General S-REITs Discussion Thread

[Senthil1179]

What is your return expectation ?

8% on Equity
6% passive income on Bonds/Fixed income (REITS is part of this)

 

[Senthil1179]

Yup, same as me, holding majority cash here (more than 70%), in money market and high interest bank accounts ( non FD). Cash is a good asset class now. Buying a few stocks here and there but overall still 70%+ cash. The other 30% in stocks fluctuating still pains me a bit though.

Do you consider PIMCO GIS (Global Income) as money market instrument ? Or does it come under some sort of risky/non-cash asset ?

 

[churnmaster]

8% on Equity
6% passive income on Bonds/Fixed income (REITS is part of this)

Ok fair enough you have a number in mind . . So overall average return expectation in the 6-8% pa range with some years below and some above

 

[direbmem]

So u have always been holding so much cash in the past? Or u power cash out alot in 2021?

Didn't cash out. Since GFC, I realized I need to have at least 50% cash to get able to sleep. Have always been in SG market only until about 3 years ago. However markets keep rising so no chance to deploy substantially more cash so cash kept building up to 70%. Bought a bit more during Covid but end up markets keep falling after interest rate rising. Now recover a bit but still in the red. I have been buying though, just not in substantial enough qty to lower the percentage cash. My mindset is that even though high cash %, if market is really that good, I would be happy if the remaining 30-50% 2X or 3X, won't feel lose out did not not all in. Results so far is that indeed equity markets not so fantastic to go 2X or 3X, so the the high cash position is right decision.

 

[direbmem]

Do you consider PIMCO GIS (Global Income) as money market instrument ? Or does it come under some sort of risky/non-cash asset ?

Don't think so leh, if the fund didn't say it's money market in fact sheet, it probably isn't

 

[stanlawj]

SREITS now behaving properly at market open... all major ones going up... I think the problem yesterday was the US bank holiday, so no info on UST bond response to the war.

 

[sohguanh]

SREITS now behaving properly at market open... all major ones going up... I think the problem yesterday was the US bank holiday, so no info on UST bond response to the war.

Will see if it goes up for the rest of the week. Actually I was waiting for those big blue chip S-REIT as some is nearing 52 week low but it is ok I managed to get the smaller S-REIT for past month onwards. No fish prawn also can as long as they give dividends faithfully on time.

 

[direbmem]

I think boat will come back? Why would REITs rise now? Interest rates not dropping anytime soon.

 

[sohguanh]

I think boat will come back? Why would REITs rise now? Interest rates not dropping anytime soon.

Sometimes it can be share buyback from market from REIT itself. By reducing the number of shares floating, the share price has to rise logically. But REIT seldom do that as they need tons of cash to acquire new assets so yes I think like you boat will come back. Patience is a virtue.

 

[zeroX26]

I think boat will come back? Why would REITs rise now? Interest rates not dropping anytime soon.

Could be REITs itself doing share buyback or institution buying coz the shares have been deemed oversold. If you look at the buy/sell queue for last week's drop, the buy queue is as long as the sell queue for some of the branded reits.

 

[churnmaster]

Could be REITs itself doing share buyback or institution buying coz the shares have been deemed oversold. If you look at the buy/sell queue for last week's drop, the buy queue is as long as the sell queue for some of the branded reits.

Buyback unlikely in fact these guys come out with fundraising tactics like rights issue, etc. Others may buy expecting a rebound for 4-5% and then take it from there. Again, the rebound should be mostly in quality names (the big players).

 

[sohguanh]

Could be REITs itself doing share buyback or institution buying coz the shares have been deemed oversold. If you look at the buy/sell queue for last week's drop, the buy queue is as long as the sell queue for some of the branded reits.

Buyback unlikely in fact these guys come out with fundraising tactics like rights issue, etc. Others may buy expecting a rebound for 4-5% and then take it from there. Again, the rebound should be mostly in quality names (the big players).

For all share buy-back they (companies,reits etc) need to announce and I always refer to this url
https://www.sgx.com/securities/company-announcements

In all stock markets I have participated when there is a bounce up it is almost always the big players that move first. Reason is simple a lot of dollars and trades and volumes are there vs the smaller players. But does that mean smaller players is not worth investing? That will depend on each investor investment strategy.

There are mutual fund aka unit trust whose mandate is to invest in smaller players. Of cuz smaller players are not penny stock their market cap is in the hundreds of millions actually. I like to diversify a lot so I will try to get both smaller and big player and for this thread will be S-REIT then.

 

[Shion]

S-REITs 3Q2023 performance to reflect higher debt costs, weak forex says JP Morgan​

https://www.theedgesingapore.com/ne...t-higher-debt-costs-weak-forex-says-jp-morgan

 

[stanlawj]

JP Morgan sort of explains the bizarro price action in SREITS. There's more to it than just UST bond yields! The side effects of high rates!
Waiting for SREITS earnings season now.

 

[homer123]

See chart at timestamp 23:55

 

[stanlawj]

See chart at timestamp 23:55

From 2024 to 2025, UST 10yr to 30yr yields likely to stay at record 4.8 to 5% interest rates. So around 25% of debt of a REITS will be refinanced at 2% higher?

Also, the markets tend to extrapolate trends and will pummel the REITS as if it will need to refinance at extra 3% or more by end of 2025, unless there is a catalyst to spur strong bids in UST.

 

[DevilPlate]

From 2024 to 2025, UST 10yr to 30yr yields likely to stay at record 4.8 to 5% interest rates. So around 25% of debt of a REITS will be refinanced at 2% higher?

Also, the markets tend to extrapolate trends and will pummel the REITS as if it will need to refinance at extra 3% or more by end of 2025, unless there is a catalyst to spur strong bids in UST.

Not js reits….most stocks will suffer high borrowing costs as well as corp loans usually lock in for 2-5years?

If 10yr UST stay above 4% for the next 5-10years, what will happen to etf like VWRA or SPY?

 

[stanlawj]

Not js reits….most stocks will suffer high borrowing costs as well as corp loans usually lock in for 2-5years?

If 10yr UST stay above 4% for the next 5-10years, what will happen to etf like VWRA or SPY?

10 years is too extreme. I think at most is 2 years more.

 

[DevilPlate]

10 years is too extreme. I think at most is 2 years more.

not impossible….maybe like u said before once Powell step down , the new one may embrace 3-4% inflation as a norm

 

[stanlawj]

not impossible….maybe like u said before once Powell step down , the new one may embrace 3-4% inflation as a norm

Oh.. good point.

If new FOMC chair in 2026 switches to higher inflation target (which affects the natural interest rate r* as it is called) eg 3%, the Fed Funds rate will be dropped from from 5.5% to say 3.5% while the current UST10yr to 30yr stay near 4.5% forever to normalise yield curve is actually a possible outcome.

So higher r* means higher UST long term bond yields.