I came across this HK shopping mall REITs counter,
current yield is about 6.1% and traded at big discount to its NAV
This counter is dual primary listed in SGX and HKEX,
I kind of like the idea that it's a REITs in HK where the tourism and retail biz prospect looks stable
Anybody got any views on this counter?
Hi iff,
I think 6.1% yield is pretty low considering the depreciating HKD (which is pegged to USD) in relation to SGD and that its portfolio is concentrated in 1 country. The main attraction would be its low gearing of 21% (3rd lowest in the REIT sector and excludes its HK$365 mil cash) which implies significant potential for DPU growth via debt funded acquisitions. Perhaps, you may wish to look at Starhill REIT which has an annualized yield of 6.8%. Its portfolio is well diversified with malls in 5 different countries (including Singapore) and its gearing stands at 31% which excludes S$108 million cash. A study of reits in similar sector may give you a better idea on how to value it appropriately ?
(Not Vested in Mall REITS)
http://www.businesstimes.com.sg/companie...dpu-up-244
Fortune Reit's Q3 DPU up 24.4%
By
Lee Meixianleemx@sph.com.sg@LeeMeixianBT
12 Nov5:50 AM
Singapore
THE recent "occupy activities", a distinct slackening in tourist spending, and the slowdown in domestic demand have emerged as new sources of uncertainty affecting the overall economic outlook and retail scene, Fortune Reit said in its financial statement on Tuesday.
"
However, Fortune Reit's malls are situated across HK and mostly in Sub-urban areas. Won't get a direct hit in my opinion. Different segmentation.
Just went to HK, Mongkok is still very crowded on Tues evening...
Fortune REIT has been on a tear recently, now close to HK$9, up from about HK$6 in 10 months, and exceeding the previous peak of two years ago. Yield has dropped to under 4.7%. A number of factors could be driving this - particularly denomination in HK$ which is tied to the US$, which is also moving higher. So Fortune REIT is in effect a bet on the US$, but with much higher yield than available on US$ cash. It is currently with a decent half yearly distribution. I have decided to take profits and divested yesterday, hope I don't regret the decision too much.
(29-01-2015, 12:19 AM)Dosser Wrote: [ -> ]Fortune REIT has been on a tear recently, now close to HK$9, up from about HK$6 in 10 months, and exceeding the previous peak of two years ago. Yield has dropped to under 4.7%. A number of factors could be driving this - particularly denomination in HK$ which is tied to the US$, which is also moving higher. So Fortune REIT is in effect a bet on the US$, but with much higher yield than available on US$ cash. It is currently with a decent half yearly distribution. I have decided to take profits and divested yesterday, hope I don't regret the decision too much.
Assuming you sold on 28th Jan, you timed the top of the year to perfection.
The biggest question - can the days of 20% rental reversion continue for the next few years? If yes, it is certainly a buy.
(Not Vested)
(25-11-2015, 02:28 PM)Shrivathsa Wrote: [ -> ] (29-01-2015, 12:19 AM)Dosser Wrote: [ -> ]Fortune REIT has been on a tear recently, now close to HK$9, up from about HK$6 in 10 months, and exceeding the previous peak of two years ago. Yield has dropped to under 4.7%. A number of factors could be driving this - particularly denomination in HK$ which is tied to the US$, which is also moving higher. So Fortune REIT is in effect a bet on the US$, but with much higher yield than available on US$ cash. It is currently with a decent half yearly distribution. I have decided to take profits and divested yesterday, hope I don't regret the decision too much.
Assuming you sold on 28th Jan, you timed the top of the year to perfection.
Not bad, in retrospect. Now faced with the decision as to what to do with the proceeds, which I left in HK$. I was hoping for a big drop in Fortune, so that I could buy back in. While it has dropped, it has not been by a lot. Choice is whether to shift to S$, for investment in better prospects in SGX, or leave in HK$.
IMHO, Hong Kong property generally looks overvalued, particularly commercial real estate. The number of mainlanders coming over to Hong Kong to buy milk powder, handbags and other essentials has noticeably dropped a lot.
Just leaving the proceeds in HK$ has, in S$ terms, been quite profitable, and I suspect that trend may continue, both due to US$ strength and MAS quietly letting the S$ weaken slightly. If the US starts raising interest rates at last, the current trends (US$ up, property down) will continue. There is a little discussed possibility that the US will increase rates faster than most people currently expect, which would have a huge impact, and accelerate those trends.
Current decision - do nothing with my HK$ funds for the moment. Leave the options open - convert to S$ for deployment to SGX or go back into HK$ denominated stocks if those really drop a lot. The first is currently more likely, as I suspect that the US$/HK$ will strengthen more in the next few months against the S$, while a big drop in the HK market is further away. However, I have been wrong before and will be wrong again, so will wait and watch for the moment.
Voluntary Delisting of the Units of Fortune Real Estate Investment Trust from the Main Board of SGX-ST
ARA Asset Management (Fortune) Limited, in its capacity as manager of Fortune Real Estate Investment Trust ("Fortune REIT") announced that it intends to voluntarily delist the units in Fortune REIT from the Main Board of Singapore Exchange Securities Trading Limited (the "SGX-ST").
More details in
https://links.sgx.com/FileOpen/E_SGX%20D...eID=564033