General S-REITs Discussion Thread

[stanlawj]

 

[d5dude]

Basically same DD that any stock picker should do for any stock, not just REITs.

Dividends come from earnings, companies cannot sustain high yields if earnings cannot keep up.

 

[sky1978]

Some reit manager opt for shares to get their due fees. So do you all see them as align with reit vision to be with it up and down? Wonder why they don't take cold hard cash for their fees.

Still need to wonder? The reason is very simple: if they take cash, the amount available for distribution will be impacted. Just need to go see how much fees they are getting vs the amount available for distribution. Purely looking at cashflow, If you are getting a dollar, the manager might be getting between 20c or 30c. If the P/B is high, they will not be getting that many new units/shares. The only headache is when the P/B is so low, and by taking new units, they will have to take a lot more, which easily leads to quick dilution in DPU. There is a reason why 97% of the REIT managers in the US are internalised.

 

[DevilPlate]

actually for recent Keppel reit acquisition, manager said DPU accretive lor....

https://www.keppelreit.com/news_ite...old-grade-a-office-building-for-a3638-million

255 George Street is expected to generate a first-year yield that exceeds 6.0% and DPU accretion of 1.4%[1] on a pro forma basis. The seller will be providing rent guarantee on existing vacancies and potential expiries.

And I don't mind more FH properties:

Post-acquisition, Keppel REIT’s Singapore-centric portfolio will be approximately S$9.6 billion across 13 properties in Singapore (76.5% of AUM), Australia (19.3% of AUM), South Korea (3.3% of AUM) and Japan (0.9% of AUM), and the proportion of freehold assets in its portfolio will increase from 33.2% to 36.4%[4] (by NLA).

 

[stanlawj]

actually for recent Keppel reit acquisition, manager said DPU accretive lor....

https://www.keppelreit.com/news_ite...old-grade-a-office-building-for-a3638-million

255 George Street is expected to generate a first-year yield that exceeds 6.0% and DPU accretion of 1.4%[1] on a pro forma basis. The seller will be providing rent guarantee on existing vacancies and potential expiries.

And I don't mind more FH properties:

Post-acquisition, Keppel REIT’s Singapore-centric portfolio will be approximately S$9.6 billion across 13 properties in Singapore (76.5% of AUM), Australia (19.3% of AUM), South Korea (3.3% of AUM) and Japan (0.9% of AUM), and the proportion of freehold assets in its portfolio will increase from 33.2% to 36.4%[4] (by NLA).

Do you know how will they pay for the acquisition? There are no details about how it will be financed.

I check the financial statements, and Keppel Reit only has $130M cash as at 31 Dec 2023.

 

[ctan84]

Do you know how will they pay for the acquisition? There are no details about how it will be financed.

I check the financial statements, and Keppel Reit only has $130M cash as at 31 Dec 2023.

I don't mind if its a rights issue. Will subscribe big time to buy at discount.

 

[DevilPlate]

Do you know how will they pay for the acquisition? There are no details about how it will be financed.

I check the financial statements, and Keppel Reit only has $130M cash as at 31 Dec 2023.

As long it is not pte placement at a discount hahaha

 

[stanlawj]

We're going for another wild ride through the abyss.

Let's see how SREITS will fare this time as UST bond yields rip up towards 5% again in Q2 to Q3 2024.

 

[sky1978]

Do you know how will they pay for the acquisition? There are no details about how it will be financed.

I check the financial statements, and Keppel Reit only has $130M cash as at 31 Dec 2023.

In their SGX announcement, they already mentioned that their intent is to finance with debt (section 5.1), and as of 28 March 2024, they have sufficient credit facilities to do that. Ideally, they should use as much AUD debt as possible, providing them with a natural FX hedge. If their target yield is 6%, they will have plenty of things to buy in Australia.

https://links.sgx.com/FileOpen/KREIT Announcement on Acquisition.ashx?App=Announcement&FileID=793870

 

[ctan84]

We're going for another wild ride through the abyss.

Let's see how SREITS will fare this time as UST bond yields rip up towards 5% again in Q2 to Q3 2024.

Sure boh? I will be quite happy for this to hop on this wild ride leh... Everytime you talk until armageddon happening, make me happy happy short while, but after that nothing happens one leh...

 

[philips107]

https://www.businesstimes.com.sg/co...io-almost-20-discount-its-longer-term-average

S-Reits sector’s PB ratio is at almost 20% discount to its longer-term average​

Free to read, not behind paywall

 

[stanlawj]

https://www.businesstimes.com.sg/co...io-almost-20-discount-its-longer-term-average

S-Reits sector’s PB ratio is at almost 20% discount to its longer-term average​

Free to read, not behind paywall

Because the book value is current value, not future value.

 

[stanlawj]

Sure boh? I will be quite happy for this to hop on this wild ride leh... Everytime you talk until armageddon happening, make me happy happy short while, but after that nothing happens one leh...

if you like wild rides, this will be good one. I'm waiting to see if the REITS will make a lower low, or a higher low.

 

[ctan84]

if you like wild rides, this will be good one. I'm waiting to see if the REITS will make a lower low, or a higher low.

lai lai, i waiting for this

 

[limster]

Because the book value is current value, not future value.

The property valuation could be linked to the rental yield and could be based on the assumption that you own the property without debt. When I read valuation reports they don't mention they base it on how much loan the owner took to buy the property, for example.

So if the cost of the REIT debt payments increases, it has nothing to do with the 'value' of the property, but will still affect the DPU.

 

[stanlawj]

The property valuation could be linked to the rental yield and could be based on the assumption that you own the property without debt. When I read valuation reports they don't mention they base it on how much loan the owner took to buy the property, for example.

So if the cost of the REIT debt payments increases, it has nothing to do with the 'value' of the property, but will still affect the DPU.

You are explaining the share price part of the P/B ratio. Regarding the book valuation part, it drops not just due to rents, but due to dropping neighbouring transacted CRE prices as the result of forced selling due to foreclosures or investor redemptions.

If all my neighbours CRE got sold off -20%, even if I don't sell my CRE and my rents collected increase, my CRE property value still goes down because the property surveyor needs to take in the recent transacted prices of similar properties as mine.

[note: my understanding is the book value for REITS is always the net asset value]

 

[focus1974]

Adam called it.

means can go in liao.

He's got luck as well as knowledge on his side.

not everyone who work hard at investing earned that much. Only those who have luck on their side.

 

[sohguanh]

Adam called it.

means can go in liao.

He's got luck as well as knowledge on his side.

not everyone who work hard at investing earned that much. Only those who have luck on their side.

If he got luck and knowledge he should be inside casino VIP room instead of meddling with stocks. Casino is much faster to win monies then play stocks

 

[DevilPlate]

You are explaining the share price part of the P/B ratio. Regarding the book valuation part, it drops not just due to rents, but due to dropping neighbouring transacted CRE prices as the result of forced selling due to foreclosures or investor redemptions.

If all my neighbours CRE got sold off -20%, even if I don't sell my CRE and my rents collected increase, my CRE property value still goes down because the property surveyor needs to take in the recent transacted prices of similar properties as mine.

[note: my understanding is the book value for REITS is always the net asset value]

Me think valuation drop mainly due to higher cap rate.

https://www.drwealth.com/why-are-s-reits-dropping-again/

 

[focus1974]

If he got luck and knowledge he should be inside casino VIP room instead of meddling with stocks. Casino is much faster to win monies then play stocks

you think stock market is because you are smart and don't depend on luck?