Arreit was making loss.. Shall I be worried? Reit won't bankrupt right?

Arreit's loss is due to fair value adjustment on the property valuation, which amounted Rm18 million.
Also there is a bad debt expenses of 2.+ million.

queensbay mall is not going to be cheap.in 2010,cma bought it for RM$652million.last year aminvestment bank analyst report estimated the purchase price of $818 million at a rental yield of 5.5%

This post has been edited by ryan18: Feb 28 2014, 09:48 PM

wow....reit at loss!
property price coming down....that's something to worry about.

Drop in fair value of Arreit relates to Silver Bird factory

and CIMB moves out from AR property? there is another i think.... but forgot which.

Wisma Amanah Raya Bhd at Jln Semantan in 2014

be optimistic. Its Temporary for prime location property to be vacant. Then when find new tenant, yield will go up and share price will go up. But that is the risk in property. Once found good tenant, then will be too late to buy the share. No Risk No Gain...

😱.

AReit has made quite a lot of blunders including Silver Birds factory, their handling of tenants and selection of buildings which are not performing. In fact they are the ONLY REIT which has a NEGATIVE property evaluation report in 2013, means they have OVERPAID for some of the property. This speak volumes on their management. Similar to buying stocks, we buy the management not the company.

I rather not take risk with REITS because the potential small gains does not tally with the amount of risk taken. If I want to take on risk, I would rather look for those with much higher potential gains like growth shares. We need to know the reason we buy REITs at the first place, which is minimum volatility, less risk compensated by less gains and more or less a replacement for FD/Bonds.

Hence I prefer lower risk REITs with more or less guaranteed occupancy, like Grade A Mall Reits.

All the B and C grade REITs are no go for me.....

This post has been edited by gark: Mar 1 2014, 10:06 AM

No, it is due to the paying price for the factory, which is too high, so they now have negative evaluation. In the future they will have a very hard time to rent out the building again unless they modify heavily to suit the new tenant, because a different tenant will have different requirements. Modification cost will indirectly affect the cashflow of the REIT.

This is the No 1 risk of industrial REITS if they change tenant.

-ve FV was due to current owner High5 (fka Silver Bird) which occupy Silver Bird factory went into PN17
High5 in d midst to restructure its financial to exit PN17 + negotiations with Arreit on mthly rental still on-going
Once dust is clear, earnings shall resume upward

IF the bankrupt company can afford to pay rent after restructuring... the chance of this happening is very slim. Not all company can come out of PN17 successfully, some will just disappear.

Also their office at Jalan Semantan has been empty for almost 6 months, no one wants to rent yet....

Not a risk I would want to take, for a REIT.

ARREIT's manager fee - as one would have expected - increased in 2013


Renovation fee not born by the tenant meh?

Nope.. in most reit renovation/repair bills borne by REIT.

I also want to become landlord, if renovation is borne by tenants.

Buy an empty house, then let the tenant doing the renovation.
End of tenancy, I get the renovation for free...

There is reason why reit sometimes buy and sell the property.
Just like what Axreit had done.

As sometimes, getting rid of old, and low yield property can save some money that can be used for better yield property injection.

A good reit manager is not only sitting on property collect rent only, and doing nothing else,
but constantly assess the portfolio property to ensure they are generating good yield, as well as identify situation of property, whether good to dispose it or not.

Dispose property, realised property price appreciation gain is also one of objective for reit that to make a profit for shareholder.

Making loss to me :

1. no dividend liaw of course

In between all reits are geared up to pay dividend. Most of the rental income will be used to pay dividend instead of service the loan. Or u can say paying the interest only.

if tenants left how are they suppose to collect the rental and pay interest and dividend ? Worst come to the worst if bank don allow them to renew their loan then.....they have to sell their properties to pay their debt....

That's why office reits have higher risk compare with retail risk like what uncle gark has mentioned.

That's why even though i like reit's dividend but my portfolio only consist of 10% reits. Who don like high dividend in the first place..

By the way i am holding office reit as well but not arreit, uoa reit.






This post has been edited by darkknight81: Mar 2 2014, 06:40 AM

Hi guys, I also a fan of malaysian REIT.

I buy Sunway REIT with primary intention of getting its dividend (6%) which I bought @ RM1.26.
I think every REIT in malaysia has its potential, but fluctuate due to economy cycle. I prefer SREIT over others due to:

1) Management team & business strategy.

To me, this is most important criteria for buying in a company. If management team is good, they are always prepare for worst to come and the biz will fly high when economy goes up.

Sunway focus on Hybrid quality business model. For example, they own Sunway Pyramid, Hotel & Spa. I think this is good strategy coz it creates chain of demand. Imagine, tourist lives in HOTEL will need foods & entertainment (Pyramid & Spa serve this purpose). And, SREIT also has office/commercial properties and Sunway Medical Centre.
All this will help to improve & mitigate risk in particular sector. And their latest development in Sunway Putra Mall (which also a combination of Hotel, Shopping Mall etc) will create a synergy to drive up economy around. PWTC also around.

2) Trading perspective

I believe price of SREIT will go down further, maybe to RM1.20. I don't know but I hope it will reach that level so I can buy in more for up to 7% dividend yield. I think reit price in overall industry go down due to investors are bench marking reit yield with bond yield which go up to 4% - 5% recently. So, the market is expecting (and push down) reit price to reasonable level that allow investors to get a handsome yield of 7%.

3) Future prospect

I believe sunway efforts to turn a once failure to success will bode well once their asset enhancement initiative (renovation) ended and the mall reopen in 2015. Imagine, the strategic location with LRT station across the road (right in PWTC), how much people will be attracted to the mall & hotel?

So I hope Sreit price will fly high later. And this is the right time for investor to come in for bargain deal.

guys, what is your REITs to FD ratio??
I wonder if I should move some FDs to REITs.
Is this the lowest risk equity in the stock market?