Yesterday I receive my Starhill REIT circular.
Basicly I'm OK with the proposal, but haven't really decide vote against or vote for it.

It propose selling of Starhill and Lot 10 for RM1.03 Billion, to be satisfied with issue of CPU and cash. Most of these cash and CPU will end up buying YTL Corp Hotels, which I must rethink twice. Nonetheless, if such proposal goes accordingly, Starhill REIT will become the first Malaysian Hospitality REIT.

With majority STARREIT holdings in YTL hands, I dont think our vote matters
Thus our only option is to sell if we don't like what we are getting (or keep if we believe in Francis' vision for
STARREIT)

Disregard whether YTL holds how much the stake, if one doesn't like it, then just vote "no".
It might not has any material effect, but if there is significant minority shareholders vote "no", then it also sends the message to the management board as well. (besides disposing)

SC is going to change the new regulation on asset liabilities disposal issue in the near future as well.

I would say exercise your right/preference disregard the outcome, although one might think or in actual fact, it could be irrelevant.
You never know what happens next.

Cherroy, you always said that many people treat REITs like they were stocks, which is not correct.

Just wondering how we should actually treat REITs then? Fire and forget?

kmarc,

Sorry to interrupt. The business for REITs are in leasing out properties, and that is its ONLY business. Since the income for REITs is more or less stable, why would you want to trade it (buy and sell like ordinary stocks)? It is only when the income is not to your expectation that you should sell the counter and reinvest your money somewhere else. The longer you accumulate the distributions, the more you will gain. This is what we call profiting by holding.

By the way, you will not forget your REITs counter because you will be receiving the cheques every quarter

Thx for the reply. I understand that part now.

However, in the context of increasing stock price, is there a level where you would want to sell your REITs? I think this was discussed before but I can't remember the reply. Take for example HEKTAR. My ABP is around RM1.00 and the stock price is now RM1.20. That means a capital appreciation of 20%. So, if I were to hold it forever, that capital appreciation would mean nothing, provided I don't buy any more Hektar. If I sell Hektar, I will get the capital appreciation profit and the capital back to reinvest in other REITs that gives a higher dividend rate compared to HEKTAR. I don't really know how to express this but I hope you get my meaning.

Treat it as fixed income instrument.

It is more like bond than equities.

I see. As with the above question, what if there is capital appreciation? Any level to sell off?

This post has been edited by kmarc: May 20 2010, 02:49 PM

You should look at its yield at 1.20.

If the yield at 1.20 is not attractive for you, then time to let go,
or there is little improvement in DPU, (eventually increase in yield).
or the yield is expected to go lower
or there is alternative investment that offer similar yield while less risky (like FD)
or there is alternative reit which is better in term of their properties portfolio and better yield.

Just raise a few point to consider, there may other many reason, and personal reason/preference as well.

Thx. That's the answer I was looking for.

Another question, my ABP was RM1.00. So, in terms of yield, I should be calculating based on RM1.00 and not RM1.20 right (or even if the share price shoot up to RM1.50)?

Your consideration of yield should be at 1.20 or 1.50, when you decide/consider to sell time.
Because once you sell, you can get 1.20 or 1.50, not already 1.00 aka the worth is 1.20.

Ok, thx for clearing that up. I still look see look see REITs prices every SINGLE day!

Me also looking at Qcapital, see it will below 1.00 or not.
Me also look see look.

Cool! I thought I was the weird one.....

Besides Qcap, any other REITs counter you're aiming for at the moment?

Stareit initially want to add more, after adding last month or so.

But after read the whole proposal of the disposal of Lot 10 and Starhill then turn into hospitality reit, apparently, the realised capital gain and the proceed money raised will all being used to fund the new acquisition, so no extra DPU from the capital gain realised. While there will be period lose of income due to disposal as new properties is scheduled to be injected within 6 months after the proposal being carried out, so there will be 1 to 2 Q with low DPU. As both proposed disposal properties made up around 70%+ of current income.

Ok, thx for the info. Will aim for more REITs in the future.....

im interested with axreit, what the best price to enter if im expecting 9% dividend yield

Molotov Cocktail,

As with any other investments, you divide the distribution by the current price. So if you want 9% yield, the price would be between 1.60 - 1.70.

Axreit full year DPU is expected in the region of 15-16 cents, so aroung 1.70 price range could meet your targetted yield.

We can always vote "NO", and if there is enough "hands" to say "no",
then the resolutions will not be passed.
It's not about how much share that vote, it's about how much shareholder that vote.
And the more share concentrated, the more dangerous it's,
because when there is 99.9% of share goes to big shareholder and the company management,
and 1 share for another shareholder, if the small shareholder vote "NO" in every resolutions,
it'll effectively force to AGM to ground. Because as company management,
they don't exercise their vote, which is why I believe that HO HUP tussle was set in.