore has been leased to Cold Storage and John Little and British retailer George. As previously guided, CMT announced a new AEI at Bugis Junction, which is expected to last from 2Q13 to 3Q14. We remain positive on CMT’s performance going forward, in view of these positive developments. We maintain BUY on CMT with a higher fair value of S$2.43 (previously S$2.32). (Kevin Tan)

[Dividend Warrior]

West Gate construction on schedule to be completed by December 2013.

Looking good!


Photo courtesy of skyscrapercity.com