Why the reits prices keep falling?

And as investors, we can understand the impact from two perspectives.

1. Rise of risk-free yields leads to lesser demand for riskier assets

The 10-year US Treasury Yield is often taken to be a ‘risk-free’ asset. It has been hovering at historical lows in the past few years since the Great Financial Crisis of 2007-2009 as a result of the US Fed’s QE programme.

When risk-free yields are low, investors chase higher yields that can be found in riskier assets (in this case, REITs). When risk-free yields start to rise, the yields that investors demand from riskier assets will have to rise, because investors will want to maintain the same difference or ‘spread’ between the yields they can get from a risk-free and riskier asset.

And, the only way for yields in riskier assets to rise is – you guessed it – for prices to fall.

2. Rise in interest rates makes for a tougher operating environment for REITs

I’ve raised this argument previously (in here, and here). REITs are typically highly levered entities that carry significant debt on their balance sheets. Their business model is such that they borrow money at a low rate and invest it in properties at a higher rate. Rising bond yields would mean rising interest rates, which would increase the costs of borrowing for REITs.

So, when they refinance debt, it’s going to cost them more. Due to the varying durations of the rental leases for the REITs’ properties, they might not be able to pass on the cost increase, leading to a temporary decline in cash flows.

Of course, no two REITs are alike as they deal with different properties, lease durations as well as financing agreements. But, the likely outcome of a rise in interest rates for the majority of them will be a hit to their bottom-line.

Foolish Bottom Line

Investors in most REITs will likely feel temporary pain as interest rates rise. But, that’s not to say that every REIT will be a poor investment. At the very least, those with long-term financing locked in at fixed rates, as well as those with refinancing-needs that are evenly spread out, stand a good chance of coming out ahead of the pack.

The above said bond yield go up REIT yield need to go up so all SGS REIT has to price down. But the yield of some REIT is like 8.6% very attractive.
ANy Sifu can advise me on SGS REIT T8B currently at S$0.75

The pro n cons is at https://www.fool.sg/2016/10/12/viva-industr...-know-about-it/

http://www.capitalcube.com/blog/index.php/...e-another-look/

Want to invest but need hasel approval..

Chart refer http://sg.tradesignum.com/chart/t8b

it is SGX, not SGS.

do not blindly buy just becos u see a high yield.

.. why is the yield is high?
.. the yield no. is historical, it is based on the last div payout; if div goes down, price will go down with it.
.. do u know what props they have, what tenants, when leases expiry?
.. how much industrial space is available in sg now, vacant?
.. sg may get into tech recession.
.. industrial reits are the poorest performers at this time.

need to understand a few more things, then u decide.

Thanks bro Hansel, just another question. If I invest S$10k into it, given the yield of 8.6%
when T8B would give a dividend of S$860 right. From (1) above, given 1 example
SGD 0.01497
11/2/2016 11/28/2016
010716 - 300916
SGD 0.01497 LESS TAX
 
Does it mean the dividend would be $10,000 = 13,333 unit of share
13,333 x 0.01497 = s$199.60 less 10% is my net gain.
Because according to IRA in singapore, there is 10% withholding tax on reit income
https://www.iras.gov.sg/irashome/Other-Taxe...ding-Tax-Rates/
I am non resident of Singapore (Malaysian living in Malaysia)

I am planning to hold 1-4 months only given everytime US rate hike
there may be a downward pressure on the T8B prices for the reason you mentioned

Should I invest now or wait until US Federal Reserve announce a 0.25% rate hike, which
should give a shock price down to S REIT, or I should put a buy order at S$0.7, given the
lowest price of the year is at S$0.67. My brokerage is citibank..

be informed - some new forms of capital control on the RM wef dec 5.

http://www.bnm.gov.my/index.php?ch=en_pres...ac=4316&lang=en
http://www.bnm.gov.my/documents/2016/Suppl...ation_Rules.pdf
http://www.thestar.com.my/news/nation/2016...nd-for-ringgit/
http://in.reuters.com/article/malaysia-for...s-idINL4N1DX37B

more discussion here:
https://forum.lowyat.net/topic/3995728/+2820&#entry82829190

Bro, don't worry about your legal responsibility. This is a forum. You are not charging readers anything. There is no contract or client-advisor relationship.

Speak freely without worrying all those bulls**t. The readers won't hold you accountable for being wrong. They are responsible for their own action. If they want to act on online advice, then they are not that naive thinking they can hold you responsible

So, shoot away your opinion at will 

changing sgd at money changer, any limitation ?

Support!

U r talking about moneychangers in KL, JB or Spore?

sgreits look stable in the last few days.

in line with us bond yield hovering at 2.4%.

one more week, after fed action/inaction dec 14, it will be much clearer.

will be ready for keppel dc and suntec.

Kdc, yes, done same.

Wanna get more!

very nice to see sgreits moving up or stable.

kdc, 1.25, very nice!

likely due to to dow +300 last night, us bond yield stable 2.4%, weaker $.

a few more days to fed dec 14.

i think a 25bps hike is or or less priced it, hope no surprise.

RHB Invest can trade SG REIT?

yep.

all those previously with 5% yields are now dropping to give 6% or higher.

us 2 yr treasury yield at 7 yr high; 10 yr at 2.584%.

$ index touched 102.4.
i think i will wait for things to stabilize a bit before buying/selling anything.

sg reits, will wait n see... i am quite happy with what i now have.

$ for sure.

other currencies, other equities - i do not know enough, hard to monitor so many; i like to keep my lists short.
why do u say fed is knee-jerk?

25bps after 1 year is very very well planned and careful!

like to check with those looking at SGD-RM rates.

yr broker, yr bank, what r u seeing right now?

cimb, i see 3.1325/3.0635... a 2.20% spread.

i notice it has been widening of late.

what is going on??

hans, any comment on above?

today, i see SGD/RM spread 2.11%, USD/RM spread 0.625%.

the SGD/RM spread is ridiculous.

now exploring if it makes sense to do sgd/usd, then usd/rm.

i am inclined to agree with this bloomberg view that MAS will ease the SGD in the coming months.
https://www.bloomberg.com/news/articles/201...low-amid-easing

Unfortunately no success to open Std Chart during my recent trip to Spore.   

Tried to open at Std Chart (2 branches),  Maybank and DBS.  All insist on employment permit.  For MBB, even if having MBB account in Msia also rejected.  Was informed this year especially, they have tightened the account opening.

Luckily managed to open MCA with DBS after telling them that i have existing CDP account, though this does not work with MBB and Std Chart.  FYI, those who wish to open MCA at DBS to take advantage of depositing physical foreign currency must do it ASAP because starting next year January, they will charge fee on deposit or withdrawal of foreign currency.  The fee was not yet announced at the point when I opened the account.

Happy to say it is still not a wasted trip as also managed to open Maybank KE trading account and Philip Capital trading account as well.

Thanks to all sifu who have shared in this forum.