Yep, if you not SG tax resident, GST is not applicable, so.. GST is taxed on the brokerage and not on the shares.

GST (on brokerage) = 0%
Tax on dividend received = 0%
Capital gain tax = 0%



This post has been edited by gark: Jan 2 2012, 01:07 PM

O IC, thanks.

Malaysia also taxes on brokerage in term of stamp duty collected, not much an impact.

The impact on non residents sometimes is you have to claim back, and quite troublesome . And also need to understand Double Tax Treaty bet Malaysia/Singapore, presumably there is no problem here too.

Anyway, I have a clearer mind now, the Tax is not like the the additional 10% stamp duty collected on properties bought by non residents.

This post has been edited by SKY 1809: Jan 2 2012, 01:36 PM

Also no stamp duty for Singapore stock purchases...

For properties, there is a lot of taxes and restrictions for non-resident to purchase properties...

Purchase Stamp Duty
First SGD 180,000 - 1%
Next SGD 180,000 - 2%
Remainder - 3%
PLUS Additional 10% on the total purchase price...

Selling Stamp Duty
1st Year = 16%
2nd year=12%
3rd Year = 8%
4th Year = 4%

Buy also kena tax, sell also kena tax... Max Loan = 60% of house value... SG properties gonna free fall soon...

But SG REIT is exempted from all above..

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Added on January 2, 2012, 2:05 pmRemember S-REIT have high yield due to reasons, investors are not dumb.

Most S-Reit have properties which have limited land leases, usually between 20-90 years. Usually the shorter land lease period have higher yields. once a company reaches it's end of lease, they will have to re-new (re-buy using cash/debt/rights) the lease for another 30 years or so or sell off the property cheaper (incur losses).

So these properties are self depreciating, for example a company have a 30 years lease left, the total depreciation will be about 3.33% and the property asset value in calculated to reflect that. Hence a property having a 'normal' yield of 6%, it will be discounted to 9.33%, to compensate for the 3.33% re-investment required to extend the lease in the future.

This post has been edited by gark: Jan 2 2012, 02:05 PM

Kinda agree.

The forumers are quite short sighted to compare the rates of Yields only, without knowing some accounting treatments.

Basically a freehold or long leased hold asset ( like in Bolehland ) tends to have higher capital appreciations, but giving you a lower yield on asset values.

For example if a company uses a fully depreciated Bus, tends to give a better yield on asset costs ( or rather zero asset cost ).

But then again technically when a lease expires, the ownership of the Building goes back the the Government. Again u assume for sure , they ( Govt ) lease back to u, never mind the new premium charge is much higher.

But it is quite common for Governments worldwide to make U turn policies from time to time, like the 10% stamp duty imposed on non residents in Singapore.

Many evergreen assumptions may not hold water in time to come.

BTW, Singapore Government is the final owner of all properties in Singapore by default.

Just my view.

This post has been edited by SKY 1809: Jan 2 2012, 02:58 PM

Only the land belongs to the government and not the building. But land being the most expensive item in Singapore, thus re-buying the land in the future (30 years) it might cost you more than your current purchase price (land &building).

Ya, It is more costly to " move your buildings " elsewhere, not talking about finding tenants

This post has been edited by SKY 1809: Jan 2 2012, 04:04 PM

http://reitdata.com/

It's quite scary the read the above data from SG REITs!
Only 2 reits got capital gain (7.8-8.5%), but the rest of 21 reits are -1.4 to -41% dropped! With 14 reits dropped more than 10%!
Even reputable capital mall reit dropped 12.8%! And our YTL's Starhill reit dropped 9.6%. The serious 5 dropped 25-41%!

Like this hor, better buy stocks loh. Why buy reits? Same level of risk as compare to stocks.

Not all SG REIT is bad.. most of the reit which has price drop is due to rights offer which leads to selldown.

BTW two MY REITs also got rights offer recently, but no selldown, investor do not understand the consequences?

Anyway, SG REIT is quite beaten down already..... some REIT at 8%-10% yield is too tempting... First REIT, AIMSAMPI and LippoMall looks good... In the last market crash some SG REIT went down to -80%, with yield over 25%.

This post has been edited by gark: Jan 2 2012, 07:16 PM

Look where their properties are located first S-Reits with properties in Indonesia tend to command higher yields, cause Indonesia is considered riskier than Singapore. And check the history of the Reits and their sponsors. Some have weak or small sponsor, or patchy history. Singapore Reits/stocks tend to behave in a more "logical" manner compared to Bursa.

I do not agree .

Yield today has a lot to do with the stability/risk , acceptability and confidence levels of the investors.

You can see German Bonds are of much lower yields, but you cannot say Italy Bonds give more logical returns.

S Reits do have some histories of problems, so logically it affects the risk and confidence levels of the investors. Maybe like of higher Fear Volatility . Constant issuing of right shares may be a sign of these weaknesses.

On the other hand, M Reits yields are dropping slowly though the world markets as U know.......

In period of instability, opting for some stability is not a bad option.

This post has been edited by SKY 1809: Jan 2 2012, 09:41 PM

Italy bonds give high yields cause they are regarded as more risky than German bonds. So the high yield is to compensate for the higher risk the buyers are taking ...... there is logic in that, isn't there?

Same goes for S-Reits. "Safe" Capitaland-backed Reits have among the lowest yields while a certain Reit that once defaulted on a loan in 2009 has high yield.



This post has been edited by Veda: Jan 3 2012, 03:03 AM

Yes what you have all said about risk vs returns are of course correct. Except that I do not believe that Singapore reits are more risky than reits in bolehland. It's just that markets tend to overact to situations and due to a few unfortunate incidents over at their reits, they are punishing the whole lots of them.

Apart from the leasehold vs freehold factor of these reits, I actually feel sreits being 'safer' than mreits, though I own some of both. Actually more sreits - it gives higher yields and I think it offers better chance of currency appreciation versus bolehland currency, even capital appreciation as it has been overly suppressed already.

Which means? Good time to buy!!

What SKY says is correct, S-REIT have too many history of right issue in which either you pay up or get diluted. Also the property there is subject to big fluctuations. In 2008 especially there are several REITs have rights issue just to pay dividends!

Since their holdings are international, some of the REITs have tough time securing loan for example LippoMall just had a rights issue even though the debt is just 10% of Asset. Why do think they want a rights issue? Even though the yield of thier Indonesian mall is about 10%, the interest rate in Indonesia is about 15%. So the rights issue is done to 'borrow' cheaply from shareholders. Although LippoMall have some SG denominated loans, they are foreseeing the downturn in properties and shore up their book so that they don't face 'margin' call if their properties lose value.

Malaysian REITs seems to be immune to rights issue, or private placement although it will dilute the shareholders equity. Anyway Malaysian REIT is currently in a time bomb, all of them have already maximize their loans (~50% debt to asset) and cannot move anymore unless they have rights issue or private placement. There are several signs already like Hektar having right issue to pay down loans and acquisition, Axis introducing dividend reinvestment... More will come....

In my opinion, SG-REIT is more risky than Malaysian REIT hence commands a higher premium, or rather the risk in Malaysian REIT is not felt yet as it is still immature. The properties are all highly appreciated and may come down soon, if the value of properties drop, banks will ask for more collateral to back up the loan. However there a few good one which are selling at a reasonable discount, but not at mega sale level yet. Look for those with longer lease period and low debt...

This post has been edited by gark: Jan 3 2012, 09:57 AM

private placement is usually at discount price to market price, so it's actually worse for shareholders than RI. With RI, at least every shareholder has the chance to neutralize the dilution if they invest more by subscribing to all RI offered.
However, as long as the diluted % is less or equal to the % of the new income by newly injected assets per year, it's not a bad idea for long term investor as it just required 1 year for break even.

+1 well said.

Need to know what is the RI for.

As mentioned by Gark, quite often it is for the purpose of raising cash for dividends, then look quite bad.

Singaporeans are deemed to be smarter than us, they know the " catch" though not mentioned specifically by REIT managements. And why they often do not apply for RI , even offered at 15% discount ?

There are good reasons why investors dislike RI too, even it is in Bolehland. Berjaya is one of them.

And buying REITS are for mainly of getting regular passive incomes than to get Capital Gains. If outflow is always greater then inflow, then it has no meaning i.e -ve passive incomes ?

This post has been edited by SKY 1809: Jan 3 2012, 01:28 PM

+infinity

It depended how private placement being carried out.

I preferred private placement over RI.

I won't care about dilution in shareholding, as reit is not as same as ordinary company, whereby stake or dilution is important.
In reit, what we care is about as fixed income instrument.
As long as the private placement doesn't cause dilution on EPS, DPU, aka yield of the reit, it is a miles better way than RI.

For eg. What Axreit did with its private placement, although stake within Axreit is diluted, we are getting higher DPU and with more diversified asset in its portfolio.

Have a stake of 10% with 5 properties vs 5% in 10 properties is no different if view from fixed income purposes.
Instead the later is better.

On the other hand, private placement can be a better indicator that the company has little difficulty to raise money than RI.

Hi and Happy New Year to everyone !

Does any sifu here think that the recent aquisition by Hektar reits will somehow dilute their present yield/DPU ? The current yield is about 8% but the 2 new buildings that they aquired are just giving an income of 5~6% of the purchase price ? What am i missing ?

Thanks


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Added on January 3, 2012, 10:48 pmThis is very true.

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Added on January 3, 2012, 10:50 pm5-6% income is not too good, so your immediate DPU after the injection will be decrease. Unless the management has confidence to raise the income in near future.

This post has been edited by yok70: Jan 3 2012, 10:51 PM