[Official] REITs CD tracking thread

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Z070188

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For sharing!!! From my UOB Kay Hian broker.

1) REIT Investment Ideas (For Investors)

Have you noticed the REIT sector are rallying? And if you have, are you asking if the rally sustainable? 2 questions that investors or myself will asked when we saw the FTSE REIT index outperformed STI this week.

Personal View:

A summary of my findings on why is the REIT sector rallying and is it sustainable?

- Last FOMC meeting, we saw US FED dropped its rate hike yardstick of unemployment rate at 6.5% for rate hike which was pretty close at that time (which was 6.7%).

- On 28 Mar, FOMC committee member Charles Evans reported that he sees FED hiking rate no earlier than mid 2015.

- On 9 April, FED Chairwoman, Janet Yellen, has reported that US economy is subpar and needs considerable time before rate hike

As investors we know that any shift in the interest rate environment is a direct impact on REITs income and dividend payout due to their business model.

Thus, the expectation is simple, with US FED setting a dovish tone on interest rate, global enconomy recovering and the Singapore economy thriving, REITs' income should maintains for the next 1-2 years.

And with an almost guaranteed yield for at least 1 year, institutions and defensive investors will not hesitate enter into the REITs. Thus, the current rally.

What can an Investor do if he/she has missed the rally?

1) Buy on pullback (accumulate when stock price close to 50days simple moving average)

2) Enter into REITs which has not rallied too strongly and with attractive dividend yield

(E.g. Cambridge Ind Trust, Frasers Centrepoint Trust & Mapletree Logistics TRust)

3) Office and commercial REIT preferred, as office rents are expected to raise in view of limited supply

The following is a summary of capital gain on the REITs since 31 March 2014 .
http://s344.photobucket.com/user/Z070188/media/REITspriceupdate_zpsd70f5dde.jpg.html?sort=3&o=0

More on REIT model :
Real Estate Investment Trusts - MoneySENSE


Dovish Remarks from FED Chairwoman, Janet Yellen: Federal Reserve head Janet Yellen says US job market still needs help | Business | theguardian.com
 
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Z070188

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Does anyone knows when and by what mode Suntec and First Reit will issue new shares to raise fund etc?
 
SpeedingBullet

SpeedingBullet

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AReit DPU increased 16% from 3.06 to 3.55.

YoY their gross revenue increased 6.6%, NPI 6.3%.
QoQ their gross revenue increased 7.7%, NPI -2%

Their new debt:

On 27 March 2014, A-REIT had issued JPY5.0 billion floating rates notes, which will mature in March 2021, from MTN2009. The notes bear a floating interest rate of 3-month JPYLIBOR + 0.50 per cent per annum payable quarterly in arrear. As at the balance sheet date, S$564.4 million ($200.0 million and JPY24.6 billion) remained outstanding.
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Btw they just (literally 5 mins ago) announced a revision to the conversion price from $2.177 to $2.1450. Will take effect on 30 May 14, the payout date for the 3.55 distribution.

In March 2010, a collateral loan of S$300 million with final maturity date on 1 February 2017 was granted by a special purpose vehicle, Ruby Assets Pte. Ltd. (“Ruby”). To fund the collateral loan granted to A-REIT, Ruby had issued S$300 million Exchangeable Collateralised Securities (“ECS”) which are exchangeable into new units of A-REIT (“Units”) at an adjusted conversion price of $2.177 per unit, subject to certain conditions, at any time on or after 6 May 2010 and have an expected maturity date of 1 February 2017.
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AReit's future outlook:

Outlook for the financial year ending 31 March 2015

For FY14/15, about 21.3% of A-REIT’s lease (by rental income) is due for renewal. With around 1,300 tenants in a portfolio of 103 properties in Singapore and 2 business park properties in China, A-REIT is well-diversified in terms of rental income. No single property accounts for more than 4.3% of A-REIT’s monthly gross revenue. A-REIT’s portfolio has a mix of long and short term leases (30.1% versus 69.9% by asset value respectively) with a weighted average lease to expiry of about 3.9 years which will provide a predictable earnings stream.

In 2014, while the supply of industrial space in Singapore is expected to increase, the demand outlook for business and industrial space is likely to remain healthy on the back of a tentative global recovery. Singapore remains an attractive business gateway to Asia. The average passing rental rates of leases in our portfolio due for renewal in the FY14/15 are still below the market spot rental rates; hence, positive rental reversion can be expected when leases are renewed.

However, Government regulations and actions may have impact on cost of operations. Operating costs could increase given the tight labour market, although measures are being taken to mitigate the impact. With about 10.4% vacancy in the portfolio, there could be potential upside in net property income when these spaces are leased out in due course, the speed of which will largely depend on prevailing market conditions.

In China, the Manager will continue to look for opportunities in the target product segments and cities. Over the longer term, demand for such space has strong underlying fundamentals as the Chinese Government deepens economic reforms, domestic consumption grows and the Chinese people strive for a higher quality living and work environment.

Barring any unforeseen event and any weakening of the economic environment, the Manager expects A-REIT to maintain a stable performance for the financial year ending 31 March 2015.
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I personally know of someone leasing from AReit and they said the rents are ridiculous, and judging from some SMEs move to Msia or other countries and AReit's rhetoric of "positive rental reversion" means that there's very little upside. Still vested but may sell soon, perhaps when I see an opportunity opening up, collected enough dividends from AReit to say bye bye. :mad:
 
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aceirus

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A-REIT right now has only 1 business park property in China, right? The one in Beijing.

Next one in Shanghai has not completed deal I think.
 
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