Mapletree Commercial Trust

Reply to Mapletree Commercial Trust on Mon, 25 Apr 2011 06:09:35 GMT

financial_guru — Mon, 25 Apr 2011 06:09:35 GMT

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.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 16:50:38 GMT

daddy2007 — Tue, 19 Apr 2011 16:50:38 GMT

starlight1968sg:
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:

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 etc

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

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 16:18:11 GMT

starlight1968sg — Tue, 19 Apr 2011 16:18:11 GMT

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:

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 16:15:24 GMT

starlight1968sg — Tue, 19 Apr 2011 16:15:24 GMT

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.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 16:13:51 GMT

daddy2007 — Tue, 19 Apr 2011 16:13:51 GMT

financial_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.

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

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 16:06:42 GMT

daddy2007 — Tue, 19 Apr 2011 16:06:42 GMT

starlight1968sg:

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.

:celebrate:

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 15:19:05 GMT

starlight1968sg — Tue, 19 Apr 2011 15:19:05 GMT

daddy2007:
financial_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.
Even Blue Chips dropped to their lowest in 2008 crisis. Unit Trusts are not spared too. You got to present the complete picture

You have not factored in the dividends given out from 2008 till now for those REITs that you have mentioned

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.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 14:55:07 GMT

daddy2007 — Tue, 19 Apr 2011 14:55:07 GMT

financial_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.

Even Blue Chips dropped to their lowest in 2008 crisis. Unit Trusts are not spared too. You got to present the complete picture

You have not factored in the dividends given out from 2008 till now for those REITs that you have mentioned

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 08:49:28 GMT

rosemummy — Tue, 19 Apr 2011 08:49:28 GMT

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.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 08:44:29 GMT

rosemummy — Tue, 19 Apr 2011 08:44:29 GMT

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.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:52:58 GMT

dolphinsiah — Tue, 19 Apr 2011 06:52:58 GMT

financial_guru:
dolphinsiah:

What is the risks involve....

Anybody can share share their views???

:thankyou:
Hi Dolphin, this REIT is perpetual. It will be listed on SGX and anyone can buy & sell.
This trust will give regular quarterly dividends, but take note that share price can fluctuate wildly especially during financial crisis. To give an example, here are 2 similar trusts history:

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.

I PM'ed you separately over the weekend.

Good Afternoon Financial Guru,

I have PM you...please check your mail and advice...when have time.
Thanks

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:36:19 GMT

starlight1968sg — Tue, 19 Apr 2011 06:36:19 GMT

financial_guru:
I would rank hyflux as higher risk. Hyflux pref share is subject to company risk. If Hyflux goes bellyup or runs into financial trouble, they will be unable to make dividend payments.

Mapletree commercial does have risks though which is property focus on 3 buildings in SG. Rental income is more predictable than Hyflux, though there is still capital risks if commercial property prices were to drop.

REITS as an asset class haven't done v well in SGX history. Most if not all are still trading below peak 2007 prices.

Capmalls asia REIT still 20% below 2009 IPO price for those REITS that have china mall exposure.

It is due to this past experience that I try to avoid REITs.
At least Hyflux \"promises\" a 6%pa dividend.

Just checked SGX; the latest banks' pref shr are all trading above par values!

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:33:44 GMT

financial_guru — Tue, 19 Apr 2011 06:33:44 GMT

starlight1968sg:
Can make a simple comparison with Hyflux Pref Shr in terms of risk?

Thanks.

I would rank hyflux as higher risk. Hyflux pref share is subject to company risk. If Hyflux goes bellyup or runs into financial trouble, they will be unable to make dividend payments.

Mapletree commercial does have risks though which is property focus on 3 buildings in SG. Rental income is more predictable than Hyflux, though there is still capital risks if commercial property prices were to drop.

REITS as an asset class haven't done v well in SGX history. Most if not all are still trading below peak 2007 prices.

Capmalls asia REIT still 20% below 2009 IPO price for those REITS that have china mall exposure.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:23:09 GMT

starlight1968sg — Tue, 19 Apr 2011 06:23:09 GMT

Can make a simple comparison with Hyflux Pref Shr in terms of risk?

Thanks.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:21:58 GMT

financial_guru — Tue, 19 Apr 2011 06:21:58 GMT

dolphinsiah:

Good Afternoon 30plus,

Thanks for the explaination...kind of understand a bit.... :roll:

So it means that if the rental rates of these 3 buildings are good....
The forecast dividends payout ofshould be around 5% plus....??? :?

Does this TRust include other buildings which they are going to acquire....
Information is that Mapletree intends to buy more properties from China.... :lol:
Does it include in this Trust??

The forecast of 5.7% for 1st year is based on expected $0.05 dividends based on offer price of $0.88.
The yield can fluctuate depending on listed price.

The trust manager did say they will be acquiring properties later, though I'm worried abt china focus.
Another listed REIT (Capmalls asia with china properties) is not doing well. It went IPO in Dec 2009 at $2.31, but its now trading at $1.80

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:10:42 GMT

financial_guru — Tue, 19 Apr 2011 06:10:42 GMT

dolphinsiah:

What is the risks involve....

Anybody can share share their views???

:thankyou:

Hi Dolphin, this REIT is perpetual. It will be listed on SGX and anyone can buy & sell.
This trust will give regular quarterly dividends, but take note that share price can fluctuate wildly especially during financial crisis. To give an example, here are 2 similar trusts history:

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.

I PM'ed you separately over the weekend.

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 06:04:16 GMT

dolphinsiah — Tue, 19 Apr 2011 06:04:16 GMT

30plus:
No. There is no maturity. What they say is they will distribute 100% income till 2013 and at least 90% after that.

Basically, ah gong owns 3 buildings: vivo, harbourfront and PSA. Now they sell to the trust. If you invest, you own a slice of the properties and get the rental from it.

If you want to sell, you can only sell to market. Which is good because it is more liquid, and bad because market price may not represent the true value of the holdings.

Other than this risk, trusts likely will increase its portfolio over time, i.e. buy more properties. Typically, it will raise money by issuing new units, often at a bit discount to big investors. You may feel lugi there.

Hope it helps.

Good Afternoon 30plus,

Thanks for the explaination...kind of understand a bit.... :roll:

So it means that if the rental rates of these 3 buildings are good....
The forecast dividends payout ofshould be around 5% plus....??? :?

Does this TRust include other buildings which they are going to acquire....
Information is that Mapletree intends to buy more properties from China.... :lol:
Does it include in this Trust??

Reply to Mapletree Commercial Trust on Tue, 19 Apr 2011 05:41:18 GMT

30plus — Tue, 19 Apr 2011 05:41:18 GMT

No. There is no maturity. What they say is they will distribute 100% income till 2013 and at least 90% after that.

Basically, ah gong owns 3 buildings: vivo, harbourfront and PSA. Now they sell to the trust. If you invest, you own a slice of the properties and get the rental from it.

If you want to sell, you can only sell to market. Which is good because it is more liquid, and bad because market price may not represent the true value of the holdings.

Other than this risk, trusts likely will increase its portfolio over time, i.e. buy more properties. Typically, it will raise money by issuing new units, often at a bit discount to big investors. You may feel lugi there.

Hope it helps.