The email address in "Contact AK: Ads and more" above will vanish from November 2018.

FAKE ASSI AK71 IN HWZ.

Featured blog.

This guy has 800K in his CPF. (AK responds to HWZ Forum.)

A reader pointed me to a thread in HWZ Forum which discussed about my CPF savings being more than $800K. He wanted to clarify certain que...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.

Archives

"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

Largest REIT investments updated: COVID-19 meltdown (April 2020).

Saturday, April 4, 2020

This started as a reply to a reader's comment: HERE.

I actually spent more than an hour typing the reply and it became quite long.

So, I decided to publish the reply as a blog instead so that more get to hear me talking to myself.

Here is my reply to Unknown:

There are quite a number of REITs in my portfolio, as you probably know.

In 4Q 2019, three of them made it to my list of largest investments which were investments each with a market value of $100,000 or more.

The three were:

1. AIMS APAC REIT. (formerly AIMS AMP Cap. Ind. REIT.)

2. IREIT Global.

3. Ascendas Hospitality Trust. (now Ascott REIT-BT.)


In the last few weeks, the market values of the trio have plunged, of course.

I will look at each of them briefly.






1. AIMS APAC REIT.

This has always been a well run industrial S-REIT.

Being a landlord of industrial properties and business parks, the REIT is probably better insulated from the negative economic impacts of the COVID-19 crisis compared to retail and hospitality REITs.

However, if the crisis drags on for a year or two, then, we could see tenants default becoming a major problem.

Even so, industrial REITs usually collect many months of rent in advance and this provides some insurance.

Long time readers of my blog know the story of my investment in AIMS APAC REIT.

I have not done anything to my investment in AIMS APAC REIT for many years.

I thought my investment in the REIT would have fallen below $350,000 in market value by now but even with the big plunge in unit price, it remains above this number.

Pleasantly surprised.

Reference:
AA REIT and free money for me.






2. IREIT Global.

I increased my investment in IREIT Global very significantly only a few months ago.

Only belatedly, I realised that after I blogged about it, the unit price rose significantly.

I like to think that Mr. Market is always right and my decision to increase my investment in IREIT Global significantly when I did was probably a good one.

However, as the COVID-19 global pandemic moved to infect Europe, IREIT Global was not spared the wrath of the bear either.

Spain is now the most infected country in Europe, surpassing Italy.

Of course, unfortunately, IREIT Global very recently bought some properties in Spain.

Having said this, I believe most of IREIT Global's income is safe.

In a reply to another reader, I said:

"Deutsche Telekom and Europe’s largest pension fund, Deutsche Rentenversicherung (DRV) account for about 77% of IREIT Global's rental income.

"Even if all the other tenants go bust, these two won't.

"I am very simple minded and use this as the worst case scenario."


This knowledge gave me the confidence to add to my investment in IREIT Global as its unit price declined.

The lowest price I paid Mr. Market for this was 42 cents a unit.

In fact, I nibbled so much that together the nibbles might be considered a gobble.

Due to these nibbles, my investment in IREIT Global remains above $200,000 in market value.

Reference:
IREIT Global is going to Spain.






3. Ascott REIT-BT.

Of the three, the most vulnerable to the economic recession that will be created by the COVID-19 crisis is probably Ascott REIT-BT.

The airlines and hospitality industries are the first to feel the heat and will continue to feel the heat for some time to come.

Even after the COVID-19 crisis has abated, it is possible that people might take a while to warm up to the idea of travelling again.

I watched a documentary on the Spanish Flu and it was said that people who survived that global pandemic were so scarred that they did not even want to leave their homes unless they had to.

That went on for a long time after the crisis was over.

So, compared to industrial and commercial S-REITs or even retail S-REITs, hospitality S-REITs could take a longer time to recover from the COVID-19 crisis.

Due purely to the plunge in its unit price, the market value of my investment in Ascott REIT-BT is now much lower than $100,000.

Reference:
Ascendas Hospitality Trust getting a bad deal?






I said in a recent blog that we have to be prepared for a reduction or even a suspension of dividend payout in some instances.

This is true for investors of these REITs too as their incomes could be compromised.

In closing, tougher measures will be implemented in Singapore for a whole month starting next Tuesday, 7 April 2020, in the fight against COVID-19.

Let us all be socially responsible and remind each other to do the right things.

We owe it to ourselves, our family and friends, to do our part in the fight against COVID-19.

We are #SGUnited.

For a summary of the stricter measures, watch this 10 minutes video:






Together with this blog post, I am trying out a mobile version of ASSI.

So, for those of you who read ASSI using mobile phones, you will notice a difference.


With this new look on mobile, several things will be lost.


The disclaimer at the end of the blog is not visible on the mobile version and this has been my main reason for not having a mobile version of ASSI for the longest time.


Tags or labels at the end of each blog are also missing which means that if I acknowledge that a blog is an advertorial it would not show which was another reason for resisting the new mobile version.


With this new mobile version, there are no left and right sidebars which might be a big disadvantage to new readers and an inconvenience to old readers who might want to read older blogs or have access to resources and comments listed in those sidebars.


Readers who want to access whatever is lost in the mobile version will have to click on the "View web version" option at the end of the page.



Anyway, let me know what you think and I will see whether to keep this or to go back to the old way.

Further reading:
1. Largest investments updated.
2. 1Q 2020 passive income: COVID-19 crisis.
3. Survivability and opportunity in times of distress.

67 comments:

Ed Choi said...

DPU from SK6U dropped significantly in this round. Must need to wait and see whether the issue of spread of wuhan virus is improved in coming weeks.

AK71 said...

Hi Ed,

It seems that things will get a lot worse.

After all, Singapore's small domestic market alone will not be able to swing it for the retailers even without stricter control measures announced yesterday by our government.

It is my guess that it will be a couple of years at least before we see international travel recovering fully.

So, in the meantime, SPH REIT and other retail S-REITs will have to roll with the punches and hope not to get hit too severely.

We need a vaccine against the COVID-19 to be widely available or else most countries will keep their borders shut.

It seems that the time needed for this to happen is at least 18 months.

Crossing fingers.

LKH said...

Thks for sharing your thoughts. Did you nibble Comfort Delgro and Singtel as well?

keng said...

Hi AK,

Good to have a mobile version, but I think the font is a little too big, and I will have to scroll quite a bit to view the content, maybe you can't consider having just a slight decrease in font size?

If you have read the announcement from SPH, they actually allowed students to leave and offered refunds for their student accommodation business. Wonder if Centurion will be doing the same.

I am also holding Ascott Trust and preparing for no distributions in this challenging climate. In this current situation, size and diversity really does matter, and hope the trust can use this opportunity to acquire good assets on a cheap.

For peace of mind, I have not been looking at share prices as actively as I did. The dive in share prices is really depressing. This is the first time I experienced such an event and I would say I'm not that prepared in terms of having a sizeable warchest, having jumped in too soon.

Hope the market rebounds in the coming months or years.

Take care and stay safe!

Neverwinter has no covid, so I guess your characters are doing well!

laurence said...

Wow, AK is moving up the digital technological chain!! :)

AK71 said...

Hi LKH,

I am keeping my powder dry for non-REITs at the moment.

In the non-REITs space, I will probably be prioritizing banking stocks over ComfortDelgro and SingTel as I feel they might be comparatively safer investments for income.

AK71 said...

Hi keng,

The font size is what it is because of my failing eyesight. ;p

As for student hostels allowing refunds, I believe that it is the decent thing to do.

Good karma. :)

Someone once denounced me for being fake when I said I maintained an emergency fund enough to cover 24 months' of routine expenses.

I have been prepared for years that my passive income could take a big hit and slow to a trickle or maybe even dry up.

Looks like it is happening now.

Hope it doesn't last too long, of course.

Doing the right thing is more important to me than making money at all cost.

Some money we should not make.

Under normal circumstances, Ascott REIT-BT is not only bigger but it should also be more resilient than either Ascott Residence Trust or Ascendas Hospitality Trust on their own.

However, this COVID-19 crisis is shutting down hospitality businesses worldwide and geographical diversification is pretty useless although the larger size of the entity will give it more leeway to borrow.

Of course, the crisis could see valuation of their assets taking a hit in which case gearing level could increase even as borrowings stay at the same level.

There is also the matter of interest cover ration which could possibly weaken.

Unless the REIT has metrics like IREIT Global's, I would be very wary.

I don't look at the stock market daily either.

Unless we are traders, there really isn't a need to.

I believe that the bottoming process might have started and it would probably take weeks and even months to complete.

So, join me in Neverwinter where it is free of COVID-19! ;p

AK71 said...

Hi Laurence,

To be honest, I have known about the mobile version for many years and also tried it a few years ago.

However, for the reasons stated in the blog above, I decided to forgo the mobile version.

I decided to make it available again because it seems that many more readers are using mobile phones to read my blog.

It isn't something I would do myself because my mobile phone has such a small screen compared to my laptop.

Anyway, as long as these readers know the drawbacks of the mobile version and are happy with it, then, it is OK (for now).

Unknown said...

I got 36 months of reserves and I am freaking out.

garudadri said...

Very user-friendly and navigable version. I agree with your sentiments regarding prioritising banks and non-REITS. There is a small chance that banks might cut or even cancel dividends as it happened in Europe if the problem persists

streamyx88 said...

hi, i saw in some recent announcements by Ireit that some of the substantial shareholders have been disposing their shares......it is not a vote of confidence during these times

cuie said...

Thanks for making the mobile version available! I read your blog on my mobile and love the new interface! :)

AK71 said...

Hi Unknown,

I hope the crisis doesn't last 36 months.

Crossing fingers. -.-"

AK71 said...

Hi garudadri,

Thanks for the feedback.

If everyone likes the new mobile version of ASSI, I will let it stick. ;)

Just have to be aware of the stuff we are not getting with the mobile version.

There is always the option to click on "View web version" at the bottom of the page, I guess.

As for prioritizing banking stocks, our local banks are very well capitalized.

A strong balance sheet is important but even more so during bad times.

We should brace ourselves for possible dividend cuts and suspensions for the duration of the crisis at least.

AK71 said...

Hi streamyx88,

If you are referring to Mr. Tong, he has been trimming his stakes in S-REITs and not just IREIT Global.

So, it isn't IREIT Global centric.

Having said this, IREIT Global is not insulated from problems caused by the COVID-19 crisis, of course.

AK71 said...

Hi cuie,

I am glad you like it. :)

If more people say that they like the new mobile version of ASSI, I will let it stick.

Just keep in mind that we are missing quite a number of features here but, of course, we can click on "View web version" at the end of the page at any time. :)

Sunny said...

Hi, AK, how to access your mobile version of your blog? Any link?

Thanks

AK71 said...

Hi Sunny,

As long as you are using a mobile phone to read my blog, the mobile version of my blog should display for you now.

If it doesn't, try refreshing the page.

raf said...

Hi AK, thanks for your valuable talking to yourself. Would appreciate some self talk on two reits that may be less prone to dividend reduction: First Reit and Elite Commercial. Thks

raf said...

Hi AK, thanks for your valuable talking to yourself. Would appreciate some self talk on two reits that may be less prone to dividend reduction: First Reit and Elite Commercial. Thks

Steven said...

Hi AK,

Regarding the mobile version, the fonts are a bit big, you might want to turn it down a notch. The "View web version" at the end of the page, maybe you can put a line at the top of the page as well, reason being, it takes quite a while to scroll to the end of the mobile page.

Regarding REITS, i feel in this current crisis, all reits will be impacted. But some because of their tenants composition, they will be more buffered. Currently, not much can be done about the tenants composition in the reits, mostly i feel we need to focus on their cashflow.


Best Regards,
Steven

Steven said...

Hi AK,

Regarding the mobile version, the fonts are a bit big, you might want to turn it down a notch. The "View web version" at the end of the page, maybe you can put a line at the top of the page as well, reason being, it takes quite a while to scroll to the end of the mobile page.

Regarding REITS, i feel in this current crisis, all reits will be impacted. But some because of their tenants composition, they will be more buffered. Currently, not much can be done about the tenants composition in the reits, mostly i feel we need to focus on their cashflow.


Best Regards,
Steven

Unknown said...

Hi ak,

Do you see the recent resignation of ireit CEO as a red flag that only insiders know? I find that the resignation was a bit abrupt and there wasn't proper succession planning in place. The new CEO has yet to be announced a couple of months since.

AK71 said...

Hi raf,

I think that the risk of First REIT seeing negative rental reversions is actually pretty high.

The fact that their master tenant who is also their sponsor is not financially strong is something to keep in mind too.

Reference:
Sold First REIT...

As for Elite Commercial REIT, there is some financial engineering to boost the DPU, if I remember correctly but the REIT's counter-party risk seems relatively low.

My plate is rather full and I have not looked at the REIT in detail.

You might want to visit Investment Moats where Kyith shares his thoughts on the REIT:
Elite Commercial REIT by Kyith, 23 Jan 20.

AK71 said...

Hi Steven,

Thanks for the feedback.

The font size is good for my failing eyesight. ;p

It is a good size for the web version of my blog.

Unfortunately, I cannot set different font sizes for each version of my blog. :(

As for the "View web version" button, it seems that I don't have a choice where it appears.
:(

All S-REITs distribute 90% to 100% of their cashflow to their investors.

So, investors will know easily how badly impacted they are by the COVID-19 crisis when the distributions are announced.

Hope for the best but we have to be prepared for the worst.

AK71 said...

Hi Unknown,

I was under the impression that IREIT Global has found a new CEO:

"Pursuant to the announcement dated 24 February 2020 on the resignation of the Chief Executive Officer (the “CEO”), the Manager also wishes to update that the Board of Directors has identified and approved a well-qualified candidate to assume the new CEO position."

Source:
http://ireitglobal.listedcompany.com/newsroom/20200317_183550_UD1U_ER4QPBN3RL2IFYVP.1.pdf

The word is that Mr. Aymeric Thibord decided to resign from his position as Chief Executive Officer to pursue other career opportunities.

I have no reason not to believe that. ;)

LoveLocks said...

Thank you AK
I prefer the mobile version.

CupcakedCrusader said...

Hi Ak,

Rocking this new mobile friendly format, makes viewing on mobile much less cluttered. I rmb you avoiding investing in our blue chip reits like CMT, FCP, MCT due to the high valuation and having to pay a premium for them. However, with the ongoing virus, all of them are going below NAV. Could you talk to yourself on whether you would be looking at them vs ireit as believe they would do well when this event past.

Cheers,
Cupcake

AK71 said...

Hi LoveLocks,

Another vote for the mobile version, I see.

Thanks for letting me know. :)

AK71 said...

Hi Cupcake,

Yes, retail S-REITs were so expensive.

At those prices, I wondered why would people invest in them and not, say, DBS, for example, which gave a similar dividend yield?

When we consider that S-REITs distribute their cashflow while non-REITs pay a percentage of their earnings and not cashflow as dividends, it was simply mind boggling.

The current crisis is forcing many people to shop online and I wonder if it is another nail in the coffin for retail S-REITs?

Anyway, with the stock prices of the local banks having taken a beating which resulted in them trading at a discount to their NAVs as well, retail S-REITs are not more attractive now than before in this respect.

Of course, if the unit prices of retail S-REITs decline much more from here, everything else being equal, I might change my mind.

I anyhow talking to myself only hor. ;p

Shen said...

Hi AK,

can you talk to yourself on AGT? Wondering what your thoughts are with the current covid situation, and whether you see value in nibbling more at current prices <50c. Noticed that the last round you were accumulating at <54c.

AK71 said...

Hi Shen,

Warren Buffett kept accumulating airline stocks and the last time he bought more was in February.

Well, he just sold big chunks of his investments in Delta Airline and Southwest Airline a few days ago, losing a lot of money in the process.

So, you see, quite obviously, the situation has changed so drastically that Buffett sold stocks that he said he would not sell just a couple of months ago.

The situation has definitely changed drastically since that time I bought more of AGT.

Of course, the Olympics is postponed by a year too.

Although AGT is probably going to be worth more when things return to normal, we have to accept that AGT's income would probably be impacted negatively by the COVID-19 crisis in the meantime.

If we expect this crisis to last a lot longer and be more severe than the Global Financial Crisis, then, we have to accept that AGT might not be a good investment for income in the meantime either.

From an asset play perspective, I am holding on to my investment in AGT because I think it is undervalued.

However, as an investor for income, I am not adding to my investment because of the uncertainty surrounding its ability to generate steady and meaningful income for me in the meantime.

AGT has always been a slightly speculative investment and in such investments, I like to be paid while I wait and the being paid component of the strategy is in jeopardy now.

The cool guy :) said...

Hi AK, I am a fan of the mobile version as well. One thing i noticed however, is that on clicking on the next page button on the first page ">", it shows only 1 post at a time rather than 5 or more post. This makes it very hard to scroll to older posts.

What are your thoughts on APTT? The yield now is about 10% and this is based on a fairly low payout ratio. Their cashflow should be fairly resilient to Covid 19 fallout. Do you think they will cut their dividend further?

AK71 said...

Hi The cool guy,

I am such an IT idiot that I am not sure I know how to fix the issue you mentioned.

I will potter around and see if I find a fix.

APTT will probably survive the COVID-19 crisis but there is a possibility of them reducing their dividend payout even more, of course, even if they don't have to.

APTT is undergoing transformation which is something that will take quite a bit of time to achieve.

I would say that APTT remains a pretty speculative investment but unlike AGT in my reply to Shen's question earlier there isn't an attractive asset play angle.

So, it is really whether they can succeed in their transformation and be a much better investment for income.

AK71 said...

Another shortcoming of the mobile version is the missing "Search" function at the top of the page.

For new readers who are using the mobile version of my blog, in case you are wondering about AGT and APTT, I have included links here to help you find the most recent blogs on these entities here in ASSI:

1. APTT, Softbank, ECB, UBER, GRAB, WeWork and irrational competition.

2. Accordia Golf Trust: Buying cheap and cheaper.

streamyx88 said...

i have to applaud you for taking time to ready and REPLY every comments !!

AK71 said...

Hi streamyx88,

I am just talking to myself here in ASSI.

Even if people talk to me, I am still talking to myself.

I am mental, I know.

Really. ;)

Unknown said...

https://www.businesstimes.com.sg/companies-markets/tikehau-capital-cdl-raise-their-stakes-in-ireit-global-as-strategic-partners

laurence said...

Everyone is all ears whenever AK talks to himself.
ASSI is the only place on earth where everyone can't wait to listen to someone talking to himself. ;)

A piece of good news today!!!!

Tikehau Capital, CDL raise their stakes in IReit Global as strategic partners

IREIT Global on Tuesday said its key unitholders and strategic partners Tikehau Capital and City Developments Limited (CDL) have raised their stakes in the real estate investment trust (Reit).

French asset management and investment group Tikehau Capital raised its stake to 29.2 per cent from 16.64 per cent, while Singapore-based developer CDL increased its stake to 20.87 per cent from 12.52 per cent.

This brings their aggregate shareholding to over 50 per cent, IReit Global's manager said in a regulatory update.

AK71 said...

Hi Unknown and Laurence,

Thanks for sharing the news with us here. :)

IREIT Global is very undervalued.

The REIT is a very reliable investment for income even now.

It is very good to see Tikehau Capital and City Developments Limited having so much more skin in the game and not just pay lip service which was what the sponsor of Eagle Hospitality Trust did, for example.

raf said...

Hi AK, would you consider buying ESR given the much bigger drop than other industrial reits

AK71 said...

Hi raf,

Is ESR REIT a better investment for income than other industrial S-REITs?

Just looking at prices will not give us an answer.

Look at their financial numbers.

Hint: Higher gearing ratio and lower interest cover ratio is not a good combination.

Further reading:
When would I invest in ESR REIT again?

raf said...

Yes am aware of your concern about ESR since its merger with Viva. My question was in the context of the last sentence of your blog (When would I invest in ESR REIT again?)which reads:

"Of course, having said this, if there should be a big crash in price, maybe, then, I might take a look"

JH said...

it seems to be a v shape or w shape recovery from covid19 once the cure is out this month...

AK71 said...

Hi raf,

I believe your earlier question was to compare ESR REIT with other industrial REITs and not related to my blog on the merger of ESR and VIVA.

"would you consider buying ESR given the much bigger drop than other industrial reits" (?)

Anyway, to answer your next question, if everything else has not crashed in price, I might take a look at ESR REIT since a lower price might compensate for the REIT's weaker numbers.

Since everything else has crashed in price, in comparison, ESR REIT is not more attractive to me now than it was before.

AK71 said...

Hi JH,

The suffering is terrible.

We should all pray for a swift recovery.

JH said...

yes there will be good news... wait for April 15 and 16.... good news from Israel...

AK71 said...

Hi JH,

I watched a YouTube video on this just now.

Crossing fingers. :)

Link:
https://www.youtube.com/watch?v=E7FJrdIEQiU

JH said...

Hi AK,

I am sure not what is your belief... but do watch this with open mind as it is based on certain Christian view point. Quite a lot is covered of what is to expect for 2020 so do watch it in full if you have the time.

So yes, I personally believe Israel is coming out with good news soon on April 15 and 16. As for the market, not sure about v shape, w shape or whatever shape, this covid-19 will be gone soon. The next market disruption besides the covid-19 perhaps has something to do with US and China... as what this video mention is going to happen in 2020.

Donald Trump would be winning the election despite all odds against him...

https://www.youtube.com/watch?v=uHX2RjTi_Vk&t=1556s

AK71 said...

Hi JH,

I like to think that I am a man of science although I was not particularly good at science when I was in school. ;p

I have from time to time made some Buddhist references in my blog and, so, that's my inclination.

Anyway, it is good that you gave a warning in your comment that the YouTube link is based on Christian perspective or I would not have published your comment and the link for fear of offending some readers who might innocently decide to check it out.

What is going to happen in the future?

Whatever it is based on, your guess is as good as mine. ;)

vany said...

Hi Ak,

What do you think of the markets' rally for the last 2 days?

AK71 said...

Hi Vany,

I just published a blog which you might find interesting:
Buying DBS, OCBC, UOB and cheering for IREIT Global.

Good luck to us all. :)

JJ Boo said...

Hi AK,

Today 8 Apr Deutsche Bank Hong Kong disposed all their shares, which is 26%.
Correct me if I'm wrong but its not the same Mr Tong you commented to streamyx88? At $0.60 per share now and this latest sell off, can you quickly talk to yourself again?

I'm very green so hope to hear you talking to yourself more. Thank you ya...

AK71 said...

Hi Boo,

Hmmm... You want to read the announcement again:

https://links.sgx.com/FileOpen/_FORM_3_Deutsche_Final.ashx?App=Announcement&FileID=605669

The transaction happened on 6 April, not 8 April.

Same day Mr. Tong sold down his stake.

They are probably all related transactions that took place at 49 cents a unit.

I don't know why they sold, of course.

It is more interesting to see Tikehau Capital and City Developments Limited increasing their investment in the REIT so substantially.

It is also interesting that an insider, Bruno de Pampelonne, bought 200,000 units at an average price of S$0.6075 per unit on 8 April.

https://links.sgx.com/FileOpen/_Form_1_Bruno_8%20Apr_Final.ashx?App=Announcement&FileID=605770

If I had a lot more money, as an investor for income, I would buy more IREIT Global too.

Since you say you are very green, if you are viewing my blog on mobile, you might want to click on "View Web Version" at the end of the page and start by reading the blogs which I have linked in the side bars.

If you are already using the web version of my blog, you get to skip a step. ;p

CL said...

I think this is the first time since the GFC that reit cut dividend heavily (example: SPH Reit). Moving on, what gives you the strong conviction that REIT (such as Mapletree, CapitaLand, Ascendas, Aims APAC, IREIT) will go back to pay dividend on an increasing level (or at least go back to pre-Covid-19 era)?

CL said...

I think this is the first time since the GFC that reit cut dividend heavily (example: SPH Reit). Moving on, what gives you the strong conviction that REIT (such as Mapletree, CapitaLand, Ascendas, Aims APAC, IREIT) will go back to pay dividend on an increasing level (or at least go back to pre-Covid-19 era)?

AK71 said...

Hi CL,

If we are going to have another Great Depression, then, everyone is in trouble.

I don't know what is going to happen.

Like I said, I don't believe in being overly optimistic or being overly pessimistic.

I believe in being pragmatic.

If you read the blog again, you will see why I think AA REIT and IREIT will continue to make meaningful distributions to unitholders.

However, we should be ready for a possible reduction or even suspension in distributions.

Nobody said...

Hi AK,

Is it still worthwhile to buy Ireit since its price has gone up to 66.5 cents?

Elaine said...

Hi AK

May I ask for your thoughts on the most recent reprieve for reits? I think it gives reits some breathing space, but I don’t understand why the market is cheering! Shareholders might not receive any income for several quarters.

Coronavirus: New measures to give Reits more flexibility in raising funds, managing cash flow
https://www.straitstimes.com/business/property/coronavirus-new-measures-to-give-reits-more-flexibility-in-raising-funds-managing?xtor=CS3-18&utm_source=STiPhone&utm_medium=share&utm_term=2020-04-17%2010%3A04%3A53

Cheers
Elaine

AK71 said...

Hi Elaine,

I saw the news and I thought we could have gone a bit higher than a 50% gearing level, to be honest.

Although there is still a possibility that REITs' income might be negatively impacted due to the COVID-19 crisis which could lead to a reduction in distributions to investors, allowing higher gearing would reduce the probability of REITs issuing rights to strengthen their balance sheets.

This is because we could see the valuations of REIT's assets coming down if their income generation ability is compromised while debt level in nominal terms stay the same.

This is probably good news for many people who invest in REITs for income.

AK71 said...

I hit the publish button too quickly.

As for allowing REITs to defer distributions till 2021, if we are long term investors, we will get paid eventually.

This is why having an emergency fund is important.

People who said AK was crazy or didn't believe that AK has an emergency fund when he has "so much" passive income, think again.

See:
How much should we have in our emergency fund?

darren6040 said...

Hi AK,
I am turning 20 and im starting my investment journey.I have about 20+k in savings that im using to invest. My investment goals are over a long horizon over 10+ years and i am looking to just grow my capital. How would you start if you were in my position? Im thinking half of it in strong local banks and the other half in local REITS

Elaine said...

Thank you, AK, for sharing your insight.

AK71 said...

Hi Darren6040,

As long as you have taken care of the basics, the rest of your money, you can use to invest for higher returns.

Investing in good income producing assets to improve financial health is a viable strategy for anyone.

REITs are relevant instruments for income investors and if you have read my blogs on REITs, you will see that they are an important part of my journey.

As for the local banks, you can see what I think about them in my more recent blogs. :)

AK71 said...

Hi Elaine,

Hey, don't thank me for anything.

Just talking to myself, as usual. ;)

Unknown said...

Dear AK

After this merger what do u think is the fair price for this counter, Ascott trust(HMN) I would love to increase my stake here making use of this market
downturn.

Thank for your kind sharing that enable to make some money here.

God bless you with good health and long live.

victor

AK71 said...

Hi Victor,

There really isn't any need to do any crunching of numbers here.

Cheap, cheap, cheap.

However, so is almost everything else in the stock market.

Eh, I am not enabling anyone to make any money here.

Remember, I am just talking to myself.

Have a plan, your own plan. ;)

Monthly Popular Blog Posts

 
 
Bloggy Award