General S-REITs Discussion Thread

[fr33d0m]

Every asset class has its own merits. No reason to go to either extreme.

 

[lunafan]

I tried my hands in bond ETF and got burnt badly, lost like 40% value. Actual bonds at $200k+ minimum purchase are out of reach for normal retail investors like me. REITs actually very profitable for me as i only go for quality REITs with solid sponsors. Not sure why all the hate with REITs, maybe because of low quality ones like Eagle?

 

[havetheveryfun]

I tried my hands in bond ETF and got burnt badly, lost like 40% value. Actual bonds at $200k+ minimum purchase are out of reach for normal retail investors like me. REITs actually very profitable for me as i only go for quality REITs with solid sponsors. Not sure why all the hate with REITs, maybe because of low quality ones like Eagle?

not hate but more like nothing special for reits nowadays.

in the past REITS were attractive because they gave high dividend yield (6-7%) and other blue chip companies (3-4%) couldn't match.

Nowadays blue chip companies are giving as much dividend yield as reits (both around 5-6%), so reits have lost its appeal. especially when reits give out 90% of its earning to reach 5-6% yield, but blue chip companies only paying out half or less of its earnings but still able to give 5-6% yield also.

 

[DevilPlate]

not hate but more like nothing special for reits nowadays.

in the past REITS were attractive because they gave high dividend yield (6-7%) and other blue chip companies (3-4%) couldn't match.

Nowadays blue chip companies are giving as much dividend yield as reits (both around 5-6%), so reits have lost its appeal. especially when reits give out 90% of its earning to reach 5-6% yield, but blue chip companies only paying out half or less of its earnings but still able to give 5-6% yield also.

Last time precovid blue chip reits where got 6-7%? More like 4-5% nia

Pay out ratio 50% only applicable to our 3 local banks right…i think ST, Singtel etc higher than that.

 

[havetheveryfun]

Last time precovid blue chip reits where got 6-7%? More like 4-5% nia

Pay out ratio 50% only applicable to our 3 local banks right…i think ST, Singtel etc higher than that.

true but they also dont need to pay out 90% like reits to reach 5% dividend yield , maybe 60-80% only also at most

i never said bluechip reits, some reits were still worth taking a risk for 7-8% dividend yield back then, but nowadays these type of reits is not worth the risk at all.

 

[lunafan]

not hate but more like nothing special for reits nowadays.

in the past REITS were attractive because they gave high dividend yield (6-7%) and other blue chip companies (3-4%) couldn't match.

Nowadays blue chip companies are giving as much dividend yield as reits (both around 5-6%), so reits have lost its appeal. especially when reits give out 90% of its earning to reach 5-6% yield, but blue chip companies only paying out half or less of its earnings but still able to give 5-6% yield also.

But bluechip companies are not obligated to pay and maintain that dividend. They can reduce it at anytime and that isn’t very assuring for retirement planning. Different asset classes got their own pros/cons, REITs are out of rotation for the past few years due to high interest rates. It will start becoming attractive again once rates come down

 

[DevilPlate]

But bluechip companies are not obligated to pay and maintain that dividend. They can reduce it at anytime and that isn’t very assuring for retirement planning. Different asset classes got their own pros/cons, REITs are out of rotation for the past few years due to high interest rates. It will start becoming attractive again once rates come down

But reits borrowing cost already came down except those reits that have some in usd.

 

[DevilPlate]

true but they also dont need to pay out 90% like reits to reach 5% dividend yield , maybe 60-80% only also at most

i never said bluechip reits, some reits were still worth taking a risk for 7-8% dividend yield back then, but nowadays these type of reits is not worth the risk at all.

make no sense to compare sampan reits with other blue chip companies.

shd be comparing sampan reits vs other high yield junk bonds?

 

[bruiser69]

With lower interest rates will come higher SREITS prices. That's a no brainer

The only downside is if the FED doesn't cut rates going forward

 

[thretiredDad]

I tried my hands in bond ETF and got burnt badly, lost like 40% value. Actual bonds at $200k+ minimum purchase are out of reach for normal retail investors like me. REITs actually very profitable for me as i only go for quality REITs with solid sponsors. Not sure why all the hate with REITs, maybe because of low quality ones like Eagle?

I get what you mean — bond ETFs are a different investment from holding actual bonds. With ETFs, you’re marked to market every day, so when rates spiked the paper losses looked huge. At least with individual bonds, you can hold to maturity and redeem at par, but true the $250k lot size is really out of reach for most retail.

As for REITs, I wouldn’t say there’s “hate”. It’s more of a misconception. Some people treat REITs as if they’re guaranteed passive income, or buy just because they look cheap vs. book value — and that’s where they might get burnt. Like you said, quality of sponsor and balance sheet make a big difference. The weaker ones (like Eagle) spoil the reputation, but the blue-chip names with solid sponsors have done very well for investors

 

[cherynsq]

propnex shooting up to $2.20

 

[DevilPlate]

I get what you mean — bond ETFs are a different investment from holding actual bonds. With ETFs, you’re marked to market every day, so when rates spiked the paper losses looked huge. At least with individual bonds, you can hold to maturity and redeem at par, but true the $250k lot size is really out of reach for most retail.

As for REITs, I wouldn’t say there’s “hate”. It’s more of a misconception. Some people treat REITs as if they’re guaranteed passive income, or buy just because they look cheap vs. book value — and that’s where they might get burnt. Like you said, quality of sponsor and balance sheet make a big difference. The weaker ones (like Eagle) spoil the reputation, but the blue-chip names with solid sponsors have done very well for investors

250k not so bad but in order to play corp bonds prolly need to have 2M to spread out the risk over 8-10 bonds.
Now thats the problem.

 

[thretiredDad]

250k not so bad but in order to play corp bonds prolly need to have 2M to spread out the risk over 8-10 bonds.
Now thats the problem.

Wait serious ah, need $2M just to build a proper bond portfolio? That sounds like you’re talking about junk bonds leh — why must diversify until 8–10 names?

If the bonds are investment grade and you pick carefully, is it really necessary to spread out so much

 

[DevilPlate]

Wait serious ah, need $2M just to build a proper bond portfolio? That sounds like you’re talking about junk bonds leh — why must diversify until 8–10 names?

If the bonds are investment grade and you pick carefully, is it really necessary to spread out so much

Only SGS/SSB no need to diversify
But even that got one fellow here say what happens if a black swan happen to SG

 

[DevilPlate]

Ascendas Reit 7y at 2.6% (guide) only

SGD corp bond really low yield….i would rather buy their shares instead.

Bluechip reits borrowing cost has drop liao regardless Fed rate cut anot is immaterial.
Perhaps sentiment nia lol

 

[thretiredDad]

Only SGS/SSB no need to diversify
But even that got one fellow here say what happens if a black swan happen to SG

** NEW ISSUE: CAPITALAND ASCENDAS REIT SGD 7-YR GREEN NOTES - UPDATE 1 **

** NEW SGD 7-YR SENIOR GREEN BOND ANNOUNCED
** DEAL IS STRONGLY ANCHORED
** INITIAL PRICE GUIDANCE : 2.60% AREA
** EXP ISSUE RATING: A3 BY MOODY’S
** ISSUE SIZE : SGD 700M (CAPPED)
** TIMING : TODAY'S BUSINESS

Bid Price Bid Yield Ask Price Ask Yield
CAPITA 2.15 12/07/32 98.25 2.41% 98.87 2.32%
SATSSP 2.45 08/06/32 100.45 2.38% 100.80 2.33%
AREIT 3.73 05/29/34 109.69 2.49% 110.19 2.43%

then buy Reits bond

bondholders will always get first claim before equity holders.

 

[sky1978]

Only SGS/SSB no need to diversify
But even that got one fellow here say what happens if a black swan happen to SG

If that happens, then even if the capital is returned in full, the purchasing power of that original dollar would have already diminished. So capital protection does not always equate to purchasing power protection.

Bluechip reits borrowing cost has drop liao regardless Fed rate cut anot is immaterial.
Perhaps sentiment nia lol

It will take another 2 to 3 years to fully enjoy those low rates. REITs engage in rolling hedging. Just as it took 1 to 2 years for them to be hit with higher rates, it will also take time for their higher-rate swaps to expire, and then they roll into lower rates.

Today's S-REITs are operating in a different environment compared to maybe 10 years ago. Once they step into the overseas domain to increase their AUM, they are faced with new risks. No matter what Blue Chip names or strong sponsors, it can still end up blue-black when the triple whammy effect of FX losses, Interest rate hikes and the poor performance of assets hits. So, for a lot of S-REITs, the risk is no longer a SG-Centric risk; over the past 1-2 years, the best performing S-REITs are generally those with minimal overseas exposure.

 

[limster]

Ascendas Reit 7y at 2.6% (guide) only

SGD corp bond really low yield….i would rather buy their shares instead.

Bluechip reits borrowing cost has drop liao regardless Fed rate cut anot is immaterial.
Perhaps sentiment nia lol

I agree that the fixed income sector is not really that attractive.

My investment into fixed income/cash equivalents is focused on short-term funds or even MMF to reduce MTM risk. For me its more 'parking' / 'capital preservation' rather than trying to make money with fixed income.

After my T-bills matured, I have been putting the T-bill money mostly into Lion Global All Seasons (standard) unit trust, which has a reasonable expense ratio of 0.41% and has a substantial allocation to safe fixed income: 26% into SGD Fixed income, 25% into Global short duration and 20% other fixed income

 

[DevilPlate]

I agree that the fixed income sector is not really that attractive.

My investment into fixed income/cash equivalents is focused on short-term funds or even MMF to reduce MTM risk. For me its more 'parking' / 'capital preservation' rather than trying to make money with fixed income.

After my T-bills matured, I have been putting the T-bill money mostly into Lion Global All Seasons (standard) unit trust, which has a reasonable expense ratio of 0.41% and has a substantial allocation to safe fixed income: 26% into SGD Fixed income, 25% into Global short duration and 20% other fixed income

Lion UT nett returns >2.5% rn?

 

[limster]

Lion UT nett returns >2.5% rn?

short answer: yes.

more important answer: Sharpe ratio is higher than LionGlobal Infinity Global Stock Index Fund, which means better risk-adjusted returns as well.