General S-REITs Discussion Thread

[1l92041H]

Shaping up to be a sweet November. Collect CD and enjoy price appreciation!

will we have an update on your blog for nov?

 

[Raynon]

Expect all REITs to pop up sharply tmr following from today US inflation read

Yr forecast wrong leh

 

[kickass22]

Why would I want to buy a REIT that cannot maintain its earnings?

Thats why you should DYODD and visit the malls before buying Frasers Centrepoint Trust. Even better, ask the tenants about the rental situation - I got a friend who is leasing a few units in different malls, so I can get good information about whether rental going up or down.

He always complain rent so high - but I ask him why not move to HDB shophouse, should be cheaper but he is staying put because he is making profit - and ultimately, that's what counts.

If mall is empty then maybe better not buy

I think the key point is not about buying reit that cannot maintain its earning. The key point is about calculating total returns. With any investment , we want those the maintain their earnings.

 

[demoforce1]

Shaping up to be a sweet November. Collect CD and enjoy price appreciation!

$500K capital?

 

[churnmaster]

Why would I want to buy a REIT that cannot maintain its earnings?

Thats why you should DYODD and visit the malls before buying Frasers Centrepoint Trust. Even better, ask the tenants about the rental situation - I got a friend who is leasing a few units in different malls, so I can get good information about whether rental going up or down.

He always complain rent so high - but I ask him why not move to HDB shophouse, should be cheaper but he is staying put because he is making profit - and ultimately, that's what counts.

If mall is empty then maybe better not buy

Is the rental these REITs earn fixed for a given period or is it fixed + variable, where the variable component is a small % of the revenue generated by the tenants ? If its the later then yes footfalls can translate into better earnings for the REITs. As a category, F&B, Entertainment and Departmental stores do well in most places, rest of the businesses just chug along.

Btw, the REITs business is just a leveraging business. For eg. You borrow at 3-4% pa and then invest the same in real estate to earn 5.5-6.5% pa, thereby boosting your ROE, part of which is given out as dividends. But what happens when the borrowing rates go up to say 5-6% pa ? To maintain their earlier ROE, their rental yields should go up proportionately which is easier said than done.

Most of the REITs peaked in 2H 2020, well before interest rates started to rise. FCT peaked pre COVID.

 

[weng0202]

Second round of chiong for reits. Hope the worse is over liao.

 

[TehSi99]

Why nobody mentioned FLCT anymore?

When I looked at their fundamentals, looks fairly good to me. What I don't understand is why the higher recent price drop.

 

[soneat]

Why would I want to buy a REIT that cannot maintain its earnings?

Thats why you should DYODD and visit the malls before buying Frasers Centrepoint Trust. Even better, ask the tenants about the rental situation - I got a friend who is leasing a few units in different malls, so I can get good information about whether rental going up or down.

He always complain rent so high - but I ask him why not move to HDB shophouse, should be cheaper but he is staying put because he is making profit - and ultimately, that's what counts.

If mall is empty then maybe better not buy

At the end of the day, those who believes in reits would have reaped the rewards that would make him happy, provided he didn't buy the wrong thing.

Those who don't believe in these will tell us how flawed reits (and dividend plays) are.

I have personally went thru many cycles and I chose to stay vested.

 

[Forestraintree]

For those who use discount future cash flow to value reits based on their current dividend using the projected interest rates of targetted 5%, it is a flawed valuation approach.

U have to project yearly dividend payout as well as yearly interest rates. Interest rate won't stay high for ever at 5%...

 

[stanlawj]

Interest rate won't stay high for ever at 5%...

What if it stays that high for at least 5 years?

 

[weng0202]

What if it stays that high for at least 5 years?

Are the chances of that high? All depends on how determined fed is on fixing inflation.

 

[stanlawj]

Are the chances of that high? All depends on how determined fed is on fixing inflation.

Don't fight the Fed? Somehow, the US financial system is still intact at 4% 2-yr note yields. I have discovered the Fed and the US financial system is hiding big losses and printing up the money to make up for the losses in secret. This money is not available to anyone else except the US banks.

The rest of the world has aligned to US military power and accepted this. No one is fighting it except Russia.

 

[Forestraintree]

Maybe.. though highly unlikely. At 5%, before we reached the end of 2 years, probably we will see companies defaulting on loans, high job cuts, and inflation would have reversed.. no reason why inflation would still stay high with such a scenario. Fed will then lower interest rate to a more sustainable rate where the economy can continue to function and grow and yet still keep inflation in check... the reason for an aggressive interest rate hike is to kill the high inflation .

Past history has shown that a wishy washy interest rate hike will keep inflation high and prolong the pain so a harsh one is necessary to instil fear into people... inflation is also due to people's expectation of future prices. Fed knows an actual hike to 5% will cause a lot of real pain.. so they hope instilling fear will suffice in taming inflation.

I have 2 theories...

Theory 1
based on the market strong rebound at the slightest slow changes in cpi, I would think Fed will realise they haven't instil enough fear. So they would probably still speak using harsh tone to instil more fear. But I seriously doubt they will raise by another 75 basis point.

Theory 2
Fed harsh stance is targetting crypto prices. As long as bitcoin is still above 10k, inflation is still considered high. Bitcoin is the leading indicator of inflation, ie people's expectation of future price on a really useless product. Inefficient as a transaction, huge carbon footprint , and generating multiplier effects thru algo sister coins which fed can't control. Bitcoin must fall....

What if it stays that high for at least 5 years?

 

[Dividends Warrior]

will we have an update on your blog for nov?

My next blog update is in Dec. or early Jan. I do quarterly updates.

 

[Dividends Warrior]

$500K capital?

Around $550k

 

[churnmaster]

Around $550k

What was the peak portfolio value ? $700K plus ?

 

[TehSi99]

What if it stays that high for at least 5 years?

it is possible. But once economy is in deep shiet for long time and high unemployment, interest rates have to come down to boost economy.

 

[TehSi99]

At the end of the day, those who believes in reits would have reaped the rewards that would make him happy, provided he didn't buy the wrong thing.

Those who don't believe in these will tell us how flawed reits (and dividend plays) are.

I have personally went thru many cycles and I chose to stay vested.

I would say the most difficult thing about Reits investing is picking the winners that stay winning for years.

 

[homer123]

Why nobody mentioned FLCT anymore?

When I looked at their fundamentals, looks fairly good to me. What I don't understand is why the higher recent price drop.

This FLCT has the best debt profile but was bog down by FX risk since its asset in OZ, Euro and Pound were down sharply. Despite the FX risk, I think the FLCT has performed exceptionally well with little DPU impact.

 

[1l92041H]

My next blog update is in Dec. or early Jan. I do quarterly updates.

awesome, looking forward to your content

some of the other financial blogger like lady you be free totally go into hiding when the portfolio tank, makes me think the purpose was to flex rather than to share knowledge