Yup, that's why I opt for some reits lately because even in economy difficult time, as long as those property under the reit is having long term tenants especially from strong corporate company, then income is somehow secure and won't be affected by other factor as compared to normal property stocks. So yield is pretty known and highly predictable and secured. As long as those yield is 2x of normal FD rate, I am somehow ok with it.
As normal property stock, if others subsidiaries of company (especially those from building sector) are doing poorly, then it might drag the whole group in term of profitability wise. Another one issue is that under the reit, profit must be distributed which will be only good for minoirty shareholders like ours. Unlike normal property stocks, even if company make tons of profit, but they can decide to keep it in the company forever even in cash form without any investment, while only give tiny bit of dividend to the shareholders.

Reit is like buying a property and rent it out. While in normal property stocks, you are participating in the company as shareholder, so totally different risk.

But downside of reit, they have not much room for the upside because of profit wise is stagnant and grows relative slow (rental increment won't be fast, and rental amount only can be negotiable after the tenants renew their lease) even if economy is good time, unlike those common stock, price can shoot up 2x 3x in good time.

Agreed, and there is another downside of REITs though. Most of the REITs are highly geared (maximum 50%). Even now, the market standard of gearing for REITs is around 30%+. So if the interest rate does increase, it might reduce the margin for REITs. Well, I might be wrong though, so please correct me if I am

Since REITs are required to distribute at least 90% of their net income, most of the REITs could not retain the profit for expansion purposes. Therefore, they have to depend on gearing, so the expansion would be limited, unless they issue more units, which would than reduce the shareholders equity.

Yup, mostly reit listed currently is under some gearing especially when acquiring new properties. But with the SC rule of limitatin of 50%, it serves the ceiling they can go which is a good thing also. No doubt it would mean high interest expenditure but it won't be severe. Recent Reits sell-down might be because of this reason as well.

Also my view is even BNM increases the interest rate, it won't go too far, max I can see is 0.5% for near term only. The weakening economy might be a big concern for BNM to raise rate further even though inflation still pose a problem.

Those under right issue exercise (eg. Axreit with private placement of new shares at 1.68, if not mistaken few month ago) is a good way to finance the acquisition with incuring extra interest expenses.

This post has been edited by cherroy: Jul 18 2008, 11:34 AM

Yeah, very true. My cost for AXREIT is RM1.76, which I think is high. I should bring it down to around RM1.71 soon, but now a bit tight because I am aiming IOICORP first

guys,

I was hoping for AXREIT to annouce their interim report today.

Anyone knows when it will be out?

i'm guessing in early august

It would most probably be in a fortnight's time
They usually release it at the last week of the month.

regarding axreit, they issued new earlier his year, wont it dilute the earning , making EPS drop compare to before?

Yes, the EPS will be diluted, but the earnings will not.
A better measure would be to look at the net profit, not the EPS.

if tat is the case, then the dps will drop also....then dividend declared will be lower.

Yes, if total profit is not increased with the issued of new shares, then it will dilute the EPS. But those new funding or right issue is used for new acquisition of new properties which will generate more income to the company. So total profit should increase if the newly properties contribute positively to the company then might as well increase in EPS rather than decrease/diluted. So it depends how newly acquired properties perform, if profit generated from new properties is poor then dilution can occur.

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Added on July 21, 2008, 10:16 amAs retailers we look for the EPS as the EPS will determine how much company can give us.

This post has been edited by cherroy: Jul 21 2008, 10:16 AM

if tat the case then definately wont be anywhere near 8% return.... seller queue at 1.63.

Market anticipated some 7.xx cents for half year, so annualised around 15 cents, at 1.63, gross yield is 9.2 or net yield 7.8%. That's the reason I bought at 1.64 last week.

With poorer economy outlook ahead and if indeed economy slow or near to recession, 95% of the stocks high probably will go down, reits won't spare from it. But yield you are getting is at once you bought.

Fyi, FD interest rate does affect reit price quite signficantly apart from properties outlook as the yield determine whether we choose FD or reit.

This post has been edited by cherroy: Jul 21 2008, 10:57 AM

i'm Q-ing at @1.62

150 lots were traded at 1.62

anyone remember how many new shares were issued?

(new shares)/ (exisitng shares) x 100% = ?

never mind, i found it already
"At the meeting, Axis REIT unitholders passed the resolution on a placement of up to 50 million new units, representing about 24.3% of the existing units.

Axis REIT's fund size will expand to a maximum of 255.9 million units upon completion of the placement."

hmm, almost 25% of earning dilution if the newly accquire space arent perfoming.

This post has been edited by ante5k: Jul 21 2008, 11:17 AM

my 50 lot matched la @1.62

Yes, you are right.

Howeverm, it should be performing as those newly acquired properties are existing factory like Nestle warehouse, hypermarket space for Giant which already has tenants or being leased out back.

50 lots as in RM81k or RM8.1k?
I'm also thinking of buying more AXREIT, but I need to save the money for my IOI

Should be 50 x 100, but I am sure he is capable to take Rm81K in one shot as well.

Anyway, I wait until below 1.60 to make my next purchase, as I don't like the idea averaging down in a too tight range, as this will make bullets depleted too fast.
Also, with plenty of cheap sale around or may be fire-sale in near future or next few weeks or month, who knows. Don't need to rush.

but the interim report coming up next week right? Not much time left in my opinion.

it's only 50 x 100. If go down to 1.60, i will buy another 50x100