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

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

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

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

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

Yes , you are right.

If he does not factor in the costs of running the new buildings, then his investments, I would say is based on Best Case Scenario

Obviously unlikely to happen.

He could be penalised ( by the market ) for doing all the hard works.

Hopefully, I am wrong.

P/S > For those who think their computations are to good to be true , then rethink about the Chinese saying " Frog jumping on the Street" , that possibly able to help you to spot your mistakes. I use this method over and over again.

This post has been edited by SKY 1809: Mar 22 2010, 12:24 AM

It stands for Malaysian REITS generally.

Meaning Singapore REITS are not covered here.

One concern that I want to point out is :

First thing first , I am not familiar with commercial properties, so comments quite limited.

However, the present UOA premises are located at the centre of the city . The rental rate of RM 4plus seems to be a bit low as compared to the new buildings of rm 5.5 to 6.
"
Bear in mind, the new buildings at Bangsar or Damansara are not so " centre " as compared to places around Jln Sultan Ismail, where the existing building is located.

The other thing is why the occupancy rate of the existing building is low at 70 plus in the centre of KL, whereas Damansara has 87% or so ?

Where could it go wrong ? That is my question .

Mind to share, anyone ?

This post has been edited by SKY 1809: Mar 23 2010, 06:51 PM

One thing you have to be careful with Interest rates.

For short term loan of 5 years used for working capital, many companies do not use their properties to pledge.

Therefore these working capital loan interest rates are higher than any property loans.

Property loan rates so far are among the lowest in the market, as the risk is much lower.

Many banks compete businesses in this area, also resulting lower rates.

I do not know whether SC allow REITS to take property loans since money is collected by way of private placements or through proper right issues for purchase of any property. . KInda double financing to me if property loan is taken again.

The borrowings of REITS are mainly for working capital.

Perhaps you are more of pro REITS, less neutral in your computations.

So be careful.

This post has been edited by SKY 1809: Mar 24 2010, 08:28 AM

Well, if you very serious of investing in REITS.

My advice to you is to know the types of interest rates for different types of loans.

- Car loans
- Personal loans
- Business or working capital loans

( Mostly above BLR )

- property loans, as I say competition makes it cheaper

Also risks play an important role.

I mean these are just the basic stuff to know.

That is all.

Yes, you are right.

But if your purchase of property is fully covered by either a private placement or right issue ( like AXreit ) :-

1) there is no need to take a loan again , for what reason you need one ? It is a form of double " financing " to do so.
2) Unless it is for working capital , that is normal.


Frankly, and personally I also prefer REITS to get a longer term property loan ,and the money is standby for their working capital.

1) It could be cheaper if the money could be parked back like those full flexi housing loans for individuals.
2) a long tenure loan may cut down the risk faced by a short term loan borrower.

P/S : I do not think REITS use 5 years short term loans to partially buy properties. Correct me if I am wrong.

Just my view.

---

Added on March 24, 2010, 12:22 pmAXreit > quite close to 4.5% for short term loan.

Read somewhere, but cannot recall.

Frankly AXREIT might have more disclosures than others , more transparent in a way.

This post has been edited by SKY 1809: Mar 24 2010, 12:36 PM

Gearing and cashflow are important to REITS.

Cannot just simply assume they would have the cashflow.

First, under the accounting method, you need to provide ONLY the interest accrued to the profit and loss accounts.

Whatever profit ( realized at the end of the day), you can safely pay out 90% as dividends.

However, for actual cashflow you need to factor in the whole instalment amount. The total instalment amount ( term loans ) if for short term loan of 5 years is fairly big. OD could be exceptional, but some may attach with a sinking fund condition.

There could a a mis match, meaning short of cashflow . though the law may allow you to pay out 90% of the realized profit.

The balancing act to me is not as easy as Investors thought. To say about Leveraging is much easier than in practice.

Just my view

---

Added on March 24, 2010, 6:26 pmIt means 92% of the total loan is in the form of short term

This post has been edited by SKY 1809: Mar 24 2010, 07:44 PM

some typo errors made by Maybank.

You can discuss it too.

Why must you wait for people to discuss your reits ?

You can bring it up here, to share more with us.

This post has been edited by SKY 1809: Mar 24 2010, 08:14 PM

Whatever loans taken by REITS, the proper way by right should be settled off every now and then when the loans are due. It should not be " Refinancied " let say every 4 years or so.

The refinancing method used by REITS indicates there is a major weakness in the system, possibly they are earning insufficient cashflow to pay back the loans taken when due . Meaning they are just merely serving the interest when due.

This could be the downfalls of REITS in Singapore, I guess. And the downfalls of certain industries from time to time , cannot be attributed solely to the banks for non supports. LCL is one such I can think of.

Companies have to manage their own cashflow very well. And the job falls under their management , not the bankers.

Under normal circumstances, loans such as revolving credits or ODs that are needed for working capital of an entity , will be renewed, as the financing of working capital is an on going process.

But it should not amount to 30 or 40% of the gearing ratio.

And for commercial property loans taken by the companies, banks do allow a longer tenure of 10 years to pay back , possibly up to 15 years ( needed to reconfirm on 15 years )

There is a saying that long term assets should be financed by long term debts, the proper way. Those who are involving the the financial management of the companies would agree to this point.

Just my view.

This post has been edited by SKY 1809: Mar 25 2010, 08:35 AM

deleted.

This post has been edited by SKY 1809: Mar 25 2010, 08:34 AM

There are still lot of arguments in the market of what is called a true Islamic Reit.

So one should not use this Islamic factor as an overweight to buy.

Things like sin businesses , traditional banks earning interest and coffee/entertainment outlets selling non halal food and drinks should not be allowed to operate in REITs Premises. Some argued that.

This one was brought up in certain forums elsewhere.

Just my view.

This post has been edited by SKY 1809: Mar 28 2010, 11:34 PM

If you check back the previous thread ( v one ) , one of their buildings was ( is ) vacant for quite some time.

Also , Islamic reits may restrict themselves to Islamic borrowings only , loans could be in short supply when the economy is not doing so well.

This post has been edited by SKY 1809: Mar 29 2010, 01:56 PM

Waw, LRT new extensions changed.

Many original plans now become " selective "

http://thestar.com.my/news/story.asp?file=...0528&sec=nation

If that is the case, there would not be any serious problem such as Sub Prime Crisis.

Another danger of holding properties , would be " Asset Bubbles "

I mean no investment instruments are totally perfect and without risks.

It is just that you tend to understand more about REITS, so much so the risks are somewhat " reduced".

That is why forex traders see no risks at all in playing forex. Sure win one IF you know how.

This post has been edited by SKY 1809: Apr 10 2010, 09:34 PM

I think REITS were grossly undervalued in the past bcos many investors failed to understand REITS.

Now more investors understood the product, then tends to approach the fair value.

In Malaysia, no matter how good a product is , if buyers do not get to see and believe, then slowly it becomes a bad product.

Just my view.