Mapletree Commercial Trust
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I disagree with financial guru that REITs does not have a good track record. It does because of the benign interest rate environment over the past decade.
It’s not meaningful to compare prices using peak and trough, especially when that is during a major financial crisis. Any liquid investments with a market value will see fluctuation, even unit trusts that are considered low risk like bond funds. Many blue chips was trading at less than 50% today’s price during the crisis.
I’ll address the 3 REITs mentioned by financial guru.
Firstly, CapitaMall Asia is not a REIT. It doesn’t have to distribute a certain % of its income like REITs. It’s taking on development and leasing risks for the newer projects that are not stabilised, which REITs don’t usually do. Those investors looking at REITs should not be touching CapitaMall Asia. It’s more for growth rather than income.
For CapitaCommercial, if you use the IPO price and adjust for the rights issue in 2009, you’re looking at close to doubling your investment at IPO in 2004, based on today’s price. And that’s not counting the dividends.
Mapletree Logistic IPO price in 2005 was just $0.68. I would think the returns is not too bad, especially after taking into account the dividends.
The problem with REITs in the Singapore market is that because of the lack of instruments paying reasonable yield, the investors have chased the price up to rather unrealistic level and panic during the crisis. As a result, we see more volatility in the prices than we should in REITs. But today’s price is a decent entry level with reasonable yield though I would be very careful about the possible rise in interest rate. If interest rate move up significantly, the current yield will not be attractive and the prices will fall. But this is equally applicable to low risks bond funds. -
Comparing Hyflux and REITs, I would think the risk is pretty similar. The major difference is that you get upside in REITs, but hardly for preference shares. Those in the market (mainly by banks) were issued when interest rates (esp longer term rates) were higher. That’s why they’re now trading at a premium. The issuer’s financial position is also stronger now than at the time of issue, though this don’t account for much difference in the price.
If interest rate moves up, both will see a drop in price. -
financial_guru:
Even Blue Chips dropped to their lowest in 2008 crisis. Unit Trusts are not spared too. You got to present the complete picture
Capita Commercial Trust.
Peak Value of $2.41 in Jun 2007. Lowest value of $0.43 in Dec 2008 during the financial crisis (loss of 83%). Right now current price of $1.40 is still 40% below peak price. :!:
Mapletree logistics Trust.
Peak Value of $1.47 in July 2007. Lowest value of $0.31 in Dec 2008 during the financial crisis (loss of 79%). Right now current price of $0.90 is still 40% below peak price. :!:
SGX listed reits as an asset class so far does not have a good track record. Current prices of most reits have not recovered to 2007 levels.
You have not factored in the dividends given out from 2008 till now for those REITs that you have mentioned -
daddy2007:
Extreme high and low values have been presented. What about the launched prices?
Even Blue Chips dropped to their lowest in 2008 crisis. Unit Trusts are not spared too. You got to present the complete picturefinancial_guru:
Capita Commercial Trust.
Peak Value of $2.41 in Jun 2007. Lowest value of $0.43 in Dec 2008 during the financial crisis (loss of 83%). Right now current price of $1.40 is still 40% below peak price. :!:
Mapletree logistics Trust.
Peak Value of $1.47 in July 2007. Lowest value of $0.31 in Dec 2008 during the financial crisis (loss of 79%). Right now current price of $0.90 is still 40% below peak price. :!:
SGX listed reits as an asset class so far does not have a good track record. Current prices of most reits have not recovered to 2007 levels.
You have not factored in the dividends given out from 2008 till now for those REITs that you have mentioned
Anyway, all investments come with a varying degree of risk. It is just how much risk an investor can swallow. -
starlight1968sg:
:celebrate:
Extreme high and low values have been presented. What about the launched prices?
Anyway, all investments come with a varying degree of risk. It is just how much risk an investor can swallow. -
financial_guru:
We don't just buy REIT based on price. We should be looking at their NAV, Gearing, Interest Coverage, Corporate Rating, Occupancy Rate, Spread of Occupancy Rate, Debt Maturity Profile etc. Just to name a few evaluation criteria. Study their fundamental and enter with a right price. Take care of the downside and the upside will run by itself
Capita Commercial Trust.
Peak Value of $2.41 in Jun 2007. Lowest value of $0.43 in Dec 2008 during the financial crisis (loss of 83%). Right now current price of $1.40 is still 40% below peak price. :!:
Mapletree logistics Trust.
Peak Value of $1.47 in July 2007. Lowest value of $0.31 in Dec 2008 during the financial crisis (loss of 79%). Right now current price of $0.90 is still 40% below peak price. :!:
SGX listed reits as an asset class so far does not have a good track record. Current prices of most reits have not recovered to 2007 levels.
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rosemummy:
If interest rate moves up, both will see a drop in price.
People have been saying the interest rate would move north since we have been in an ultra low interest environment for such long, the problem is when. -
daddy2007:
We don't just buy REIT based on price. We should be looking at their NAV, Gearing, Interest Coverage, Corporate Rating, Occupancy Rate, Spread of Occupancy Rate, Debt Maturity Profile etc. Just to name a few evaluation criteria. Study their fundamental and enter with a right price. Take care of the downside and the upside will run by itself
Ha.. this knowledge is what I lack of.
Too complicated for me to understand.
Possibly Hyflux pref shr is not that complex ? :roll: -
starlight1968sg:
All these figures are in the annual report. Just look at the trend for the past few years and one can gauge how strong is the particular REIT. Don't think is rocket science. Just need to compile these criteria and measure against the threshold. E.g Gearing should be less than 35%, Interest Coverage more than 2.5x etcdaddy2007:
We don't just buy REIT based on price. We should be looking at their NAV, Gearing, Interest Coverage, Corporate Rating, Occupancy Rate, Spread of Occupancy Rate, Debt Maturity Profile etc. Just to name a few evaluation criteria. Study their fundamental and enter with a right price. Take care of the downside and the upside will run by itself
Ha.. this knowledge is what I lack of.
Too complicated for me to understand.
Possibly Hyflux pref shr is not that complex ? :roll:
Although not 100% foolproof, at least there are some basis for evaluation for entry. If one pick those good REITs, don't think they will cook their financial statements
I got a F9 for my Accounting... but these simple figures I can still understand..... hahahahaha -
There's a good article here on REITs: http://www.lioninvestor.com/are-singapore-reits-a-good-investment/
As mentioned in some of my previous posts, I have similar views to him on REITS.
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