General S-REITs Discussion Thread

[$ingaporean]

I recently bought some art at 1.07.

Why i like art?

1. Huge portfolio and Well diversified in many countries
2. Holding mainly freehold properties
3. Low price to nav
4. Good brand name
5. Good yield at more than 7% at purchase price
6. I think they should be nearly done with their shopping spree
7. Reasonable gearing below 40%

However,

1. if global economy takes a hit, prices might still fall.
2. For some reasons, dpu seemed falling every year. Maybe due to rightsndilution?

However, with 7% yield holding for long term, i think risk is low should be able to withstand capital losses with the dividends for a couple of years hopefully dividends can sustain.

 

[waxqube]

I bought ART a while ago when I was just a newbie and only looked at price to nav. I have since sold it. Let me act as a devil's advocate. Comments in bold.

I recently bought some art at 1.07.

Why i like art?

1. Huge portfolio and Well diversified in many countries (OK)
2. Holding mainly freehold properties (freehold is overrated)
3. Low price to nav (I don't mind paying more for good REITs)
4. Good brand name (OK)
5. Good yield at more than 7% at purchase price (the current yield isn't that important)
6. I think they should be nearly done with their shopping spree (I don't think so)
7. Reasonable gearing below 40% (Most S-REITs have gearing around that range anyway)

However,

1. if global economy takes a hit, prices might still fall.
2. For some reasons, dpu seemed falling every year. Maybe due to rightsndilution?

However, with 7% yield holding for long term, i think risk is low should be able to withstand capital losses with the dividends for a couple of years hopefully dividends can sustain. (there's an opportunity cost whereby you might fare better picking a better REIT/stock)

 

[micromousez]

I recently bought some art at 1.07.

Why i like art?

1. Huge portfolio and Well diversified in many countries
2. Holding mainly freehold properties
3. Low price to nav
4. Good brand name
5. Good yield at more than 7% at purchase price
6. I think they should be nearly done with their shopping spree
7. Reasonable gearing below 40%

However,

1. if global economy takes a hit, prices might still fall.
2. For some reasons, dpu seemed falling every year. Maybe due to rightsndilution?

However, with 7% yield holding for long term, i think risk is low should be able to withstand capital losses with the dividends for a couple of years hopefully dividends can sustain.

Shopping spree not done yet...
Ascott did state "Ascott’s expansion target of 80,000 units worldwide by 2020"
Now is currently around 44,000 units...

That why ppl al cautions that there will be more rights & dilution upcoming...

-Vested in ART-

 

[Average]

If i buy 100shares then subscribe right shares gaugau, is better right?

 

[Average]

Zzz that time ara rights $1 is damn worth, nv buy.

 

[$ingaporean]

Great comments on the ART.

I read about the 5b portfolio and 6b target, so what i meant of newrly done is maybe 1 or 2 more rights issue and we are done. By subscribing to the rights we are not impacted by the dilution. I didnt really know about the 80k unit target by 2020.

Most reits are around 40% gearing with some exception like sphreit or fortune reits. 40% probably isnt a lot considering interest rate is low. It is actually working to your favour. But will need to caution about rapid rising rates although my personal feel is it will be gradual over long period. If i remember correctly their average rate is 2+%.

On why i like freehold, my plan is to hold on to it long term, and collect dividends. Other hospitality reit property are mostly leasehold. In the long run, maybe valuation will drop due to shorten of the lease. For freehold, the valuation likely be retained with inflation hedge. (My opinion)

I wanted something in the hospitality sector so i pick up ART compared to others. I wanted a portfolio of reits from different sectors. Recently also picked up SPHreit, china reits (crct, mgcct), all these form my reit portfolio now. Hope i made the right choice. I also wanted industrial reits and commercial reits but have not research which one to get, and feel that maybe diversify over longer timeline to get more reit

I tend to lean towards the big names with freehold properties and good yield, lower price than nav. This correction opened up the window of opportunity to pick up some. Not to say price will up from here, but at least i did not buy at a high price.

Risk will always be there for reits, so, i will save some bullets in case prices drop more then i will pick up more.

 

[Genosis]

Zzz that time ara rights $1 is damn worth, nv buy.

On hindsight, really worth it.....

 

[OngHuatHuat]

You have to account for the decrease in price for the current shareholder as well. Cannot just take current price - right price, coz additional shares will bring dilution effect and lead to a decrease in price for existing shareholders.

This share has dropped from its high at 1.75 half a year ago to current price due to dilution effect and bad market sentiment.

Zzz that time ara rights $1 is damn worth, nv buy.

 

[$ingaporean]

Probably you are already aware, ART recently did a private placement at a discount to mkt price and I believe this caused the share price to drop. Existing shareholders have no chance to subscribe to rights, but received accrued DPU up to that point.

I was aware of the rights issue but didnt know existing unit holder cannot participate.

Wonder why did the reit punish unit holder this way?

 

[Genosis]

I was aware of the rights issue but didnt know existing unit holder cannot participate.

Wonder why did the reit punish unit holder this way?

Wa......'punish' is a strong word leh

It is the nature of the beast IMO. When REITs with high gearing need to do acquisition, usually they will do rights issue or private placement. Rather common. The critical thing is that the acquisition should be yield accretive, and the rights issue or private placement price should not be at a huge discount.

This is also when the scale of the REIT comes into play. A bigger REIT with scale and a massive portfolio can choose to divest non-core, under-performing asset then use the funds to acquire a better asset. This is called 'capital recycling'.

 

[exterminazn]

lol sabana management is like sh it
u never see how their DPU keep dropping?

Mind sharing what's the bad thing abt their management? Do you mean their investing direction or acumen?

 

[Bedokian]

I was aware of the rights issue but didnt know existing unit holder cannot participate.

Wonder why did the reit punish unit holder this way?

That is the nature of REITs. They have to distribute 90% of their net income to unit holders. Without much financial leeway to expand, they have to either issue additional shares/rights (increasing equity) and/or take up more loans/issue bonds (increasing debt). The good and hopeful thing would be that these additional money would bring in more money through getting yield-accretive assets.

So in a way, "punish" is not an appropriate term.

 

[Genosis]

Mind sharing what's the bad thing abt their management? Do you mean their investing direction or acumen?

The management is poor in terms of securing lease renewals and new leases when their master leases expired and were converted to multi-tenancy......

 

[$ingaporean]

That is the nature of REITs. They have to distribute 90% of their net income to unit holders. Without much financial leeway to expand, they have to either issue additional shares/rights (increasing equity) and/or take up more loans/issue bonds (increasing debt). The good and hopeful thing would be that these additional money would bring in more money through getting yield-accretive assets.

So in a way, "punish" is not an appropriate term.

What i meant as punish is they did not allow unit holders to participate in the placement thus resulting in dilution.

But i guess in such times, prices would usually fall and unit holders can still buy off the market.

 

[Bedokian]

What i meant as punish is they did not allow unit holders to participate in the placement thus resulting in dilution.

But i guess in such times, prices would usually fall and unit holders can still buy off the market.

From the perspective of the Reit (or any other listed company), having placements is a very quick way of raising capital. And yes, you could participate by buying off the market, since the placement price would have been factored in.

 

[raidorz]

Helpful? Taken from http://www.sreitinvestmentblog.sg/

 

[micromousez]

If they do private placement 1 or 2 more times
Dilute u gao gao
Will u hold, sell or buy more?

i will hold/buy more provided that their net profit remain the same or bigger..
I may sell only if had found better stock such as if CMT/FCT drop to below my target price of $1.90

 

[limster]

During last GFC MLT did a private placement at 73.5 cents.

A few months later, I bought MLT for 43.5 cents and then 37.5 cents. I have to thank the big boys for donating all that money to MLT by paying 73.5 cents per unit

 

[exterminazn]

I saw 2015 fct give alot of dividend, what happen?

 

[Bedokian]

I saw 2015 fct give alot of dividend, what happen?

Meaning they earned a lot.