Can we trust those "independent" valuer? A lot of those "independent" or quasi-government institutions only will realize they are wrong once a big scandal happens to them, otherwise it is just "business" as normal. Examples includes Arthur Anderson (Enron), Moody's, Standard & Poor's (CDO's) and many more to be named. I am highly suspicious that our local valuers have nudge the valuation north of 20% for most REITs.

This post has been edited by gark: Jun 8 2010, 10:16 PM

The problem is that REIT's consider a positive valuation of it's existing assets as an 'income' and not as a capital gain. This point is troubling for me, when somehow when I evaluate REIT's like a share, something is not right because EPS and PE ratio is then askew-ed. As most REIT's trade below BV ratio, have low current asset/liabilities and low cash is a bit troubling for me. Furthermore most REIT's raise cash by dilution is bad.

This post has been edited by gark: Jun 8 2010, 11:08 PM

Ok, thanks for the info, so far I have evaluated most of the REIT's, either they are not attractive enough or their evaluation is still too high, so I will take the wait and see approach. I am still avoiding those REIT's which buy back from their own company, I feel they might not be fair enough to their shareholders.

You can also leverage with REIT's if you want, since the yields are comparable. Also both property have capital gains. The only problem is getting the collateral to make the loan, you can pledge the shares? Or withdraw equity from your other properties? Anybody done this before, ie. 80-90% loans for REITs?

This post has been edited by gark: Jun 11 2010, 09:42 AM

How about capital gain, these few hot years (2009-2010)capital gain from physical properties are quite high (30% a year), but REIT's has been on the slow side (5%~10%). Is it because the properties held by the REIT is already over valued, or commercial properties are less 'hot'? How come there are no residential REITs which invest in an entire condo block? Plenty of those overseas.

Thanks a lot Cherroy for the massive amount of info, appreciated the intelligent discussion. So far my experience is mostly in physical properties, net capital gain is about 15% per year and net rental yields is about 5.7%, so far the rental is enough to pay off my monthly installment . REIT's have better yields, but lower gains, yet easier to administer.

Now having some capital, was thinking either to buy another property (expensive and low yield nowadays so keep on deferring.... ) or put into REITs. Both also leveraged with BLR-2.1%, with equity pulled out of existing property (80% paid up ). Also I have to pay 24%-25% income tax on the rental gains , while REIT's I pay only 10%. Decisions, decision....

Penny for your thoughts?

This post has been edited by gark: Jun 11 2010, 04:44 PM

Maybe they "over declare" their property value to their own REIT's, thus selling the properties at a higher price. When the property is sold at 'above' market value, naturally the yields will have to come down because the rentals cannot catch up with the rich valuation.

Wah, with Capital REIT having double page full color advertisement in all major newspaper, guess the investors will have to pay for those eh?

I think you are confused what a REIT is. Mc Donalds is a business, their primary income is from selling you burgers, not gaining rent or capital appreciation from the property.

Sunway Carnival is ok lah, so far can see all the shop lots occupied. Parking is also very full during weekend. Will go there once a month or so. At least it is better compared to Pinang Megamall and Aeon Seberang Prai, those two are really waiting to close shop already. The only problem is that the mall is quite smallish, and also the anchor tenants have little floor space. The sunway hotel next to it, is also have quite low occupancy, but it's cheap. You will be surprised people living on the mainland is lazy to go to the island, as you have to pay RM 5.60 plus it is too crowded & jam here and there.

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Added on July 8, 2010, 5:47 pmQueensbay is giving gurney a run for it's money, used to favor gurney, but nowadays prefer Queensbay as it is bigger, with better layout and tenants. Gurney is quite cramped especially at the LG floor, now modern shopping mall emphasize a lot more open areas compared to maximizing retail space. Gurney is more of the latter, but it is trying to expand.

This post has been edited by gark: Jul 8 2010, 05:47 PM

Historically REITs perform like a bond in bull times, and like an equity when in bear times. . Remember during severe recession, you might have deflation and also loss of income from rentals.

This is not apparent in Malaysia's REITs during the last bear run, but it happened to a lot of foreign REIT's that they actually lost rental incomes and their value of properties depreciated. So if I were you I will be more careful to pick high yield REIT's unless there is not much impact on the property prices or rentals.

Yes I agree that leverage can depress the share prices of the REIT. But in 2008, although the local REIT did not face margin calls, they too drop in tandem with the market. A lot REIT and also those in Malaysia, reports property revaluation as 'income', when the property prices do come down, you will have negative income, so the net income of these REIT will also suffer (although on paper basis only). As long as their tenant does not default, then they can still continue to pay dividends, but if the economic problem is prolonged, then some of their tenants might default or forced to close shop.

Anyway I am highly uncomfortable with the leverage of our local REIT, although the dividends are nice, I have not step foot in it.

Corporate taxes are higher than the 10% witholding tax lah. You pay more if you invest as a company

Can,,, just pay off all the profit to your 'employees'. Then no tax.

I wonder anybody here is investing in REIT's with margin? The returns sounds good, but very risky if there is a margin call.

Future yield in 2011 if you buy at current price, not current 2010 yield.

This post has been edited by gark: Jul 30 2010, 05:21 PM

At 7% dividend? No thanks.

For me at least 10%, so I am prepared to wait long long time before buying. Or maybe never if it does not come to the level i want.

This post has been edited by gark: Aug 12 2010, 12:03 PM

Correction, to get 10%, the market must be falling or crashing... The more bullish the market, the less dividend % you will get as the price moves higher.

This post has been edited by gark: Aug 12 2010, 12:55 PM

There are some REIT's out there with high dividend and low gearing. Further more they are selling at discount to NTA value. So not only highly leverage REIT's is able to give the best yield, but they can give the best growth.