V1 http://forum.lowyat.net/topic/479946/+2500

REITS do have the future.

It is one of the effective tools to accumulate your retirement funds.

Lower tax at 10% and with quarterly dividends. The law does force REITS to pay out at least 90% of the realized incomes to you as investors. Average Yield is about 8% p.a ( + - ). Not counting capital gain if any.

In view of more good quality companies recently taken into private ( such as Hume, IOI properties etc ), REITS are of better choice. Many more to come. REITS could be the answer to some of your needs such as earning good and regular ( passive ) dividends./Incomes.

You are more like a landlord of some good properties, without having the burden to collect the rentals on your own.

Highly portable as you may switch from one to another ( charges involved ) . Having a traditional property needs time to sell. Hard to sell by piece. You could do so in REITS by way of 100 units per transaction.

More matured people should strongly consider this form of passive and regular incomes.

Likewise beginners should start their investments by way of REITS, before venturing into other stocks.

Just my view.

Happy Investing to all.

This post has been edited by SKY 1809: Jul 3 2010, 10:21 AM

IMHO REITs are a good alternative to blue chips and unit trust investing, slow and steady but with even better yields.

REITS tend to be less volatile unless there is some unfavourable news (e.g. losing a major tenant). Also sometimes, the bad news can be a blessing in disguise as you are getting a bargain. So for those who have a weak heart can consider this investment vehicle.

The law/rule required Reit to distribute 90% of their income is the main reason why I invested in reit.

Simple reason, why invested in a listed company? because can share a chunk of its profit.
And with real cash being distributed, you are reloaded with cash and can reinvest on your own liking, whether increaese your stake in reit or diversify into other area.

Another one thing is simple business model, when you know the properties have good rental and occupancy then generally the reit income is pretty highly predictable.

While it can have some part of inflation hedge as well as long as the properties is in highly demanded area.
As we know proeprties price and rental rate generally goes up, when inflation.

Downside:
Due to nature of distributing 90% of its income, there is little money left, so repayment of borrowing totally is a long process, and they need constant or periodically refinancing for their borrowing.
Any new acquisition, must either through increase the borrowing or private placement only.

Recently Hektar having a good run. Any good news?

How much impact on REIT if BLR keep on increasing back to 6.5-6.75%?

Bargain for would-be unitholders, heartache for current unitholders who wanted to cash out anytime soon.

Logically REITs are for long term, cashing out due to short term investment objective may not work.

On the other hand, if you do DCA if unit price sinks , you may find your average effective yield goes up in the long run. Unit price may go up if tenant is found.

The exceptional case is they cannot find a tenant at all.

Then you can blame it on luck again

Either that, or the REIT management company couldn't find a replacement CEO after half a year. Lets not forget the due date for ATRIUM to find a replacement for its vacated CEO post is end of April. Until now, I think we still have no news on it. I do have a substantial amount in ATRIUM at ABP of 0.74, which is not a bad price. I am getting very good income from ATRIUM alone, so I would feel bad if I had to let it go close to the deadline.

Anybody has any idea what would happen if ATRIUM still hasn't found a replacement after the deadline?

I don't think the CEO position is a big issue. Company can always apply extension from SC/KLSE to fulfill the requirement.
Atrium is relative small operation company, with 4 warehouses to manage which should be quite easy.

Atrium's concern should be put on lease renewal issue, which one of its warehouse lease is expected to end this year second half, if not mistaken, correct me if I am wrong as I don't know or find any update whether negotiation is taking place to extend/renew the lease yet.

This post has been edited by cherroy: Mar 20 2010, 11:52 PM

I do not think it is so difficult to find a replacement.

Just that they may have someone in mind from within the company.

The reason that they have not promoted him/her up, could due to the expectation not made, or more time is needed to judge their performances.

They just cannot simply promote one just because there is no CEO.

On the other hand , whatever savings if any, would be passed back to you in the form of dividends, as more realized profit .

So not totally bad from investors point of view.

This post has been edited by SKY 1809: Mar 24 2010, 07:27 AM

not sure.. but REITS doesnt appeal much to an ordinary Malaysian investor... However, I hope to buy Sunway REIT's IPO coming out soon...

anyway allow me to post a pic just for fun - how the skyline of KL will be transformed....
by nazrey


with many big projects coming up, so REIT has potential? not sure.

This post has been edited by accetera: Mar 21 2010, 12:14 AM

Errr..... buying reit on IPO generally is not a good idea, as most reit IPO history showed. They tend to trade below NAV in general from various reit in the market except may be Axreit only.

Reit is not about having potential or not or growth.
The mindset investing in reit is own the properties and get the rental only, one should be treat it as a fixed income instrument and don't expect much appreciation side from the reit price.
Should treat it difference from ordinary share.

Sorry i would like to make correction on my previous post the latest gearing ratio for UOA should be 39% not 43%.

Refer to UOA ANNUAL REPORT, the average interest for borrowings is 3%. Base on my calculation on the properties yield which is around 8% with respect to latest valuation. It still provides a lot of margin. Lets assume this interest rate rise to 4% within the next 3 years we still have quite a number of margin for that. So i am quite comfortable with UOA NEW acquisition. Base on my own calculation after deducting of the interest expenses the project EPS shoud be at least 16 cents per unit!!!!!!

So for me i will hentam UOA REITS KAO KAO

In the eyes of common investors, the post of CEO is important, and shouldn't be vacated for so long. Although it will not be reprimanded by SC, if left unfilled for too long, I'm afraid it would affect the price of ATRIUM.

If they have someone in mind for the post, then it should be ok.

darkknight81,

I don't get it. How did you get the EPS of 16 cents while the current EPS is around 10-11 cents? Did you take the EPS dilution into your calculation, or did you just ad it up to the current EPS?

The market reaction ( sell down of UOA reit ) does not seem to go along with your analysis.

Even some professional analysts could overlook certain facts from time to time, and hence give a strong buy call. LCL was one such that Analysts did not pay attention to LCL's cashflow, by giving a strong buy.

But if you are pretty sure yourself ( like W Buffett used to be ), you would be very successful in time to come.

Best of luck to you.

This post has been edited by SKY 1809: Mar 21 2010, 04:48 PM

I think he may miss out the dilution on the private placement part, just my guess.

It is unlikely to see reit can achieve EPS grow of 50% with just one or two acquisition through private placement and borrowing.

In normal circumstance, market reaction on the share price is quite effective to reflect whatever news or development. As we see reit price generally well position in the range of 7-8% yield across, which most investors are comfortable with that kind of yield range.

That was what I was thinking as well. But I am still waiting for him to explain

This post has been edited by Jordy: Mar 21 2010, 06:10 PM

Of course i did include the dilution and even the extra interest expenses UOA needed to pay in future and considering the extra interest hike of another 0.5 % even.

Of course if you guys look from the private placement of course the future EPS does not change much. But don forget the RM 270million loan which was raised through borrowings with interest rates of around 3.5% in future (last year borrowings interest was 3% we add another 0.5% for future interest rates hike). So as i said previously the margin is quite high. So in short leveraging is very important in managing reits

This post has been edited by darkknight81: Mar 21 2010, 06:17 PM

In view of many facts and figures are still not available right now.

It is too optimistic to build your investment basing on Best case scenario.

1) Best Case
2) likely or possible case
3) Worst case.


At most you could for 2. Let assume no errors or wrong assumptions on your part.

Just my view.

This post has been edited by SKY 1809: Mar 21 2010, 06:21 PM