General S-REITs Discussion Thread

[f4ll3n]

Checked mine last night. Money is in.

HSBC credited mine on 29th, which is 1d after payment date. probably processing. Tiger gave it to me in the morn of 28th. owell. better late than never.

 

[revhappy]

actually is just my HSBC side still uncredited =.= not sure what's the delay zz

Any particular reason to use HSBC for your REITs holding?

 

[Shion]

Simple solutions for these two REITs​

https://www.theedgesingapore.com/capital/reits/simple-solutions-these-two-reits
The unit prices of Manulife US REIT (MUST) and Lippo Malls Indonesia Retail Trust (LMIRT) pummelled new lows in March, signalling distress. Charts such as these would usually imply the end of the stock, but that is not necessarily the case for these two REITs. Indeed, they can be saved.

In the case of MUST, its manager simply acquired too many properties in too short a time, and it now needs to either regurgitate those properties that it cannot digest or raise equity.

LMIRT’s acquisition pace was more measured. However, the structure of the REIT — with Indonesian assets, risk-free rates and rupiah rental income and net property income — was simply not tenable for a Singapore entity, and not suitable for Singapore retail investors. Instead, unitholders of LMIRT may have paid a higher price for their assets than they could have paid.

However, this was disclosed in the IPO prospectus. LMIRT’s IPO prospectus back in 2007 clearly stated “certain Indonesian rupiah amounts have been translated into Singapore dollars based on the exchange rate of IDR5,908.2 to $1.” This was despite the average rupiah rate in 2007 at the time of the IPO being IDR6,155.4 to $1, which was also stated in the prospectus.

The problem with LMIRT is that it is a structured REIT. Its assets are in Indonesiam where the risk-free rates are higher than Singapore’s, with rental income and net property income priced in rupiah, and then translated into Singapore dollars. LMIRT’s unitholders are essentially investing in rupiah assets and taking on rupiah risk, hence the original high yield of 8% or so. The rupiah is now at IDR11,321 to $1.

Despite this loss in translation, in 2020, during Covid, LMIRT’s manager announced the acquisition of Lippo Mall Puri for the equivalent of $330 million, partly financed with Singapore dollars raised from a dilutive rights issue.

On Feb 24, LMIRT’s manager announced that it planned to stop distributions on its $140 million perpetual securities and its $120 million perpetual securities. On March 20, LMIRT’s manager announced it would not be paying distribution for the $140 million tranche which was due on March 27. This triggered a dividend stopper, requiring LMIRT not to pay distributions on its units (DPU).

On March 6, LMIRT’s manager announced the appointment of Sterling Coleman Capital to advise on capital management. Similarly, MUST’s manager appointed Citigroup to undertake a strategic review. The task isn’t that complicated. Both REITs have three options or combinations of these three options.

These are: a placement that will dilute all unitholders; a rights issue that will dilute all unitholders but is a more fair distribution than a placement; and divesting properties. Interestingly, LMIRT has divested properties in previous years and surely it is still able to do that. MUST should also be able to divest properties. Many times in the past, MUST’s manager has said that the US is the largest, deepest market for commercial property.

While investors await the Citigroup review with anticipation, all that has emerged, to date, is news from Korean media that Mirae Asset Global Investments is in talks with MUST’s manager. In a Singapore Exchange announcement, MUST’s manager has said there is no certainty of a transaction:“The Manager wishes to emphasise that there is no certainty or assurance that any definitive agreements will be entered into or that any transaction will materialise from the current discussions.”

Interestingly, Mirae did not go through on a KRW4 trillion ($4 billion) purchase of International Finance Centre Seoul, according to the Korean press. Mirae had agreed to acquire the asset from Brookfield Corp (formerly Brookfield Asset Management) and paid a deposit of KRW200 billion after signing an memorandum of understanding with Brookfield, according to the Korean press. The parties are reported to be in litigation. Mirae had planned to set up a private REIT to finance the purchase but the permit was rejected, Korean media reports say.

 

[Shion]

'Rewards for the brave' who dare to bet on US office S-REITs now: DBS​

https://www.theedgesingapore.com/ca...-brave-who-dare-bet-us-office-s-reits-now-dbs
The US office market remains in a state of uncertainty, but headwinds are largely known and priced in, says DBS Group Research analyst Rachel Tan. She believes there are some bright spots amid a gloomy outlook, with rewards for the brave who dare venture into US office Singapore REITs (S-REITs).

The US-listed office REITs are currently trading at 0.75x price-to-book (P/BV), close to the lows seen during the global financial crisis (GFC), writes Tan in a March 27 note. “While the US office SREITs do not have sufficient trading history stretching back to the last crisis, we believe that at 0.5x P/B, it is close to the bottom and awaiting a catalyst.”

Tan believes the re-rating catalyst lies in the Fed moderating or pausing interest rate hikes, which will also drive a turnaround in the share price.

DBS’s preferred pick is Keppel Pacific Oak US REIT (KORE) CMOU 1.37% , which has shown more resilient operations compared to its peers. On the other hand, Manulife US REIT (MUST) BTOU 4.76% has de-rated the most and would probably see the overhang lifted once it resolves its capital management issues, writes Tan.

Similar to the broader industry trend, the US office S-REITs’ submarkets’ optimism has declined, especially towards the end of 2022, reversing the strong start at the beginning of that year.

Based on JLL’s 4Q2022 US office market insights, the US office S-REITs submarkets with a positive/improvement outlook contributes 21% to 60% of net property income (NPI) and cash rental income (CRI), down from 35% to 82% in 1Q2022.

KORE continues to lead its S-REIT peers with positive submarkets contributing the majority of its NPI/CRI, mainly from the Seattle market, which comprises 42% of KORE’s NPI.

This is followed by Prime US REIT (PRIME) OXMU 1.59% , with positive submarkets contributing 35%, mainly from Atlanta.

Lastly, MUST’s positive submarkets fell to only 21% from 35% in 1Q2022, as Washington and Virginia are no longer positive submarkets.

DBS has “buy” call out on all three names, with target prices of 65 US cents (86.28 cents) for KORE, 63 US cents for PRIME and 45 US cents for MUST.

MUST in turmoil

On March 27, MUST’s unit price fell yet again by 14% to close at 22 US cents.

To analysts Rachel Tan and Derek Tan, the decline may be possibly attributable to the rumours that the tentative transaction between Mirae Asset Global Investments and MUST, both presumed to currently be in talks (for a possible capital injection), could have fallen through.

However, DBS understands that the discussions are still ongoing. “While investors are impatient for a potential conclusion of the strategic review of this proposed transaction, we believe the process takes time and any subsequent disclosure of a potentially positive outcome of the review would be viewed as a positive for MUST, should the transaction be able to help it recap its balance sheet. However, the devil is still in the details.”

There were also fears earlier this week that short sellers’ were stepping up their bearish bets against the US office segment with the expectation of a potential credit tightening following the US regional banking crisis.

According to DBS, US office S-REITs’ lenders comprise mostly local and Asia-Pacific banks, except for PRIME.
“Though PRIME’s lenders comprise mainly US financial institutions, these do not fall into the high-risk list.

Moreover, the facilities are extendable to 2024-2026, and it has undrawn credit lines of US$196 million ($260.15 million). In addition, US office S-REITs have refinanced/locked in refinancing debt that is expiring in FY2023. As such, any refinancing risk in the near term is limited.”

All-round declines

Portfolio occupancy has seen a progressive decline throughout FY2022 to end the year at just a little below 90%.

This is apart from KORE, which saw occupancy rise to 92.6% from 91.9% as at end-2021, partly due to the disposal of Powers Ferry and Northridge Centre.

Following the asset valuation decline in 4QFY2022, both MUST and PRIME saw gearing cross 40%.

MUST’s gearing spiked to 49%, given a higher valuation decline of 11%, while PRIME’s gearing increased to 42%, from 37.9% in 4Q2021, with still some buffer.

On the other hand, KORE’s gearing stood at 38.2%, mainly due to minimal asset valuation decline and the disposal of some smaller assets.

Headline FY2022 distribution per unit (DPU) fell by 3% to 11% y-o-y, in line with the decline in vacancies and the increase in interest costs.

“However, we note that KORE has converted its management fees in units to be paid out in cash instead, while MUST has announced a 9% retention in distributions. Excluding these adjustments, we note that FY2022 DPU fell by 1% to 7% y-o-y, with the lowest decline from KORE, followed by PRIME and then MUST,” says Tan.

As at 1.19pm, units in KORE are trading 0.5 US cents higher, or 1.37% up, at 37 US cents; while units in PRIME are trading 0.5 US cents higher, or 1.59% up, at 32 US cents; and units in MUST are trading 1 US cent higher, or 4.76% up, at 22 US cents.

 

[audiovideo]

Hope can maintain momentum

 

[f4ll3n]

Any particular reason to use HSBC for your REITs holding?

just gunning for their NTB promo

 

[snowcrabramyeon]

 

[TehSi99]

'Rewards for the brave' who dare to bet on US office S-REITs now: DBS​

https://www.theedgesingapore.com/ca...-brave-who-dare-bet-us-office-s-reits-now-dbs
The US office market remains in a state of uncertainty, but headwinds are largely known and priced in, says DBS Group Research analyst Rachel Tan. She believes there are some bright spots amid a gloomy outlook, with rewards for the brave who dare venture into US office Singapore REITs (S-REITs).

The US-listed office REITs are currently trading at 0.75x price-to-book (P/BV), close to the lows seen during the global financial crisis (GFC), writes Tan in a March 27 note. “While the US office SREITs do not have sufficient trading history stretching back to the last crisis, we believe that at 0.5x P/B, it is close to the bottom and awaiting a catalyst.”

Tan believes the re-rating catalyst lies in the Fed moderating or pausing interest rate hikes, which will also drive a turnaround in the share price.

DBS’s preferred pick is Keppel Pacific Oak US REIT (KORE) CMOU 1.37% , which has shown more resilient operations compared to its peers. On the other hand, Manulife US REIT (MUST) BTOU 4.76% has de-rated the most and would probably see the overhang lifted once it resolves its capital management issues, writes Tan.

Similar to the broader industry trend, the US office S-REITs’ submarkets’ optimism has declined, especially towards the end of 2022, reversing the strong start at the beginning of that year.

Based on JLL’s 4Q2022 US office market insights, the US office S-REITs submarkets with a positive/improvement outlook contributes 21% to 60% of net property income (NPI) and cash rental income (CRI), down from 35% to 82% in 1Q2022.

KORE continues to lead its S-REIT peers with positive submarkets contributing the majority of its NPI/CRI, mainly from the Seattle market, which comprises 42% of KORE’s NPI.

This is followed by Prime US REIT (PRIME) OXMU 1.59% , with positive submarkets contributing 35%, mainly from Atlanta.

Lastly, MUST’s positive submarkets fell to only 21% from 35% in 1Q2022, as Washington and Virginia are no longer positive submarkets.

DBS has “buy” call out on all three names, with target prices of 65 US cents (86.28 cents) for KORE, 63 US cents for PRIME and 45 US cents for MUST.

MUST in turmoil

On March 27, MUST’s unit price fell yet again by 14% to close at 22 US cents.

To analysts Rachel Tan and Derek Tan, the decline may be possibly attributable to the rumours that the tentative transaction between Mirae Asset Global Investments and MUST, both presumed to currently be in talks (for a possible capital injection), could have fallen through.

However, DBS understands that the discussions are still ongoing. “While investors are impatient for a potential conclusion of the strategic review of this proposed transaction, we believe the process takes time and any subsequent disclosure of a potentially positive outcome of the review would be viewed as a positive for MUST, should the transaction be able to help it recap its balance sheet. However, the devil is still in the details.”

There were also fears earlier this week that short sellers’ were stepping up their bearish bets against the US office segment with the expectation of a potential credit tightening following the US regional banking crisis.

According to DBS, US office S-REITs’ lenders comprise mostly local and Asia-Pacific banks, except for PRIME.
“Though PRIME’s lenders comprise mainly US financial institutions, these do not fall into the high-risk list.

Moreover, the facilities are extendable to 2024-2026, and it has undrawn credit lines of US$196 million ($260.15 million). In addition, US office S-REITs have refinanced/locked in refinancing debt that is expiring in FY2023. As such, any refinancing risk in the near term is limited.”

All-round declines

Portfolio occupancy has seen a progressive decline throughout FY2022 to end the year at just a little below 90%.

This is apart from KORE, which saw occupancy rise to 92.6% from 91.9% as at end-2021, partly due to the disposal of Powers Ferry and Northridge Centre.

Following the asset valuation decline in 4QFY2022, both MUST and PRIME saw gearing cross 40%.

MUST’s gearing spiked to 49%, given a higher valuation decline of 11%, while PRIME’s gearing increased to 42%, from 37.9% in 4Q2021, with still some buffer.

On the other hand, KORE’s gearing stood at 38.2%, mainly due to minimal asset valuation decline and the disposal of some smaller assets.

Headline FY2022 distribution per unit (DPU) fell by 3% to 11% y-o-y, in line with the decline in vacancies and the increase in interest costs.

“However, we note that KORE has converted its management fees in units to be paid out in cash instead, while MUST has announced a 9% retention in distributions. Excluding these adjustments, we note that FY2022 DPU fell by 1% to 7% y-o-y, with the lowest decline from KORE, followed by PRIME and then MUST,” says Tan.

As at 1.19pm, units in KORE are trading 0.5 US cents higher, or 1.37% up, at 37 US cents; while units in PRIME are trading 0.5 US cents higher, or 1.59% up, at 32 US cents; and units in MUST are trading 1 US cent higher, or 4.76% up, at 22 US cents.

Rewards for the "brave" or trap for the "fools". Only time will tell.

 

[elvintay07]

Kum siah. I follow his channel closely. Most of the time wrong also. ! I love it

 

[TehSi99]

Kum siah. I follow his channel closely. Most of the time wrong also. ! I love it

Sometimes his qualitative and fundamental analysis are 一厢情愿 thinking but still interesting.

 

[revhappy]

Sometimes his qualitative and fundamental analysis are 一厢情愿 thinking but still interesting.

He sold his HDB and made a video out of it. The rental market is very good right now, he could have easily milked his HDB for another 20 years. Instead he bought REITs. I feel residential is going to be much more valuable that all other types of properties. He will most likely regret selling it.

 

[DevilPlate]

He sold his HDB and made a video out of it. The rental market is very good right now, he could have easily milked his HDB for another 20 years. Instead he bought REITs. I feel residential is going to be much more valuable that all other types of properties. He will most likely regret selling it.

Concur that. Perhaps he detest dealing with tenants

 

[TehSi99]

Concur that. Perhaps he detest dealing with tenants

With reference to earlier post, he better be spot on for his Reits selection.

 

[havetheveryfun]

He sold his HDB and made a video out of it. The rental market is very good right now, he could have easily milked his HDB for another 20 years. Instead he bought REITs. I feel residential is going to be much more valuable that all other types of properties. He will most likely regret selling it.

thats exactly the reason why he sold, he feel property prices is at its peak now so he wan to cash it out now.

 

[DevilPlate]

He sold his HDB and made a video out of it. The rental market is very good right now, he could have easily milked his HDB for another 20 years. Instead he bought REITs. I feel residential is going to be much more valuable that all other types of properties. He will most likely regret selling it.

After watching his video about his hdb sale…..i think i would also sell too…..Old flat facing highway.
He also free up his name to buy another pte property if there is a correction.

 

[revhappy]

After watching his video about his hdb sale…..i think i would also sell too…..Old flat facing highway.
He also free up his name to buy another pte property if there is a correction.

The rental yield on a condo is just not going to be the same as his HDB fetches. So, he will need to bet on timing the property cycle correctly. For renting out actually, it doesnt matter, there will always be demand no matter how old the property is. Tenants are not so picky, in fact, I prefer run down property as a tenant because the landlord wont be so fussy.

He sold his HDB for for 437k, he could easily rent it out for 3.5k in the current market, that is about 10% rental yield.

 

[elvintay07]

The rental yield on a condo is just not going to be the same as his HDB fetches. So, he will need to bet on timing the property cycle correctly. For renting out actually, it doesnt matter, there will always be demand no matter how old the property is. Tenants are not so picky, in fact, I prefer run down property as a tenant because the landlord wont be so fussy.

He sold his HDB for for 437k, he could easily rent it out for 3.5k in the current market, that is about 10% rental yield.

But if 1 month can rent $3,500, 10 years already $400+k lei. He machiam kill golden goose like that considering that place can easily last another 30 years

 

[starbugs]

Sometimes his qualitative and fundamental analysis are 一厢情愿 thinking but still interesting.

He is a financial advisor but I classify him as a salesperson type, not the CFA/analytical type of advisor. I always armchio when he discusses his half-ass "analysis" and "research" on YouTube.

 

[DevilPlate]

The rental yield on a condo is just not going to be the same as his HDB fetches. So, he will need to bet on timing the property cycle correctly. For renting out actually, it doesnt matter, there will always be demand no matter how old the property is. Tenants are not so picky, in fact, I prefer run down property as a tenant because the landlord wont be so fussy.

He sold his HDB for for 437k, he could easily rent it out for 3.5k in the current market, that is about 10% rental yield.

Rental started to soften liao. Currently probably $3k …..3.5k no way lah.

for such poor facing 3rm flat, most likely rental will drop back to ~2.5k after supply caught up with demand next yr or so.

At his age and earning power, I would sell and aim to buy a 3br resale OCR condo ~1.3-1.5k psf. Currently, there is a huge price disparity between resale and new launches.

next 1-2yrs best time to hunt for a resale condo as sellers already started to lower down selling price expectations. 6 months ago, most if not all sellers asking 3-5% above valuation.

 

[TehSi99]

https://www.theedgesingapore.com/ne...ing-link-reits-successful-rights-issue-take-e

Comtemplating between FLCT and MLT.