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Cutting losses in REITs.

Thursday, December 7, 2017

Reader says...
You have been very successful in investing in Reit.

May i ask if you have any cut loss plan for taking up reit position?

I know investing in reit is a long term investment, looking for distribution return.

As investing are about probability and there is no certainty, if the price of reit falling below the entry price, do you get out or continue holding your position?

Really hope to hear from you soon. Thank u Ak.

Your willingness to share help gain alot of knowledge for me.

AK says...
I have in the past sold down some of my investments in REITs.

Examples of such REITs were Lippo Malls and Sabana REIT.

In both instances, I sold because I thought they were no longer as good an investment for income and that the management was mediocre.

If I believe that a REIT is still a relatively good investment for income and that any price weakness is due to (seasonal or cyclical) externalities, unless structural, I won't sell.

You might be interested in the blog on Sabana REIT: HERE.

And the blog on Lippo Malls: HERE.

(I was lucky not to lose any money in both instances and made some money instead.)


laurence said...

No need to think so much. Just buy, hold and sell when AK does.
He's the Oracle of REITs with a long list of supporting evidence to back up the title.

AK71 said...

Hi Laurence,

I am no Oracle and I am thinking of retiring or at least semi-retiring from blogging.

So, better do not rely on me. ;)

AK71 said...

Jacintha Poh, Moody's vice-president and senior analyst, said: "We expect that LMIRT's financial metrics will weaken, on the back of aggressive acquisitions, such that the trust will prove more vulnerable to foreign exchange rate fluctuations and asset devaluations."

"The trust also faces high refinancing risk with around 30 per cent of its total debt coming due in 2018."

LMIRT's leverage will also increase following the proposed debt-funded acquisitions of two retail malls, Lippo Plaza Jogja and Kediri Town Square, S$98.1 million, which are scheduled to complete by the end of 2017.

Financial metrics

Specifically, the trust's pro-forma adjusted debt to total deposited assets will increase to 39 per cent from 36 per cent at Sept 30, 2017, and its adjusted net debt to normalised Ebitda (earnings before interest, taxes, depreciation and amortization) will weaken to 4.1 times from 3.7 times over the same period.

LMIRT also faces a refinancing wall in 2018, with S$100 million in medium term notes due in November and S$90 million of secured loans will come due in December.


AK71 said...

G said...
Hi AK, seems like reits have been showing weakness in their prices (FTSE Reits Index has been going down). I have just added Ascendas Reit and MLT Reit recently in October ($20k), no too sure if I should continue to hold them, cut or add to average down. Would you be adding on anymore reits given the future outlook, especially with the increasing interest rate hikes and trade war concerns outlook?
NOVEMBER 6, 2018 AT 12:07 PM

AK said...
Hi G,
I remind myself that all investments are good at the right price.
If you refer to my past blogs on S-REITs, you will get an idea of what I mean. :)
NOVEMBER 8, 2018 AT 11:41 AM

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