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Analysing REITS
20-03-2011, 03:21 PM. (This post was last modified: 20-03-2011, 03:24 PM by Nick.)
Post: #21
RE: Analysing REITS
(20-03-2011, 02:28 PM)tonylim Wrote: Hi Nick,

Thanks for your speedy reply.

How about point 2 and 3 . Hope you can help to enlighten also.

Hi Tony,

Your questions about the cap distribution can be answered here -

I am not too sure about the reason behind it though ? Perhaps a more experienced REIT investor can share their views on this matter ?
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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22-03-2011, 09:55 AM.
Post: #22
RE: Analysing REITS
REIT unit prices set to increase

by Stella Lee 04:46 AM Mar 22, 2011

SINGAPORE - Unit prices of Singapore Real-Estate Investment Trusts (REITs) are expected to increase as the retail sector gains traction from increased consumer spending and help boost rentals for shopping malls.

Economic indicators, namely population growth, rising tourist arrivals and rising household income in Singapore have boosted retail sales as the Singapore economy expanded at 14.5 per cent last year.

Retail REITs own and operate retail properties and earn revenue by leasing them to retail tenants.

Retail rents in Singapore stopped declining since last year and private retail occupancy has stabilised at the 94 per cent level since the fourth quarter of last year, recovering from a low of 91 per cent in the fourth quarter of 2009.

Credit Suisse recently upgraded ratings for units of retail REITS including CapitaMall Trust and Frasers Centrepoint Trust to outperform at S$2.22 (from S$2.10) and S$1.90 (from S$1.68) on the back of rising distribution per unit (DPU).

Analysts expect that the retail REIT sector will be driven by acquisitions for this year, with the momentum already picking up.

Earlier this month, CapitaMall Trust acquired Iluma at Bugis from Jack Investments for S$295 million and Frasers Trust has announced plans to target Bedok Point.

Credit Suisse believes that CapitaMall Trust might acquire ION Orchard on expectations of a lowering interest cost and a stabilisation of its rentals since its opening in October 2009.

Government land sales tenders (GLS), an indicator of mall valuations, have also been on the rise. Retails rents on average, are estimated to grow between 2-5 per cent per annum, according to Credit Suisse.

Rental growth for suburban malls is expected to be stronger than in the central areas due to tenant bargaining power from an oversupply of retail space in the latter segment.

Mr Alvin Tan, associate analyst at Moody's Investors Service, said: "If you look at economic growth last year, prime space levelled off but suburban areas were very resilient after the crisis. Rentals for suburbans are the most stable amongst all segments."

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27-03-2011, 04:17 AM.
Post: #23
RE: Analysing REITS
I summarise the need to cash call into these 3 permutations i hope you guys can help me see if i am getting it right here:

decision to refinance using cash call is via making decision on these 3 main factors.

Prevailing Interest Rate vs Existing Yield

If prevailing interest rate lower than existing yield, -1 to cash call.

Else +1 to cash call.

Prevailing Interest Rate vs Portfolio Interest Rate

This is to replace existing debts.

If prevailing interest rate is lower than portfolio interest rate, -1 to cash call. Should favor interest re-finance

Else +1 to cash call.

Low Gearing vs High Gearing

If gearing is low, -1 to cash call

Else +1 to cash call
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31-03-2011, 05:26 PM.
Post: #24
RE: Analysing REITS
Let me try to offer my 2cents. For me I probably won't look at it this way, but rather:

- Perception of interest rate over tenure of required debt. Equity on the other hand, is infinitely timed
- Amount that need to be raised, and how it may affect the company's ROE, gearing, etc
- Assets which may be collaterised to take on debt where cash call doesn't require
- Impact to future cashflow if taking debt, compared to normal equity raising

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09-04-2011, 10:20 AM.
Post: #25
RE: Analysing REITS
Business Times - 09 Apr 2011

In Reits we trust?

A report card on the performance of various types of trusts listed in Singapore shows that Reits remain the best bets


A FEW weeks back, I was having dinner with some colleagues, one of whom is from The Straits Times when a colleague from Lianhe Zaobao walked past. We started chatting, and the topic naturally veered towards the stock market, given that we are all business writers.

The Straits Times colleague asked the Zaobao colleague what she thought of Hutchison Port Holdings (HPH), whose initial public offering was about to close then. Instead of directly answering the question, the Zaobao colleague said: 'CitySpring is now trading at half its IPO price!'

The Straits Times colleague interpreted the comment as negative for HPH. 'She's saying don't buy, that the new IPO may suffer a similar fate as that of CitySpring,' he said. Then, our marketing colleague sheepishly admitted that he has CitySpring in his portfolio. I didn't own up at the time, but I too had CitySpring languishing somewhere in my portfolio.

The conversation set me thinking. Has CitySpring done that badly if we take into consideration all the dividends paid out since its IPO?

How about the other investment trusts? We've had a number of property investment trusts, shipping trusts and business trusts listed on the Singapore Exchange. In general, how have they done since IPO, in absolute terms, and relative to the broad market movement?

So I decided to find out. Basically, I obtained from Bloomberg the total return for each of the trust relative to their IPO price. Bloomberg assumes that all dividends received are reinvested back into the security.

Also, the Bloomberg program can only calculate total return up to a certain number of days. So, for Reits that were listed before 2005, I had to switch to the weekly return numbers. Hence, the returns for Reits such as Ascendas, CapitaMall, CapitaCommercial, Suntec and Fortune are calculated based on the closing price on the first Friday after they started trading, and not the IPO price.

Here's what I found. Of all the various types of trusts, the real estate investment trust (Reit) has been the most successful. The performance of shipping trusts and other forms of business trusts have generally been rather dismal.

And among the Reits, those with Singapore-based properties have on the whole performed better than those with overseas properties.

So which has been the most successful Reit to date? Excluding those with trading records of less than one year, CDL Hospitality Trust appears to be the star. Since July 18, 2006, it has returned 225 per cent to its unitholders. That's an equivalent of 28.5 per cent a year, and it outperformed the FTSE Straits Times All Shares Index by a whopping 198 percentage points during that period.

First Reit, which owns hospitals and hotels in Indonesia and Singapore, is the second-best performer with a return of 20 per cent a year. Both were listed in 2006.

The first batch of Reits to hit the market also fared well. Ascendas Reit rewarded investors with return in excess of 17 per cent a year since 2002 - that's a near 10-year record. CapitaMall Trust, meanwhile, returned 16 per cent a year, outpacing the general market by more than 170 percentage points.

Earning the dubious honour as the worst Reit to have listed on the Singapore Exchange is Saizen, which owns residential properties in Japan. It is now 78 per cent below its IPO price, and after taking into consideration its distribution, investors have seen their capital getting shaved by 33 per cent a year since November 2007. It underperformed the general market by 66 percentage points.

AIMS AMP Capital Industrial Reit, formerly known as MacarthurCook Industrial Reit, is the second-worst Reit. It has lost 72 per cent of its share price, or the equivalent of 17 per cent a year after dividend since 2007. It trailed the general market by 37 percentage points.

The median return of all the Reits listed on SGX since their IPOs up till end-March 2011 is 8.9 per cent a year. That's a return not to be sniffed at. Reits which bombed tended to have high gearing, so that's a good metric to start one's screening process.

As at this week, the average yield for all the Reits listed in Singapore is 7 per cent. There's a website - - which provides a comprehensive and updated listing of all the reits and business trusts in Singapore.

Meanwhile, the performance of the other two types of trusts - shipping and business or infrastructure trusts - leaves very much to be desired. On average, the three shipping trusts - Pacific Shipping Trust, FSL Trust and Rickmers - have seen their unit price slumped by 56 per cent since their IPO. Only the distributions from Pacific Shipping Trust has more than made up for the capital loss.

Investors who bought into Pacific Shipping Trust are still better off than leaving their money in the bank, or buying into the general Singapore market. The trust returned 7.43 per cent a year since May 2006. It outperformed the FTSE All Shares Index by 17.5 percentage points.

No such luck for holders of FSL and Rickmers. Investors in the two suffered a loss of 14 per cent and 20 per cent a year respectively since 2007 when they were listed.

As for the other business trusts, the performance in general has also been lacklustre. The average annual return is -18.9 per cent a year. The average is dragged down by Indiabulls Properties Investment Trust which has seen its unit price slump 70 per cent since its listing in July 2008. The best performer in this category is Ascendas India Trust - with an annual return of 2.3 per cent a year since 2007.

What about CitySpring? Well, what do you know - after taking in all its distributions, investors are actually up by 1.4 per cent a year. That's an outperformance of 14.5 per cent over the FTSE All Shares Index between February 2007 and end-March 2011.

From the report card above, on the whole, it appears that of the various types of trusts, Reits remain the best bets. There seems to be a lot more uncertainties associated with the other forms of trusts.

The writer is a CFA charterholder
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09-04-2011, 10:56 AM. (This post was last modified: 09-04-2011, 11:03 AM by Nick.)
Post: #26
RE: Analysing REITS - This list was compiled in the previous quarter. So far, among the non-REITs, only PST and TCT have provided some form of positive returns after taking into account inflation.

As always, if there is something wrong with the data, please voice it out Smile
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Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.

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26-07-2011, 07:56 AM.
Post: #27
RE: Analysing REITS
Can we considered REITs as self-liquidating asset classes as well? Or do we have to break them up into 2 kinds freehold and leasehold.

For freehold, the land value goes up with time. For leasehold, you don't actually own it, its more like leasing a concession like K-green, but it is perhaps more sellable.

Having said that it means for leasehold, there is a maturity date where you get nothing back, so you need to calculate the yield to maturity isn't it?
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26-07-2011, 08:12 AM.
Post: #28
RE: Analysing REITS
Think treating reits like a bond is quite aggressive... Their cashflows are by no means certain, asset values would also be questionable when squeezed by interest rates/valuation.

Personally I don't factor in "maturity", and a adopt a much shorter term view.

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26-07-2011, 08:17 AM. (This post was last modified: 26-07-2011, 08:17 AM by freedom.)
Post: #29
RE: Analysing REITS
if a reit is conservative, it should use cost less depreciation for its properties and leasehold rights like most companies do with their ppe. But it would hurt the reit's leverage and it would be required to amortize its debt as well. doubt any reit is going to do that.

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26-07-2011, 01:40 PM.
Post: #30
RE: Analysing REITS
I respect Ms Teh's financial reports mostly bcos she seems to report a tad more in depth than others who wish to know grab attention.

But the gist of the article seems to be inclining to that REITs are safe beyond any doubt.
She should have highlighted some risks factors of REITs as well. Ms Teh is certainly capable of doing that from her financial reporting thus far.
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