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Some Info I Looked into on Elite Commercial REIT (Guest Post)

Some Info I Looked into on Elite Commercial REIT (Guest Post)

Elite Commercial REIT has all the right metrics you would look for in a worthy Reit to invest in. Great looking yield, long wale, low debt to asset, freehold property and a tenant that looks like someone who you expect to be the last to default on their rent.

This post was originally posted here. The writer, Kyith is a veteran community member and blogger on InvestingNote, with username known as Kyith and 800+ followers.

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Sometimes it is either I overthink things or that I am absolutely right to be a little more skeptical.

Private equity firm Elite Partners is looking to IPO Elite Commercial Reit. A lot of the context for how to look at this REIT is shaped by the people associated with supporting this REIT.

My mode is wary for two reasons:

  1. The guys working on these deals try to sense the market and priced it accordingly. At this point (23 Jan), we don’t even have a sensing what is the range of yield we will get. It feels to me they are trying to gauge interest from the larger investors to see how to price this. If this REIT has high-quality assets yet the IPO prices the REIT at a high yield, either the banks advising and the people themselves have a lack of confidence or that there is something we don’t know about this portfolio
  2. The people behind it

That said, it doesn’t mean I am always right in the short term.

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Why Reits Are Likely To Stay At The Top For Longer Than Most People Would Expect (Guest Post)

Why Reits Are Likely To Stay At The Top For Longer Than Most People Would Expect (Guest Post)

The real estate industry cycle has been around for many years.

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Traditionally, it has several built-in advantages that make it natural for property owners to receive rental income while awaiting for their property to appreciate in value over time. This is due to the higher affluent population group and the higher GDP for the nation as well as decent inflation rise that will all but contribute to an eventual higher property price.

This post was originally posted here. The writer, Brian Halim is a veteran community member and blogger on InvestingNote, with username known as 3Fs and 1800+ followers.

While traditional real estate usually requires high amount of funds to start with and is out of reach by many retail investors, Reits on the other hand are not. They are investment vehicles that is structured to exhibit the same attributes as traditional real estate but more importantly it allows retail investors like you and me with minimal funds to invest in them.

When investors like us buy Reits, the properties owned are generally incorporating a steady income and cashflow predictability into our income-oriented portfolio. Because of this, most of the returns we are getting should be in the form of the dividends that are being paid out. Capital appreciation is a secondary bonus factor, if any due to the nature that they have to pay out more than 90% of their cashflow income as dividends, leaving only a small amount of retained cashflow for any growth opportunities.

How Managers Are Optimizing Their Cost of Capital

Since a REIT is always raising money to grow, its cost of that capital is one of the most important things to help determine a REIT’s long-term investment potential.

There are three sources of capital: undistributed cash flow, equity, and debt.

The cost of capital is the weighted average of all three sources of capital. Undistributed or retained cash flow is by design (and tax law) the smallest but cheapest (free) source of capital.

The next cheapest is debt,measured by the total interest expense it pays out of the total debt, especially in today’s low interest rate environment.

The most expensive source of capital is equity. This makes sense intuitively because each additional share sold is a future claim on a REIT’s cash flow and increases the dividend cost.

Reits Are No Longer Just An Income Play

Gone are the days that Reits are just an income play.

Kep DC Reit – Effective Debt Structure & Accretive Acquisitions


MLT – Exponential Rise To The Top

Thanks to the sluggish global economy that encourages lower funds rate and cheap borrowings, managers are looking to tap into the credit liquidity to leverage their portfolio in this era of lower borrowings.

They would tap for as much leverage the company could take before considering for more access to funds via the equity route.

That is because the cost of equity is usually more expensive than the cost of debt and it would make more sense for them to consider debt first then equity as their main cost of capital to structure the most effective leverage for growth opportunities.

To the managers, they would look for pipeline opportunities and maintain a cost of capital that is lower than the cash yield on new acquisitions in order for AFFO and dividend to grow sustainably over time.

REIT’s leverage ratio, measured by key metrics Debt/Asset or Debt/EBITDA, is important because this is one of the major factor that credit rating agencies use to determine how risky a REIT’s profile is. A lower credit rating increases a Reit’s cost of debt capital, which could spiral into lower return on investment for any growth opportunities.

So REITS can grow over time and quickly for as long as they find good opportunities aided by cheap cost of borrowings and a rising share price, which compresses the cost of equity lower when they are issuing shares for funding.

Conclusion

Investors are generally afraid that they will be diluted when REITS increase their share counts over time so this leads to active participation from investors who will but contribute to this gracious cycle that will allow more funds for management to grow and seek accretive acquisition that will allow the cash yield from acquisition to be higher than the cost of capital on the equity.

Growing cash flow and a well diversified portfolio would then lead to a rising share price and capital appreciation for the investors.

In fact, the likely they remain at the top, the easier it is for management to look for external opportunities because the growth play is likely to remain a big part for a rising capital opportunities.

The only likely swan that could break this cycle is a liquidity crunch as well as a black swan event which eventually leads to a credit crunch which typically leads to increase in the cost of capital. But by then, REITS are not alone. All of the companies in all sectors around the world are likely to be impacted as well.

Thanks for reading.

Once again, this article is a guest post and was originally posted on Brians profile on InvestingNote. 

Also, we recently did an interview with Brian, to understand how he invested and traded during the SG Active Trading Tournament here.

Become a part of our community and also see what other investors are saying about the current market right now: (click on the view now button)

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InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.

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Essential Stock Market And Investing Wisdoms For Every Investor In 2020 (guest post)

Essential Stock Market And Investing Wisdoms For Every Investor In 2020 (guest post)

If you think Stock Investing is hard, you are right.

If you think Stock Investing is easy, you are also right.

Over time, different legends have emerged from the stock market and these are the wisdom shared that every investor needs to know by 2020.

This post was originally posted here. The writer is a veteran community member on InvestingNote, with username known as Spinning_Top and close to 500 followers.

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12 Market Wisdoms From Gerald Loeb:

1. The most important single factor in shaping security markets is public psychology.

2. To make money in the stock market you either have to be ahead of the crowd or very sure they are going in the same direction for some time to come.

3. Accepting losses is the most important single investment device to insure safety of capital.

4. The difference between the investor who year in and year out procures for himself a final net profit, and the one who is usually in the red, is not entirely a question of superior selection of stocks or superior timing. Rather, it is also a case of knowing how to capitalize successes and curtail failures.

5. One useful fact to remember is that the most important indications are made in the early stages of a broad market move. Nine times out of ten the leaders of an advance are the stocks that make new highs ahead of the averages.

6. There is a saying, “A picture is worth a thousand words.” One might paraphrase this by saying a profit is worth more than endless alibis or explanations. . . prices and trends are really the best and simplest “indicators” you can find.

7. Profits can be made safely only when the opportunity is available and not just because they happen to be desired or needed.

8. Willingness and ability to hold funds uninvested while awaiting real opportunities is a key to success in the battle for investment survival.

9. In addition to many other contributing factors of inflation or deflation, a very great factor is the psychological. The fact that people think prices are going to advance or decline very much contributes to their movement, and the very momentum of the trend itself tends to perpetuate itself.

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Top 29 Warren Buffett Inspirational Quotes Of All Time (Guest Post)

Top 29 Warren Buffett Inspirational Quotes Of All Time (Guest Post)

Almost every investor has heard of the legendary investor Warren Buffett before. This is not only due to his exemplary investment track record, but also due to his sound advice on life and business in general.

 

This post was originally posted here. The writer, SmallCapAsia is a veteran community member and blogger on InvestingNote, with 700+ followers.

With that in mind, we have come up with a set of Warren Buffett’s Inspirational Quotes Of All Time below:

Warren Buffett Quotes on Life

1. Aim High But Don’t Over-Reach– “I don’t try to jump over 7-foot bars; I look for 1-foot bars that I can step over.”

2. Aim Well– “To swim a fast 100 metres, it’s better to swim with the tide than to work on your stroke.”

3. Focus On Your Goals– “I’ve often felt there might be more to be gained by studying business failures than business successes.”

4. Be Honest – “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

 

5. Believe In Yourself– “In the end, I always believe my eyes rather than anything else.”

Warren Buffett Quotes on Investing

6. Have A Philosophy– “Rule No.1 : Never lose money. Rule No.2 : Never forget Rule No.1.”

7. Ignore Mr. Market’s Moods

“The market is there as a reference point to see if anybody is offering to do anything foolish. When we invest in stocks, we invest in businesses.”

“(John Maynard) Keynes essentially said, don’t try and figure out what the market is doing. Figure out a business you understand, and concentrate.”

“The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.”

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Lessons from a Discussion of the Net Lease Corporate Real Estate ETF (Guest Post)

Lessons from a Discussion of the Net Lease Corporate Real Estate ETF (Guest Post)

Ben Carlson and Michael Batnick’s Animal Spirits have become a great podcast to listen to. If you are the sort that wants a short 30 minute entertaining take on what are some of the best financial data points out there, and discussion on some of the latest articles that they have read (they read a lot), this is the one.

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This post was originally posted here. The writer, Kyith is a veteran community member and blogger on InvestingNote, with username known as Kyith and 700+ followers.

They have introduced a Talk your book segment where they bring on some interesting financial products that they find, could have a role in your portfolio, and ask the people behind it to talk about it.

You will appreciate the way they context the discussion to a strategic level, thinking about whether you need this financial product in your portfolio.

In last week’s episode, they brought on the folks behind Fundamental Income to talk about their new Net Lease ETF and the index behind it.

The NETLease Corporate Real Estate ETF (ticker: NETL) seeks to track the performance, before fees and expenses, of the Fundamental Income Net Lease Real Estate Index (NNNLSCTR). The index’s goal is to track the performance of the U.S. listed Net Lease real estate sector in a diversified manner by screening for real estate companies that focus on investments in net lease real estate and assigning only those companies identified to the Index. The Index places constraints on constituents to protect against concentration in any one company or tenant.

This ETF that they are discussing is not listed in Singapore. It is listed in the USA and thus if you are attracted to the dividends, you have to take into consideration a 30% dividend withholding tax. So if the forecast dividend yield is 5% the after tax return is 3.5%.

Still, I think the value of this discussion is to hear from the management why they think this segment has a unique proposition that more investors should know about.

You could also benefit from contrasting this to the other type of REITs you invest in.

You could also benefit form the discussion of portfolio positioning, risk management for the REITs.

The Net Lease segment is interesting. In the past, I wrote an article about the Perfect REIT experienced investors are looking for and the Net Lease like REITs have many of these characteristics.

In Singapore, perhaps Keppel DC, Parkway Life REIT matches that description the most.

You can listen to the podcast here:

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Investing Workshop: How to Find and Evaluate Value-Growth Stocks

Investing Workshop: How to Find and Evaluate Value-Growth Stocks

We’re having an upcoming workshop next week on How to Find and Evaluate Value-Growth Stocks.

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Join James Yeo (SmallCapAsia), one of our leading veteran community members and financial blogger as he offers his take and style on investing to both novice and seasoned investors alike.

**Use promo code: FIVEOFF to enjoy $5 OFF!

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Also: Did you know that Warren Buffett made 99% of his fortune after his 50th birthday?

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Upcoming Free Seminar on Tips and Strategies For Your Investment Portfolio!

Upcoming Free Seminar on Tips and Strategies For Your Investment Portfolio!

We’re having another upcoming Free Seminar by SGX on Tips and Strategies For Your Investment Portfolio!

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Full details and register for this seminar here:

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We’re also in partnership with SGX Academy to bring you the Building Your Stock Portfolio With Confidence programme.

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Full details and register here.


InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.

Download our free app here:

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FREE Seminar: Market Outlook 2019 with High Dividend Blue Chip Stocks

FREE Seminar: Market Outlook 2019 with High Dividend Blue Chip Stocks

Join us for this FREE Seminar: Market Outlook 2019 with High Dividend Blue Chip Stocks, happening on 5th March, Tuesday 6.30pm – 10pm!

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In this stock investment seminar, @Dr_Tee will teach the powerful methods step by step, how to select strong global blue chip stocks, then wait patiently for different levels of crisis to buy at low price, holding for dividend income, then finally selling at high price for capital gains.

Key learning points include:
✔ How to generate consistent passive income and high capital gains with REITs & high dividend blue chip stocks
✔ Time for golden opportunity to buy blue chip stocks during global financial crisis
✔ What to buy (stock screening), When to buy/sell (buy low sell high), How much to buy/sell (risk management) for global blue chip stocks
✔ Fundamental Analysis (FA) + Technical Analysis (TA) + Personal Analysis (PA), integrated with unique Optimism Strategies
✔ How to take actions (Buy, Hold, Sell, Wait, Short), matching with own personality
✔ Master the investment clocks of Year 2019 for entries and exits of different asset classes (stocks, properties, commodities, forex, bonds)

Date: 5 Mar 2019 (Tue)

Time: 6:30pm – 10pm (registration starts from 6pm)

Cost: Free

Venue: 137 Cecil Street, Level 4, Hengda Building, Singapore 069537

Limited seats. First come, first serve basis.

Register now, come later!

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InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.

Download our free app here:

apple   android

Is Investing In Growth Always A Good Thing? (Guest Post)

Is Investing In Growth Always A Good Thing? (Guest Post)

This post was originally posted here. The writer is a veteran community member and blogger on InvestingNote, with username known as 3Fs.

When investors like us invest in the stock market, the goal is always trying to grow our wealth over time.

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Investors are generally thrilled by the prospect of growth in general, whether they are referring to their income, savings or even the companies that they invest in.

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