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