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68% expects downturn! CPF POFMA! Distressed REITs!
Tuesday, August 22, 2023Posted by AK71 at 9:28 AM 18 comments
Labels:
CPF,
investment,
money management,
REITs,
Singapore
From MUST to DC REIT to MINT, signs that US commercial real estate is in trouble. ARA Hospitality Trust to be spared?
Thursday, June 8, 2023
This is the transcript of a YouTube video I produced recently.
-----------------------
This is in the news today.
It is very likely that the valuations of those two hotels could have seen a decline, which would bump up the Loan to Value number, of course.
Shoes are dropping.
During "Evening with AK and friends 2023", I reminded myself that I was painting the entire US commercial real estate sector with a broad brush.
References:
1. Digital Core REIT.
2. Manulife US REIT.
Posted by AK71 at 3:55 PM 2 comments
Labels:
investment,
REITs,
USA
Digital Core REIT lost 2nd largest customer! Things to note!
Tuesday, June 6, 2023
This is the transcript of a YouTube video I produced recently.
-----------------------
With interest rates having risen so much and so quickly, the chaos at the regional banks in the USA already led to 3 relatively large banks failing.
While waiting to see if more regional banks could go under in the USA, businesses which are highly leveraged could fail one by one.
When a customer goes bankrupt, it is worse than a customer downsizing or right sizing their rental requirements.
Still, we don't want a good lesson to go to waste.
Posted by AK71 at 3:48 PM 4 comments
Labels:
investment,
REITs
Red flags! Why I avoided DASIN RETAIL TRUST?
Monday, May 29, 2023
------------
The sponsor of the trust waived a large portion of its distribution entitlement which resulted in a distribution yield of 8.5% in 2017 and 9% in 2018.
The second red flag was the quality of the assets injected into the trust.
The fourth red flag is worth a mention as it was a concern to me back in the day, but it isn't as important these days.
Anyway, back to Dasin Retail Trust.
Posted by AK71 at 9:09 AM 7 comments
Labels:
Dasin Retail Trust,
REITs
Cannot 4X money with MUST but what about a 70% growth?
Sunday, May 21, 2023This is the transcript of my most recent video on Manulife US REIT and how we could possibly grow our money 70% if we should invest in the REIT?
However, I said that the real estate investment trust would probably have to do an equity fund raising exercise which would make that claim untenable.
Today, I read another analysis but by DBS Research House this time.
In the report, DBS said that with gearing at 49.5%, just a little below the 50% limit by the Monetary Authority of Singapore, the need and urgency for a capital injection becomes more apparent.
To be sure, Mirae is doing this deal not because it is altruistic.
DBS research is cognizant of this as they said, "gearing may be stretched if capital values continue to fall again by end of 2023."
Taking all this into consideration, DBS research revised their target price lower to 24 cents a unit.
4X your money with MUST!
Posted by AK71 at 9:59 AM 4 comments
Labels:
investment,
passive income,
REITs
4X your money with MUST! Curious AK takes another look.
Tuesday, May 16, 2023
I have produced several videos and published a number of blogs on US commercial properties real estate investment trusts.
In their latest results, the real estate investment trust reported a lower occupancy of 86%. Businesses which are renewing their leases are downsizing or right-sizing.
Manulife US REIT still has almost 20% of leases expiring by end of next year, with about half of the expiries happening for the rest of this year.
Like I said in my blogs and videos on Eagle Hospitality Trust, insiders can sell for many reasons.
Posted by AK71 at 9:05 AM 12 comments
Labels:
investment,
REITs
$1.60 target price for AA REIT. Really? Why so good?
Sunday, May 14, 2023I make investment decisions based on my own analyses.
However, as a retail investor, I am cognizant of the fact that my analyses are usually incomplete.
Most important investment idea?
Why AA REIT?
Posted by AK71 at 4:33 PM 11 comments
Labels:
AIMS-AMP Capital Industrial REIT,
REITs
Why AA REIT? Still one of my largest investments.
Thursday, May 11, 2023During "Evening with AK and friends 2023" which took place in the evening of 10 May, I said that I liked a few real estate investment trusts listed in Singapore.
1. Why AK invests in REITs?
2. How to invest in REITs?
3. AA REIT's media release.
Posted by AK71 at 10:48 AM 4 comments
Labels:
AIMS-AMP Capital Industrial REIT,
investment,
REITs
Why I avoided investing in EC World REIT?
Tuesday, May 2, 2023
A reader told me that, fortunately, he heeded my warning about EC World REIT and did not invest in it.
To be quite honest, I could not recall when I did that.
Doing a search of my blogs, I found out that I blogged about EC World REIT in early 2018 to explain why I had my doubts about the REIT.
When in doubt, I stay out.
I don't have to do a complete analysis to know that I want to avoid investing in something.
If I see a red flag or two, that is enough for me to stay away.
OK, I admit I am lazy.
As if you don't know.
Anyway, it could be interesting to revisit the reasons why I avoided EC World REIT and also a chat I had with a reader.
At the time, I was concerned about the relatively short land leases.
They were similar in length to most Singapore industrial land leases.
Of course, later on, I found out that it was a characteristic of Chinese real estate.
So, it became less of an issue.
At the time, I was also concerned with the relatively low distribution yield.
The distribution yield was about 7%.
If I remember correctly, we could get much higher distribution yields back in 2018 from comparable REITs in Singapore.
Also, that 7% distribution yield was only possible because of sponsor support.
Without sponsor support, distribution yield would have been less than 6%.
That was some aggressive financial engineering at work.
Lower than 6% in distribution yield?
Definitely too low for such short land leases, I felt.
The sponsor also accounted for two thirds of the REIT's income.I also did not like that their debt was denominated in Singapore Dollar.
It reminded me of Lippo Mall Trust.
REITs should strive to borrow in the currency of the country their properties are located in to benefit from natural currency hedge.
To employ forward hedging against currency movement is expensive.
A natural currency hedge protects against disadvantageous foreign exchange movements without incurring extra cost.
I didn't like that a seaport was part of the portfolio.
EC World REIT was supposed to be about e-commerce assets.
I got the feeling that the sponsor was just trying to dump assets on unsuspecting investors by including a port in the offer.
In response to my blog, a reader had the following to say.
"I actually view the Singapore Dollar denominated debt as being good for EC World REIT.
"This is based on the likely appreciation of the Chinese Yuan against the Singapore Dollar.
"Indeed, the Chinese currency has appreciated against the Singapore Dollar in recent times and, going forward, I believe this trend will continue given international pressure on China to reduce trade deficits.
"I am quite heavily vested in EC World REIT. And thanks for sharing your views."
Regular long-time readers of my blog would know what I would have said to that.
We can have an opinion on what might happen to the Chinese Yuan against the Singapore Dollar.
However, we must recognize that when we do that, we are speculating.
What I have stated about natural currency hedge is a fact.
The fact is that having debt in Chinese Yuan for Chinese real estate provides a natural currency hedge.
I hope that reminding myself about why I avoided investing in EC World REIT has been a useful exercise for you too.
Recently published:
1. UOB: Some fundamental and technical analyses.
2. Why defensive investing is a good idea for most investors?
Related post:
EC World REIT.
Posted by AK71 at 9:00 AM 8 comments
Labels:
EC WORLD REIT,
investment,
REITs
Why defensive investing is a good idea for most of us?
Sunday, April 30, 2023
If you have been following my blogs, you would be familiar with my reminder to myself that in the current environment, it is probably not a bad idea to be more defensive as investors.
The heightened geopolitical tensions in many parts of the world, sticky inflation, higher for longer interest rates, slowing economic growth and the prospect of economic recession in major economies make for a troubling brew.
I have also said that as a retiree investor for income, it really makes more sense for me to be more defensive and seek out capital preservation options, reducing beta or volatility in my portfolio.
When interest rates were very low, there were people who would borrow money to invest in real estate investment trusts and thought they were actually investing defensively.
Why?
An idea in defensive investing is to invest in assets which deliver stable earnings and meaningful dividends and real estate investment trusts, for the most part, looked like a good fit.
However, these investors who were borrowing money to invest in real estate investment trusts were not investing defensively.
What they were doing was actually aggressive and would fall in the same class as margin trading and options trading.
If interest rates were to rise rapidly which they did, they could find themselves in a boatload of trouble as the unit prices of real estate investment trusts fell and cost of financing rose.
What they were doing had little difference with borrowing money to invest in Alibaba's common stock.
If the price of the common stock fall below a certain price, the lenders will come knocking which was what happened to some investment "gurus."
I never want to have to deal with such a possibility which is the reason for the word "bread" in "eating crusty bread with ink slowly."
If you are new to my blog and don't understand, I will leave a link to the relevant blog below.
Now, is defensive investing only good for retirees like AK?
I would argue that defensive investing is probably a good idea in varying degrees for people who do not have deep pockets.
For regular folks who still need their earned income, capital preservation should have a place in the overall scheme of things.
For retirees and people who do not have the ability to stomach big financial losses, their investment portfolio should be more defensive than not.
The ability to stomach big financial losses will vary from person to person.
How defensive an investment portfolio should be should have an inverse relationship with the ability to stomach big financial losses, theoretically.
The more able a person is able to take big losses, the less defensive his investment portfolio could be, therefore.
However, I have often seen people who are ill able to take big financial losses adopting very aggressive investing ideas.
I think they should ask themselves if they liked the idea of living next to an active volcano.
Defensive investing is also a good idea for people who are mentally unable to take big financial losses.
Losing sleep because you lost a few thousand dollars in a recent investment?
Well, then, you might want to do more defensive investing.
How do we do defensive investing?
I will not tell anyone what to invest in but I will say this.
As long as we invest with an eye on capital preservation, minimizing the risk of financial losses, we are taking a step towards defensive investing.
Promises of astronomical growth and future returns from businesses which are burning cash do not interest defensive investors.
Thinking of becoming more defensive in your approach to investing now?
If AK can do it, so can you!
Related posts:
1. "Eat crusty bread with ink slowly."
2. Update on saving for income.
3. More in equities or fixed income?
Recently published:
Investing or speculating in properties?
Posted by AK71 at 9:09 AM 6 comments
Labels:
bonds,
debt,
investment,
money management,
REITs
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