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Asian REITs 1H 2010.

Tuesday, November 2, 2010

The report by CBRE RESEARCH (ASIA) titled REITS AROUND ASIA 1H 2010 makes for interesting reading. See the following two paragraphs from the report regarding S-REITs:

The total market capitalisation of S-REITs stood at US$21.1 billion as of the end of the first half, making it the second largest REIT market in Asia after Japan. The outlook for S-REITs is stable as the sector continues to be supported by the strong rebound in Singapore’s economy, the stabilisation of rents across the retail, office and industrial property sub-sectors  as well as the steady performance and lower refinancing risk of many S-REITs.

The simplicity of S-REITs as an investment instrument, their strong underlying fundamentals and relatively risk averse nature continue to make them an attractive option for investors. The S-REIT market has developed and matured over the last eight years, in size as well as in complexity and depth. S-REIT portfolios now cover a wide array of assets in retail, commercial, industrial, healthcare, hospitality and residential sectors, all of which are situated in diverse locations around the region. Investors in REITs have also evolved and now look towards the potential of a REIT’s property portfolio. These include factors such as asset type, geographical location, occupancy rates, demographics, lease terms, tenant quality and diversity, all of which combine to provide support for the portfolio’s aggregate rental income and in turn the sustainability and stability of the REIT’s distributable income. Investors also consider the REIT manager as this directly involves the development and implementation of the REIT’s investment strategy, the management of its portfolio and capital structure to foster long-term profitability.

Read complete research paper here.

16 comments:

la papillion said...

Hi AK,

Seems like suddenly there's a lot of attention on reits. Esp so after the two mega IPOs got people starting up on reits. I read that there are perhaps 6 more coming up, some of them rivalling MIT in terms of size too.

I think it's only good that people are focusing on reits. I think reits do well in this kind of low interest rate environment because they can borrow and do acquisition at a very good rate. I doubt the power that be will raise the interest rate anytime soon...perhaps we can ride on it for 2-3 years more before re-assessing again.

Hopefully Saizen 'wakes' up, haha :)

AK71 said...

Hi LP,

In recent months, I lost out on a couple of money making positions because some shares I held for a long time were sold due to some uncertainties.

Remembering the advice that we should try to avoid losing money, I liquidated those positions only to see the share price going much higher. The consolation: I did not make money but I did not lose money either.

Of course, there is also the advice that if we have done our FA thoroughly, we should hold with conviction. This is also something I have said before but it is easier when the circumstances are clearer.

It is clear to me that Saizen REIT's fundamentals are improving. I do not foresee any negative developments for this REIT. In fact, things could only get better.

Well, Mr. Market does not care two hoots what I think. Just when I mentioned last night how there seemed to be more buying up in Saizen REIT recently, today, thus far, the REIT experienced huge selldowns. However, the selling down at 15.5c is well absorbed and my buy queue was filled as well. ;)

I eagerly await Saizen REIT's report on 10 Nov. :)

Aaron said...

How do we differentiate the difference between a sell down vs buying interest/loading? Cause both of these actions will constitute to a large volume.

AK71 said...

Hi Aaron,

If we look at the online trading platform, there is a function called "Trade Summary". Clicking on this shows us how many shares were bought up (from the sell queue) or sold down (to the buy queue).

Give it a go. :)

Zelphon said...

Yeah, huge sell down today for Saizen but it is well absorbed at 0.155..

I managed to added more today too..

Hope our conviction holds !!!

AK71 said...

Hi Zelphon,

I was just chatting with LP (Bully the Bear) and momo (Wealth Buch) in LP's cbox. They too bought more at 15.5c.

There seems to be a tug of war between the bulls and bears at 15.5c. It is encouraging to see that the selling is well absorbed.

Could it be that even BBs want to buy more at 15.5c and are waiting to pounce each time there is a chance to do so? Why buy at 16c if they could buy at 15.5c? ;p

Zelphon said...

No idea..

ur guess is as good as mine..

now all we have to do is to wait for results annoucement..

We have been holding for the past year without dividends ..

At least going forward, we will have dividends...

AK71 said...

Hi Zelphon,

Well, we did get 0.26c DPU recently. ;)

Your comment on holding on for 1 year without dividend led me to check my purchase prices and dates just for fun. ;p

I started buying in early October 2009 at 13c. I continued buying at 13c and 13.5c. Based on the closing price of 15.5c, these have appreciated 19.2% to 14.8%. The recent DPU of 0.26c represents a yield of about 2% for a 11 months holding period.

In December 2009, I bought more at 14.5c and 15c. These have appreciated 3.3% to 7.1% and a yield of 1.75% for a 9 months holding period.

In January and February 2010, I bought again at 15.5c and 16c. These have lost some money based on today's closing price of 15.5c. A loss of about 3.5%. The yield of 1.6% over a 8 months period does not cover the loss.

In March 2010, I bought some at 16.5c. These lost 6% and the yield over a 6 months period was only 1.58%.

All in all, still in the black but nothing to brag about, for sure. Of course, these observations are based on prices Mr. Market provided. Price is what we pay and value is what we get.

As I believe that things are looking up for Saizen REIT which is still undervalued at the current price, there is no reason to sell and would, in fact, accumulate on weakness.

Anonymous said...

AK.

My holding avg cost is at 16cents.

You are lucky that you can touch it from 13 - 16.5 cents range & top up at 15.5cents. I now suffer paper-loss and without much hope for dividends on this counter at the moment.

Pump in more to lower my avg cost ? Yes, thats one option. Lets see.

SnOOpy168

AK71 said...

Hi SnOOpy168,

I am now in the 15c BUY queue. If there are people willing to sell lower, I will buy. ;)

As for the next distribution, conservatively, I expect it to be about 0.52c, assuming that all the warrants are exercised which I rather doubt would happen. This would take place in March 2011.

16c remains the immediate resistance. If this resistance breaks, the counter could test the high of 18c achieved in January this year.

My longer term targets remain at 19c and 21c. When would we see these achieved? Probably when the following happen:

1. Refinancing of YK Shintoku's CMBS.

2. Next distribution in March 2011 paying out 0.52c per unit or more.

Having said this, as I am investing primarily for income, the DPU is of greater concern to me.

Aaron said...

Hi AK71,

I finally understood how to see the difference btw a sell down and loading. Thanks for your help :)

AK71 said...

Hi Aaron,

No problem. Glad to share. ;)

Anonymous said...

Hi AK71

It appears that many of those here picked up some Saizen Reits on 3 Nov at 15.5 cents. I got 100 lots at 15.5 cents too.
Btw You were saying that the next distribution for Saizen Reits is in Mar 2011. I thought the result announcement is on 10 Nov 2010 and payment is on a quarterly basis.
Please correct me if I am wrong.
Thanks

CS TAN

AK71 said...

Hi CS,

A reader, Nick, corrected me and advised that Saizen REIT has a half yearly payout policy. So, on 10 Nov, we might know how much is the distributable income for 1Q2011 but we won't be paid in December.

Let us look out for a larger payout in March 2011 which would be for 1H2011. :)

Anonymous said...

Wah so many pple buying at 15.5 no wonder my 15cts queue cannot be fulfilled. well i also bought some for 15.5 niah...in this bullish environ, its a steal...compared to FCOT. if anyone ask my why S reit is underperforming, its becoz of the warrant. look it up in the balance sheet thats shows how much the trust is bleeding from this instrument. another factor is although s reit will benefit from the rise in share price, the insiders does not think its time yet. imho, i also dunno really know y but someone may really want to accumulate but cannot really successfully force price down wo exposing themselves, thus the current farce. hehe

KY

AK71 said...

Hi KY,

I am also in the 15c BUY queue. Haha.. ;)

As for the warrants, it is just an accounting entry, just another number. Take these away and, voila, a different picture. So, I know what you mean.

With more and more warrants being exercised over time, Saizen REIT could only get stronger.

This consolidation phase could go on for a while more, it seems. No reason for me to sell and plenty of reasons to buy more. :)

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