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Mapletree Commercial Trust – Why Did I Invest in the Blue Chip REIT? (Guest Post)

Mapletree Commercial Trust – Why Did I Invest in the Blue Chip REIT? (Guest Post)

Mapletree Commercial Trust had been in my “shopping list”, and a drop in its unit price of late presented a golden opportunity for me to add it to my long-term investment portfolio – which I did last Friday (03 April 2020) when the REIT’s unit price fell to my intended entry price of S$1.57.

This post was originally posted here. The writer, Jun Yuan Lim is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 834 followers.

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Mapletree Commercial Trust (SGX:N2IU) was one of the “casualties” of the ongoing Covid-19 outbreak in Singapore, where its unit price took a huge tumble by 34% at the time of writing (it fell from its 52-week high of S$2.48 to S$1.64.)

This “blue chip REIT” had been in my “shopping list”, and a drop in its unit price of late presented a golden opportunity for me to add it to my long-term investment portfolio – which I did last Friday (03 April 2020) when the REIT’s unit price fell to my intended entry price of S$1.57.

In my post today, I will be sharing with you reasons why I’ve invested in the REIT.

Let’s get started…

 

Brief Introduction to Mapletree Commercial Trust

Mapletree Commercial Trust was listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 27 April 2011, and subsequently joining the benchmark Straits Times Index (STI) on 23 September 2019 (taking the place of Hutchison Port Holdings Trust.)

At the time of writing, the REIT’s properties in its portfolio are all located in Singapore, and they are:

  • Vivocity
  • Mapletree Business City
  • PSA Building
  • Mapletree Anson
  • Bank of America Merrill Lynch Harbourfront

 

Historical Financial Results of Mapletree Commercial Trust between FY2011/12 and FY2018/19

One of the first things I look at before I invest in any company or REIT is to first study its historical financial results (for at least the past 5 years.)

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Updates from Manulife US REIT & Prime US REIT (Guest Post)

Updates from Manulife US REIT & Prime US REIT (Guest Post)

Most of the REIT investors endure some extreme volatility in this March Madness. Their holdings have quite a good run in 2019.Coming into 2020, investors believe that the low rate environment is here to stay. Even when the threat of Covid-19 reaching the United States and Europe, investors rationalize that when the interest rate plunge, this must be a more conducive environment for the REITs. What comes next is that in a span of 2 weeks, many REITs saw their stock prices plunge 50%.

This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with username known as Kyith and has 954  followers.

Most of the REIT investors endure some extreme volatility in this March Madness. Their holdings have quite a good run in 2019.

Coming into 2020, investors believe that the low rate environment is here to stay. Even when the threat of Covid-19 reaching the United States and Europe, investors rationalize that when the interest rate plunge, this must be a more conducive environment for the REITs.

What comes next is that in a span of 2 weeks, many REITs saw their stock prices plunge 50%.

Manulife US REIT and Prime US REIT both endure the same fate as their peers.

In the past 2 days, both REITs provided some updates to analysts, so as to address the potential uncertainties of investors.

Since then both REITs saw their share price go up 20-25%. Manulife’s share price held up better, probably because they are in the Index and are much more liquid.

Their transparency may have worked wonders for their share price. However, overall, a lot of the REITs managed to bounce off their lows.

Here are some updates that I have gathered.

 

Possible Reasons for the Sharp Price Falls

Management updated that possible reasons why the draw down was so swift was due to

  1. Manulife’s entry into the index. When index funds, exchange-traded funds systematically sell down, there isn’t many fundamentals per se
  2. There was a lot of margin calls from the Private Banks (my friend KK from RisknReturns mentioned a few days ago that the three US Office REITs may have been removed from the list of marginable stocks on private banks)
  3. Funds redeeming and switching around. They are switching from smaller stocks to more liquid stocks
  4. Ultra-rich Chinese are facing heavy margin calls (we can guess who they are). Manulife US REIT does not have them on their register

 

Are Manulife US REIT’s Properties Affected?

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[UPCOMING WORKSHOP] The Essentials of REIT Investing

[UPCOMING WORKSHOP] The Essentials of REIT Investing

Real Estate Investment Trusts (REITs) are one of the most reliable way to invest as they generate steady and consistent tax free cash flow.

REITs also open up access for investors to participate in a diverse range of real estate assets with low capital outlay.

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In this exclusive 2 hr-intensive workshop, our speaker Tam Ging Wien will be sharing his knowledge and experience including:

Foundational understanding of REITs

✔ Characteristics of various real estate sectors

✔ How to perform financial evaluation on a REIT

✔ How to quickly shortlist high quality REITs

✔ How to value and buy undervalued REITs

✔ Common REIT investment traps and how to avoid them

During the sharing session, various case studies and Singapore-listed REIT examples will be used.

There will also be a Q&A and mingling session so that members of the investing community may engage in open dialog and discussions in order to deepen their understanding of REITs.

Registration will start at 6.30pm.

Do mingle and network with other fellow participants after the seminar, after all, this is where people of the same interest gather. Do bring along your writing materials for note taking.

Limited seats only. Book yours now.

USE PROMO CODE: EBACCESS to get 30% discount now!

To learn more about REITs, we recommend the article: What are REITs?

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Singapore REIT Fundamental Analysis Comparison Table – 1 July 2019 (Guest Post)

Singapore REIT Fundamental Analysis Comparison Table – 1 July 2019 (Guest Post)

Technical Analysis of FTSE ST REIT Index (FSTAS8670). FTSE ST Real Estate Investment Trusts (FTSE ST REITIndex)broke out from the 10 years resistance at 875 with significant increase in trading volume. The REIT index increased from 858.67 to 916.95 (+6.78%) and as compared to last post onSingapore REIT Fundamental Comparison Tableon June 3, 2019.

The REIT index is entering in an uncharted territory after breaking new high and may head towards to 1000 points based on projection of 161.8% Fibonacci level. Based on the current chart pattern and and momentum, the sentiment is BULLISH and the trend for Singapore REIT direction is stillUP.However, the REIT index may go for a short term pause before moving higher.

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As we approach mid-year 2019 (Guest Post)

As we approach mid-year 2019 (Guest Post)

Since the last post, the STI did indeed fell further forming a trough by early June. By this week, the STI regained some of its lost territory, landing at 3214.85.

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This post was originally posted here. The writer, Brennen Park is a veteran community member and blogger on InvestingNote, with username known as Brennen Park and 3400+ followers.

Banks are still lagging as the fall out of the US-China trade war began to infiltrate into smaller economies. It is a situation that when giants fight, all the others feel the ripples. For the 1st quarter of 2019, the actual GDP growth of 1.2% fell short against the forecast of 1.9%. Economists are now downgrading Singapore’s yearly growth rate from 2.5% forecast in March 2019 to 2.1% for year 2019. Certainly, the banks stocks are not going to fare well when the state of the economy worsens. Just months ago, it was widely expected that the FED would continue to increase the interest rate well into 2020. This would help mop off the liquidity in the system, resulting in higher net interest margin (NIM) for the banks. Right now, more and more are expecting the FED to lower the interest rate in response to the slowdown due to the on-going trade war. This would inadvertently slacken the interest margin again. Banks, which have been increasing their deposit rates recently, in preparation for higher interest rates may find their efforts come to naught if they are not able to lend them out efficiently.

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A Tale of Two REITS (Guest Post)

A Tale of Two REITS (Guest Post)

There are investors who like to base their Reit selection on two criterias: Price to Book Value and Dividend yield.
real-estate-singaporeThis post was originally posted here. The writer, D Wong is a community member on InvestingNote, with username known as Pizzaprata.

M Reit: $Mapletree Ind Tr(ME8U.SI)
S Reit: $Sabana Reit(M1GU.SI)

Based on the latest quarter’s results and closing prices:
M Reit’s P/B is 1.41 and yield is 5.7%
S Reit’s P/B is 0.76 and yield is 6.9%

From the above M Reit looks overpriced and S Reit looks attractive. Both Reits had their IPOs just one month apart in Oct/Nov 2010 with similar IPO prices of 0.93 and 0.917 respectively. That’s where the similarity ends, from the price performance chart below you can see that M Reit has doubled it’s share price since IPO while the other has dropped to less than half.

The reason is simple, M Reit has consistently improved it’s DPU every year whereas S Reit had to cut it’s DPU over the years. Therefore a good management track record is a more important criteria. So quality reits don’t come cheap and if you are hung up about P/B ratios you would never have bought M Reit as it has never dropped below its book value since IPO. Including dividends, M Reit’s total return is more than 200% so you would have missed a 3 bagger.

However past performance is no guarantee for future performance. You need to look at the Reits results in detail to see if the distributions are sustainable and what projects they are doing to increase DPU. Tomorrow I will reveal the Reits and why I accumulated M Reit last week although seasoned investors would have guessed which Reits I am talking about.

 

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Should You Leverage Up Your REIT or Stock Portfolio? (Guest Post)

Should You Leverage Up Your REIT or Stock Portfolio? (Guest Post)

There is emerging trend of experts teaching folks to build wealth with the aid of leverage. Leverage means, using other people’s money, in a lot case the banks money, to aid you in building your asset base.

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After the large DFA article last week, I do not really feel like writing a lot of stuff. There is probably a lot of other stuff I need to catch up upon then to do one humongous article every week.

So this week one is a little breather. It is some numbers that I ran some time ago.

I think I decide to bring it out.

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

You have folks like Kim Eng who is able to give to loan you currently a 3.28% interest rate loan on your shares. This enables you to buy shares more than you can afford to and speculate on them. When you earn as you sell off the shares, you earn a lot more. Conversely, if you lose as you sell off the shares, you lose a lot more.

Now, the idea for a lot of people is not to do leverage irresponsibly. We all want to do the sensible thing, but to make use of what is available to us so that we can accelerate our wealth building.

So basically, rather conservative wealth builders wish to use leverage to step up and build their wealth. It makes me wonder how conservative we are.

Here is the Setup

We are going to invest in good blue chip stocks and Real Estate Investment Trusts (REITs).

And we are going to choose to invest in 1, or more of these, to form a portfolio that gives us a 7.5% per year compounded rate of return (hypothetically). If you want to take a look at whether its achievable, you can take a reference on the dividend yield that you can get on my Dividend Stock Tracker. Those are dividend yields, and do not show the future compounded growth rate. The growth rate can be +2 to 5% or -2 to 5%, depending on which you choose. Not all stocks are appreciating over time.

Let’s say we make use of Kim Eng’s margin financing which enables us to invest in selected stocks and REITs at a rate of 3.28% (this rate used to be 2.88%. When the global interest rate moved up, it also gets shifted up. This gives you an idea that these rates do not stay stagnant).

According to the strategy, we want to use leverage to build up our financial assets.

However, we do not want leverage to kill us. So at some point, we will pay back the debt.

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Types of REITs in Singapore Market and The Breakdown of Key Financial Metrics

Types of REITs in Singapore Market and The Breakdown of Key Financial Metrics

REITs are collective property investment trusts that pool money to invest in properties. Investors can purchase units of a REIT through the stock exchange.

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Structure of how a REITs function:

REITs achieve separation of powers and duties by segregating the roles of ownership and management of the REIT assets between the Trustee and REIT Manager.

The trustee is responsible for the ownership and safe custody of the REIT’s assets. In exchange for providing the services, the trustee is paid a fee.  

The REIT manager is just like the chief executive officer(CEO) of any listed company. The REIT manager is a separate company set up to run the REIT. It is usually a wholly-owned or partly-owned subsidiary of a REIT’s sponsor.

The REIT manager has the authority to appoint Property Managers for each property managed by the REIT, whose role is to manage the day to day operations and maintenance of the property. Usually the property manager are often a subsidiary of the sponsor.

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How To Play OUE Commercial Reit Rights Issuance [Guest Post]

How To Play OUE Commercial Reit Rights Issuance [Guest Post]

This article, How To Play OUE Commercial Reit Rights Issuance was originally posted here. He is a user on InvestingNote, with username known as 3Fs.

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How To Play OUE Commercial Reit Rights Issuance

It’s been quite a while since we last had an M&A news that involves right issuance hence I think it is time to refresh our memory on how we can play this for interested parties.

The proposed acquisition this time is from their own sponsor, OUE Limited, with the acquisition of the OUE Downtown, which comprises of both 50-storey building Downtown 1 and 37-storey building Downtown 2, as well as some retail podium and carpark which they had not too long ago carried out an enhancement work.

The proposed acquisition is in the range of $908m, which is a slight discount from the independent valuer perspective, and together with some transaction and admin fee, it will total up to around $956m.

The funding will be made partly via borrowings of $361.6m while the rest of the $588m will be funded via equity rights issuance.

Is This A Good Acquisition?

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REITs To Riches (New eBook Launch)

REITs To Riches (New eBook Launch)

There’s a new book launched in our marketplace!

REITs To Riches, is written by one of our veteran community members and also a co-founder of Probutterfly.com, Tam Ging Wien. @gingwien

As part of a new launch, there’s a 30% OFF promotion for this ebook right now!

Simply key in the code RRNOW before purchase!

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For a limited time only!