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06-09-2012, 08:49 PM
The yield of a reit with average leasehold of 40 years is different in quality from one with an average leasehold of 80 years even if all else equal. You probably should lop a percentage point off the industrial reits and some of the others for that reason alone (which begs the question of why Saizen is in the 7% league with its freehold property but that's another story).
While it is true that Reits historically yield 200-300bp above 10Y government bonds in many countries, this is an abnormal time. People still fear the return of the worse days of the GFC most likely. Trading volumes in SGX are pretty low.
However, it might be true that on a relative basis, DBS (for example) is underpriced compared with say FCT. If one had the ability to hold low cost, long term shorts, one might be tempted to do relative value trading (shorting one and buying the other).
While it is true that Reits historically yield 200-300bp above 10Y government bonds in many countries, this is an abnormal time. People still fear the return of the worse days of the GFC most likely. Trading volumes in SGX are pretty low.
However, it might be true that on a relative basis, DBS (for example) is underpriced compared with say FCT. If one had the ability to hold low cost, long term shorts, one might be tempted to do relative value trading (shorting one and buying the other).