General S-REITs Discussion Thread

[Layers]

Well at least we know taka won't exit sg

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[kehyi4]

ST: High-rise office rents decline 7% as demand slows

SINGAPORE (BLOOMBERG) - Singapore landlords are paying the penalty for a slowing economy. Alone among the world's major cities, the cost of renting an office with panoramic views is falling as supply outstrips demand.

Annual rents on the upper floors of Singapore's skyscrapers fell 7 per cent to about US$775 (S$1,057) a square meter in the first six months, according to a 23-city index compiled by Knight Frank. The biggest increase was in Shanghai, where rents climbed 7.6 per cent to US$774. In Hong Kong, the most expensive market, rents rose by 5.9 per cent to US$2,996 a square meter, the broker said.

"There's a classic imbalance in the Singapore market," said Will Beardmore-Gray, head of Knight Frank's tenant representation and agency business. "They had relatively high supply and this has been exacerbated by a poor-performing economy and over development."

Vacancy rates in Singapore were 9 per cent in the second quarter, compared with 3.3 percent in Shanghai, Knight Frank data show. The nation's economy will shrink 0.1 per cent in the third quarter, according to a survey of 26 economists conducted by Bloomberg News in the week through September 13.

Demand for Shanghai office space has been lifted by the technology and creative industries, Beardmore-Gray said. The city has created 300,000 jobs in those sectors since 2009 and is expected to add 100,000 more by 2020, he said.

Manhattan skyscraper rents increased 1.9 per cent to US$1,701 per square meter during the first half, the second-highest in the index, while those in Tokyo and the City of London district were unchanged at US$1,610 and US$1,226 respectively.

Four of the five cities with the fastest rental growth were in the Asia Pacific region, with Toronto the only center outside the region posting a comparable increase.

 

[windwaver]

REITs investors usually look at yield/risk, debt leverage, price/NAV, growth potential, term of lease and most importantly the management team. REITs that frequently use rights issue for funding is usually a nono. REITs without good tenants or locations is also nono. REITs that's highly leveraged (like mortage REITs) is also nono.

Hmmm, normally I look at P/B and gearing, sometimes location of the REIT.

Need to look at so many things ah?

 

[Genosis]

Hmmm, normally I look at P/B and gearing, sometimes location of the REIT.

Need to look at so many things ah?

These are the so many things to look at......

• Gearing
• Weighted Average Lease Expiry (WALE)
• Debt expiry profile
• Land lease expiry profile
• Rental reversions track record
• Quality of assets (location, age and design of the properties)
• Type of assets (retail, commercial, industrial, healthcare, hospitality etc.)
• Management execution track records (lease renewal/ acquisitions/ AEIs/ rights issue/ private placements/ capital-recycling)

 

[windwaver]

These are the so many things to look at......

• Gearing
• Weighted Average Lease Expiry (WALE)
• Debt expiry profile
• Land lease expiry profile
• Rental reversions track record
• Quality of assets (location, age and design of the properties)
• Type of assets (retail, commercial, industrial, healthcare, hospitality etc.)
• Management execution track records (lease renewal/ acquisitions/ AEIs/ rights issue/ private placements/ capital-recycling)

Hehe, where to find all these?

 

[starfish.starfish]

Plife if consolidate to 2.4 can buy?

Started nibbling liao.

 

[zzxiaoboizz]

Not to forget to lookout for macro economic trend of rental for industrial/retail/office/etc

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[fatfleaz]

Comparing REITs to owning a physical residential property as an investment:

REITs are more liquid.

Buying REITs regularly is akin to paying for a mortgage. While one can get leverage buying property, the interest eats into your returns.

Cost of buying property is higher.

Possibly getting better yields compared to property rental. Ability to diversify according to market conditions.

REITs returns also seem more guaranteed, in a sense that REITs pay out 90% of net income. Property rental is dependent on whether one can secure a tenant.

Would one be able to invest in REITs in replacement of physical property investment? Any inputs appreciated. Thanks

 

[stam]

Comparing REITs to owning a physical residential property as an investment:

REITs are more liquid.

Buying REITs regularly is akin to paying for a mortgage. While one can get leverage buying property, the interest eats into your returns.

Cost of buying property is higher.

Possibly getting better yields compared to property rental. Ability to diversify according to market conditions.

REITs returns also seem more guaranteed, in a sense that REITs pay out 90% of net income. Property rental is dependent on whether one can secure a tenant.

Would one be able to invest in REITs in replacement of physical property investment? Any inputs appreciated. Thanks

The good thing about property is the leverage, if u can leverage high with REITs it could go well too.

But 1 thing is REITs are valued as "stock" so the market price can go up and down quickly and a lot, that's the risk.

REITs you can diversify to shopping Malls/commercial buildings too.

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[Knic_King]

Buying properties allow me to leverage... i can buy a 1mill property with 100k. And get 2-3% yield of the 1mill annual thru rental.

Comparing REITs to owning a physical residential property as an investment:

REITs are more liquid.

Buying REITs regularly is akin to paying for a mortgage. While one can get leverage buying property, the interest eats into your returns.

Cost of buying property is higher.

Possibly getting better yields compared to property rental. Ability to diversify according to market conditions.

REITs returns also seem more guaranteed, in a sense that REITs pay out 90% of net income. Property rental is dependent on whether one can secure a tenant.

Would one be able to invest in REITs in replacement of physical property investment? Any inputs appreciated. Thanks

 

[fatfleaz]

Buying properties allow me to leverage... i can buy a 1mill property with 100k. And get 2-3% yield of the 1mill annual thru rental.

Correct me if I'm wrong. Your rental would not be likely to cover your installments. So your 2-3% yield will be zero?

Compared to a conservative 4-5% yield for REITs? Instead of servicing the mortgage, I buy REITs monthly instead.

Of course, I have ignored plenty of other factors such as possible better capital gains with physical properties or buying REITs at all time high prices

 

[Knic_King]

Yes, after mortgage, i will have 0 yield. But after 30 years, if i sell the unit, i will have 100% of 1mill.

With 200k in reits, after 30 years, you wont have 1mill.

Correct me if I'm wrong. Your rental would not be likely to cover your installments. So your 2-3% yield will be zero?

Compared to a conservative 4-5% yield for REITs? Instead of servicing the mortgage, I buy REITs monthly instead.

Of course, I have ignored plenty of other factors such as possible better capital gains with physical properties or buying REITs at all time high prices

 

[Genosis]

Yes, after mortgage, i will have 0 yield. But after 30 years, if i sell the unit, i will have 100% of 1mill.

With 200k in reits, after 30 years, you wont have 1mill.

If u sell the unit, where are u gonna live?

With 200k in REITs, compound the distributions at 5% over 30 years will give u more than $864k

 

[havetheveryfun]

Yes, after mortgage, i will have 0 yield. But after 30 years, if i sell the unit, i will have 100% of 1mill.

With 200k in reits, after 30 years, you wont have 1mill.

theres no ends to the comparison.. there are advantages and disadvantages of each.

sure you can get the yield + capital.. but that's also provided you are able to rent out consecutively for the whole 30 years

 

[waxqube]

Yes, after mortgage, i will have 0 yield. But after 30 years, if i sell the unit, i will have 100% of 1mill.

With 200k in reits, after 30 years, you wont have 1mill.

Compounded dividends over 30 years is no joke... Assume the dividend yield hovers around 5%.

200000*(1.05)^30 = 864388.475

 

[Genosis]

Compounded dividends over 30 years is no joke... Assume the dividend yield hovers around 5%.

200000*(1.05)^30 = 864388.475

That's my plan.....

 

[havetheveryfun]

If u sell the unit, where are u gonna live?

With 200k in REITs, compound the distributions at 5% over 30 years will give u more than $1.7m

Compounded dividends over 30 years is no joke... Assume the dividend yield hovers around 5%.

200000*(1.05)^30 = 864388.475

how u get 1.7 m?

 

[Genosis]

how u get 1.7 m?

Paiseh......pressed the online calculator wrongly My bad

 

[Knic_King]

The unit is additional property.. i feel that properties is just another form of investment... i own reits and dividend shares too...

Some people just feel that property is safer as you own the property.

But i didnt realise 200k compunded can be so much. Looking at my cpf now...... $_$ if i can live until my retirement age

If u sell the unit, where are u gonna live?

With 200k in REITs, compound the distributions at 5% over 30 years will give u more than $864k

 

[havetheveryfun]

The unit is additional property.. i feel that properties is just another form of investment... i own reits and dividend shares too...

Some people just feel that property is safer as you own the property.

But i didnt realise 200k compunded can be so much. Looking at my cpf now...... $_$ if i can live until my retirement age

means ur cpf a lot of $