REITs

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There are currently only 2 healthcare REIT in SGX, First REIT and ParkwayLife REIT. Parkwaylife REIT will surely come out tops. It has a portfolio of extremely good private hospitals in Singapore and overseas. Gleneagles and mount E, very expensive private hospitals but still always packed! They also have nursing homes in Japan and Korea. First REIT main weakness is the indonesian currency. Its portfolio is concentrated in Indonesia and to receive dividends in SGD is taking a toll on the REIT. The indonesian rupiah has declined against the SGD by a huge margin and the rental agreement made 10 over years ago is actually putting a strain on them. The next rental renewal is coming up soon in a few years and that is the main risk factor. Will they renew to the latest exchange rate? If they do, then the DPU will drop.

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Darren Chew
Darren Chew,
Level 4. Prodigy
Updated 1w ago
There are quite a numbers of good dividend stocks in Singapore. Below are some criteria that you may want to consider when picking dividend stocks 1) Revenue and income growing or stable for the past 5 years. 2) Dividend stable or growing for the past 5 years 3) Dividend Yield is more than 3%. 4) Payout ratio is stable and less than 100%. 5) The company business will still be viable in the next 5 years. 6) Avoid small cap stock for dividend play. Some of the stocks are Capitaland, the 3 banks, SGX, ComfortDelgro, SATS, ST Engineering, Singtel. Just to name a few. Additional point to note, If you have a choice to choose between REITs and Business Trust, do just go only for the REITs. Hope that help.

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Darren Chew
Darren Chew,
Level 4. Prodigy
Updated 2w ago
These 2 reits are quite different and are not able to compare directly. Mapletree Commercial Trust is considered as a diversified REITS rather than office reit as around 40% - 50% of their revenue is generate from VivoCity. 3 out of 4 of his office building is located outside CBD. It is also one of the few pure Singapore play reits left. Capitaland Commercial Trust have almost all their Singapore office building located in the heart of the CBD. It has also expanded out of Singapore and enter the Germany market. To me, both are very good reits which have strong sponsor that have a global reach. If you can only choose 1 from the 2, based on current market condition, I will recommend Mapletree Commercial Reits as it is a reits that comprise of both retail and office which make it more defensive in nature. Hope that help.

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Tracy Lim
Tracy Lim,
Top Contributor

Top Contributor (May)

Level 5. Genius
Updated 2w ago
Just going to give my short opinion on this. I prefer Capitaland Mall Trust. For REITs, some things you can look at are: - The industry - Size - Portfolio of properties - Gearing - Lease expiry and occupancy - Distribution per unit (how much they yield and whether it increased over the years) Frasers Centrepoint Trust 6 properties. Malls ending with "point". Causeway point, Northpoint,..etc. Personally, I don't really visit these malls often. Northpoint just got revamped not long ago though. But I feel the locations of these malls are not very good. 3 out of 6 properties have less than 90% occupancy. Other 3 has above 90%. DPU: 12.015 cents. Based on current share price of 2.57 that gives 4.68% distribution yield. Market cap: 2.799B CapitaLand Mall Trust 15 properties, in good locations at MRT stations with high good connections. This means high traffic. ! 99.2% occupancy rate. DPU last year was 11.86 cents. Based on current share price of 2.59 that gives 4.58% distribution yield. Market cap: 9.516B (3x FCT) Overall I prefer Capitaland Mall Trust. Share price similar which means as an investor your same amount of money can be invested in either, for the same number of units. Good about FCT Higher dollar dividend (by 0.2 cents) Good about CMT CMT is a bigger cap REIT than FCT. Furthermore, growth of CMT is better than FCT. CMT has a greater portfolio of malls (and maybe because I prefer the malls in the portfolio of CMT haha). Higher occupancy rate than FCT.
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Takingstock @
Takingstock @,
Level 4. Prodigy
Updated 2w ago
Lets take an approach for you to help yourself. Like the answer above, are you able to explain why you choose reits, those reits and no other stocks? Reason why I am asking to find out - are you a little more on the risk averse side? - is it because you prefer regular dividend payouts for cashflow? - are you open to choosing something else? - Do you have a particular goal or timeframe? I think you need to figure out some of these first before folks can advise. Without going into the details, on face value, I have no issues with the three listed reits, they are in my portfolio. BUT I stopped my monthly investments into them as I feel the reits are slightly overpriced now. Having said that, I did come up with an approach like a modified DCA on top of DCA. As you are looking at a very long term approach, it may not be a bad idea to start a small position then adjust as you go along because time in market is better than timing. Let me assume you work for less than 5 years, you can save a fixed amt each mth, and also assume you are adverse to picking the sti index fund or stocks, and also you prefer cash savings / investment to prepare for a hdb purchase or wedding. - if you have outstanding credit or tuition loans, clear that first. - if you cleared those, no major debt, and got 3 mths reserve already then Maybe you can try this (assuming you only open to the three reits n nothing else) Set up the poems to do only monthly contribution to one of the three reits (you do your homework, and choose the best among them, probably using dividend yield as tie-breaker). The monthly transaction fee / monthly contribution should be less than 2.5%, but up to you to choose the amount. You do quarterly check-ins and re-rate the three, probably using yield as one of the major deciding factors again. If the re-rating shows another of the three reits to be better, you update the monthly contribution to change to that reit. This would lead to preferential throwing the contribution at the best reit of the time, and after some time / years, the portfolio should be reasonably balanced at optimal cost.

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Gavin Tan
Gavin Tan,
Level 3. Wonderkid
Updated 2w ago
Mapletree Industrial Trust (MIT) @ 2.14 Price - P/B ratio = 1.42 - Distribution Yield = 5.68% - Gearing = 33.8% Ascendas REIT @ 2.97 Price - P/B Ratio = 1.39 - Distribution Yield = 5.40% - Gearing = 36.3% Overall MIT is a better pick, due to a slightly higher distribution yield and lower gearing, but right now it is pretty expensive @ 1.42 PB ratio, so maybe wait for it to drop in price before picking it up?

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Forex (FX)

Hi, For my overseas investment i use Saxo Capital Markets to invest. Their rates are one of the best in Singapore with a 0.5% above the Google Exchange rate you find. Others usually have about 1%.

REITs

Gavin Tan
Gavin Tan,
Level 3. Wonderkid
Updated 2w ago
Both are close to their 52week high and are trading at around 1.02 P/B ratio Difference : Ascendas having slightly higher dividend yield and lower gearing, can prove to be a better choice. I personally went for Ascott, simply because I like the business more. End of the day, you must understand and like the company's business model.

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Tan Wei Ming
Tan Wei Ming,
Level 5. Genius
Answered 2w ago
On how to determine whether a REIT is overvalued, I look at the P/B ratio. P/B ratio for strong REITS such as CMT, MCT, AREIT, MLT or MIT are now hovering at 1.25-1.3 level or even higher. I won't invest in REITS now because of the margin of safety is kinda weak because you are buying at the peak. When REITS fall, your distributions will not be able to cover fully. Last saturday, I read an article from Financial Horse. You can take a look at this article: https://financialhorse.com/singapore-reits-overvalued-2019/ Financial Horse uses both price to book ratio and yield spread to determine whether the REIT is overvalued. The yield spread is basically the difference in yield for Singapore REITs versus a 10-year Singapore Savings Bonds. The average yield for Singapore REITs is about 5.8%, the 10 year SSB is about 2.2%, which works out to an average yield spread of 3.6%. The historical range is 2.1% to 5.6%, and the median is 3.8%, so we’re only slightly below the middle, but well within historical norms. So based on yield spreads, Singapore REITs as an asset class are still looking pretty decently valued. However, not all REITS are created equally, there are some REITS that laggard behind despite the rally since 2019. So I suggest looking at individual REITS yield spread instead of a whole in general.

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James Yeo
James Yeo, Founder at SmallCapAsia.com
Level 4. Prodigy
Answered 3w ago
I would advise against it. Interest rates can increase dramatically in the event of overheating. $1mil loan at 2% is $20k yearly, $1.667k monthly. Loan at 5% is $4,167 monthly. And if recession hits and one of you or your partner loses the job, would you have the cash cushion to tie over the period or be willing to force-sell the ppty at a huge loss? Go for REITs can bail out anytime using just 1 click.
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