SREITs

Discussion in 'Acquistion Targets' started by zuolun, Mar 20, 2013.


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  1. zuolun

    zuolun Well-Known Member

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    CapitaCommercial TrustBearish Evening Doji Star Pattern; expect a pullpack

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    Bearish Evening Doji Star Pattern
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    Last edited: Apr 21, 2013
  2. zuolun

    zuolun Well-Known Member

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    SaizenREITBullish uptrend intact; expect more upside

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    [video=youtube;P0WUc5yqn1g]http://www.youtube.com/watch?v=P0WUc5yqn1g[/video]
     
  3. zuolun

    zuolun Well-Known Member

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    DMG's review on CCT on 26 Mar 2013; NEUTRAL TP $1.70

    WE VISITED CapitaGreen's showroom on Monday morning and were wowed by its 40th-floor sky garden and restaurant, innovative technology which directs cool air inwards, and unique dual facade that cuts solar heat, among others. Set to be CapitaCommercial Trust's (CCT) next growth driver, it offers about 700,000 square feet (sq ft) of Grade-A office space and is scheduled to receive its temporary occupation permit by Q4 2014.

    Due to a dearth of immediate drivers, however, CCT is still a "neutral" and its $1.70 target price remains unchanged as the contribution from CapitaGreen would only stream in by FY2015.

    CapitaGreen's unique features include a high ceiling, sky terraces on the fifth, 14th and 26th floors, a gym and pool on level 38, column-free efficient floor plates that range in size between 12,000 sq ft and 26,000 sq ft, and a cool void at the top of the building that draws in cool air from the "sky forest" on the top floor.

    Not only is the cool void a unique architectural feature, previous studies have shown that the cool air it draws in could reduce the average temperature in the building by two degrees. Through this, we expect CapitaGreen's utility cost to be lower than that of other office towers.

    CapitaGreen is located in the heart of Singapore's CBD, and is served by the Raffles Place and upcoming Telok Ayer MRT stations. In addition, CCT has indicated that tenants of CapitaGreen will have priority access to the Golden Shoe car park which currently features 1,053 parking lots.

    CapitaGreen is a joint development by CapitaLand, CCT and Mitsubishi Estate Asia. In this project, CCT owns 40 per cent equity interest as well as a call option to acquire the remaining 60 per cent within three years upon receiving its temporary occupancy permit. We expect the building, involving a total development cost of $1.4 billion, to generate a forecast yield of 5.1 per cent-6.3 per cent when occupancy stabilises.
     
  4. zuolun

    zuolun Well-Known Member

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    1. CapitalMallAsia — This is not pure S-REIT; it's trading in a downward channel.
    (It's likley to make good profits in uptrend stocks than downtrend stocks, which require more skill and patience than pure punting.)

    2. MIT — Uptrend stock, pure S-REIT; BUY on pullback.

    3. AIMSAMPI — Uptrend stock, today kena whacked down to low of 1.65, the big monkey quickly rushed in to do stabilization and pushed back it to high of 1.68.

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    Last edited: Apr 18, 2013
  5. zuolun

    zuolun Well-Known Member

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    Brokers' Reviews on SPH on 15 & 16 Apr 2013:

    1. DBSV — Maintain BUY, TP S$4.75
    2. CIMB — Downgrade from Neutral to Underperform
    3. OCBC — Maintain BUY, TP S$4.94
    4. OSK DMG — Downgrade to SELL, TP S$4.00

    DBSV; Maintain BUY, TP S$4.75

    16 April 2013

    REIT expectations provide support

    • 2Q13 lower than expectations, dragged by weak ad revenue
    • 7 Scts interim DPS declared; maintaining our DPS estimate of 24 Scts for the full year
    • Evaluation of a property REIT still in progress and is likely to underpin share price
    • Maintain BUY, S$4.75 TP

    Highlights

    2Q13 down on weak ads revenue. 1Q13 Singapore advance GDP estimates released on the morning of 12 Apr was a good reflection of SPH 2Q results. SPH’s 2Q13 net profit dropped by 15% y-o-y to S$71.5m, while revenue slipped by 5.5% to S$282.2m, weaker than our expectations. Interim DPS of 7 Scts was declared, similar to 1H12. We continue to expect full year DPS of 24 Scts, equating to a yield of 5.2%.

    Ads impacted by cooling measures, property rental remains robust. Newspaper & magazines’ revenue fell by 7.1% y-o-y to S$224.4m due to weaker advertising revenue. Display ads fell by 10.2% while classifieds fell 7.1%, which was attributed to the property and transport sectors arising from the various government cooling measures introduced. Property rental remained robust, up by 4.5% to S$50.2m.

    Evaluation for the proposed REIT still in progress, mandate not signed. Contrary to media reports, management shared that no mandate has been signed yet. The assessment for a property REIT was still ongoing, and announcements would be made going forward when there are significant developments. We continue to believe current market conditions are conducive for SPH to spin its investment properties into a REIT.

    Our View

    Share price supported by asset realisation, yield. We are not particularly surprised by the weak 2Q results, given the uncertain economic outlook. That said, we believe share price in the near term may face resistance and some profit taking after appreciating about 10% in the past month. But, downside should be limited, and likely to be supported by the expectation of an eventual REIT listing.

    Ad revenue may pick up slightly with the economy in 2H. Our economist expects to see a slower first half, followed by a pickup in the second half for the Singapore economy. With ad revenues historically tied to economic growth and consumer sentiment, this could point to a pick up for SPH ad revenues.

    Recommendation

    Maintain BUY, S$4.75 TP. Maintain BUY as we believe share price should continue to remain firm on expectations of the potential REIT and will re-rate once there are positive developments going forward. We trimmed our FY13F earnings slightly by 3.4%, on the back of weaker ad revenue in 2Q. Our sum-of-parts TP is adjusted marginally to S$4.75.

    *****

    CIMB; Downgrade from Neutral to Underperform

    15 April 2013

    Tread carefully

    We think it is still unclear if spinning off its prized property assets into a REIT creates shareholder value. This, coupled with the weak ad environment, suggests that the recent 10% run-up in the share price may be overly optimistic.

    2QFY13′s earnings came in below expectations at 19% of our and consensus full-year estimates due to weaker-than-expected ad revenue. 1H13 formed 44%. We lower FY13-15 estimates by 5-9% but raise our SOP-based target price to reflect the appraised value of properties likely to be spun off into a REIT. Downgrade from Neutral to Underperform as we think the recent share price gains are unwarranted.

    Weaker ad revenues drag down 2Q12

    2Q’s ad revenues suffered as a consequence of the government’s cooling measure on both the car and property sectors. We think this situation is unlikely to change for the rest of the year. Property continued to do well, with Paragon registering a 5% increase in rentals. Both malls are 100% occupied.

    REIT may not create value

    We think it is unclear if there will be a special dividend. That depends on how much management decides to sell down. If management sells a large stake to the REIT, it will take away valuable property earnings when the media earnings are struggling. On the other hand, if SPH sells only a small stake, there might not be special dividends, and investors who bought in anticipation could be disappointed.

    Optimistic share price

    Our revised SOTP already capture Paragon (S$2.43bn) and Clementi Mall (S$598m) at SPH’s announced valuations. We estimate that these valuations are based on fairly aggressive cap rates of 4% when CMT and FCT’s retail malls are mostly valued at cap rates above 5%. A divestment into a REIT might not add more to our SOTP. Meanwhile, share price had re-rated well above our target price.

    *****

    OCBC; Maintain BUY, TP S$4.94

    15 April 2013

    AD REVENUES IMPACTED BY COOLING MEASURES

    • 2QFY13 numbers tracking below
    • Ads hit by pty and automobile measures
    • Still exploring REIT listing

    2QFY13 PATMI of S$72m down 15% YoY

    SPH reported 2QFY13 PATMI of S$71.6m – down 14.7% YoY mostly due to a lower contribution from the Newspaper and Magazines segment. 1HFY13 PATMI now forms 45% of our FY13 forecast; despite 2Q being a weaker quarter cyclically, we now judge earnings to be tracking marginally below expectations as SPH’s ad revenues suffered the impact of recent property and automobile cooling measures. Topline for the quarter came in at S$282.5m, which decreased 5.5% YoY mostly due to weaker newspapers numbers but partially offset by an increase in property rental income from Paragon’s positive rental reversions. An interim dividend of 7 S-cents per share is announced.

    A challenging 2Q for newspapers

    Overall, 2Q was challenging for SPH’s newspapers segment and we see the market likely showing a neutral/mildly negative reaction to this set of results. Ad revenues fell S$13.9m (down 7.6% YoY) to S$168.5m, as advertisers from the property and automobile segments pulled back in the aftermath of recent cooling measures. In addition, circulation revenue also dipped by S$2.4m (down 4.9% YoY) as the physical subscription base declined (including digital subscribers, however, total circulation volume remained steady). We see cost-side items mostly kept in check over 1HFY13: staff costs fell 2.1% YoY to S$174.6m while newsprints charge-out costs fell marginally to S$626-S$644/mt. SPH’s property segment continues to be the bright spot, with Paragon’s 1HFY13 rental income up by S$3.4m (up 4.5% YoY) from higher rental rates. Occupancies at Paragon and Clementi Mall were maintained at 100%. The Seletar Mall remains on track to be completed by end of 2014.

    Still exploring REIT option

    Management expressed that it is still in the midst of exploring a REIT listing and that one key variable being deliberated is the stake of its assets to be divested. A REIT listing continues to be a realistic event, in our view, given the size and quality of its retail malls and the potential for significant shareholder accretion. Maintain BUY with an unchanged fair value estimate of S$4.94.

    *****

    OSK DMG; Downgrade to SELL, TP of S$4.00

    15 April 2013

    Valuations Stretched; Downgrade To Sell

    2QFY13 results came in slightly below our expectations with PATMI at SGD72m (-15% y-o-y, -22% q-o-q). A 7.6% y-o-y fall in N&M ad revenue was partially cushioned by a 4.5% y-o-y increase in property rental income. We lower our FY13/14 earnings by 5.8/6.0% on weaker domestic economic outlook, which impact ad revenue. Downgrade to SELL with lower SOTP TP of SGD4.00 (SGD4.30 previously).

    • Share price enjoyed a great run up but valuations appear stretched. SPH’s share price ran up some 10% since it announced an exploration of a REIT listing on the SGX. Though we understand there are advantages of a REIT spin off, such as potential cash inflows, we think valuations appear stretched. With an unexciting core publishing segment, and FY13 dividend yields compressing to 5.2%, we are downgrading our call to SELL.

    • Feasibility of a REIT listing would depend on how cash is deployed. SPH is still in the early stages of studying a REIT spin off possibility and we think visibility on any positive catalysts are lacking at this point in time. We think a key point that needs to be addressed would be whether SPH will be able to make yield accretive investments with the use of proceeds.

    • Ad revenue weak but property segment held the fort. Property segment income continued to enjoy 4.5% y-o-y growth to SGD50.2m due to higher rental rates from Paragon but this was more than offset by a 7.1% y-o-y fall in Newspaper and Magazine segment revenue to SGD224.4m. Following weaker-than-expected 1Q13 Singapore GDP contraction (based on advanced estimates) of 0.6%, we have consequently lowered our FY13 earnings by 5.8% to reflect weaker ad spend going forward.

    • Downgrade to SELL, yields looking less attractive. We value the core media segment based on 13.8x FY13 P/E, Paragon (SGD2.43bn) and Clementi Mall (SGD359m) at market value, M1 and Starhub at OSK TP and investments as at Feb 13. SPH has declared an interim dividend of SGD7¢ a share. We think SPH looks less attractive with FY13 yields at 5.2%.
     
  6. zuolun

    zuolun Well-Known Member

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    K-GreenThe power of Analyst's review

    Amfraser: "We initiate coverage on K‐Green Trust (KGT) with a SELL call and a fair value of S$0.80."

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    K-Green Trust posts EPU of 0.51 cents in Q1

    15 Apr 2013 10:56 PM

    SINGAPORE: K-Green Trust posted an earnings per unit (EPU) of 0.51 cents in the first quarter, representing a 8.9 per cent contraction from the previous EPU of 0.56 cents.

    This is based on a Q1 net profit of S$3.2 million, which is down 9.4 per cent from S$3.5 million a year ago.

    Excluding construction revenue arising from the flue gas treatment upgrade following its completion, revenue for the quarter inched up 3 per cent to S$17 million.

    According to K-Green, net asset value per unit as at March 31, 2013 was S$1.01. Cash generated from operations was S$10 million for the quarter, down from S$11.7 million a year ago.

    The business trust, managed by Keppel Infrastructure Fund Management, owns the Senoko Waste-to-Energy Plant, Keppel Seghers Tuas Waste-to-Energy Plant and Keppel Seghers Ulu Pandan NEWater Plant. All three assets have long-term concession agreements with Singapore statutory bodies -- namely NEA and PUB.

    In a filing to the Singapore Exchange, Keppel Infrastructure Fund Management said it "will continue to evaluate asset enhancement opportunities in all three assets and will remain focused on acquisitions in areas of waste management, water treatment, renewable energy and energy efficiency", adding that key geographies for potential acquisitions remain Europe and Asia Pacific.
     
    Last edited: Apr 16, 2013
  7. zuolun

    zuolun Well-Known Member

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    When the shit hits the fan...

    SREITs will be the 1st Asset Class to get hit, if interest rates rise.

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  8. zuolun

    zuolun Well-Known Member

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    Are REITs in Danger?

    By Ser Jing Chong
    March 20, 2013

    Singapore’s REITs have been on a tear since the start of 2012, judging by the 40% increase in the FTSE Straits Times Real Estate Investment Trust Index (SGX: FSTAS8670). The FTSE ST REIT index measures the performance of various REITs in Singapore and has demonstrated how yield-hungry investors have been bidding up the prices of REITs in relation to the broader shares market (the Straits Times Index (SGX: ^STI) only increased by around 21% since 2012).

    As investors are busy chasing yields, it is worth noting that local REITs have been under scrutiny lately as ratings agency Fitch Ratings said REITs have to look for financing from other sources as they’re not well equipped for ‘interest rate shocks’. Fitch thinks that these REITs might have difficulties refinancing their debts if interest rates rise, as it would make debt more expensive to obtain.

    REITs are almost always heavily leveraged entities, and when their debts come due, they can only take on new debt to repay the old one or issue shares for capital for repayment of the debt. As such, any issues regarding REITs’ refinancing capabilities must be noted.

    On the other hand, Moody’s, another ratings agency, has notched up the ratings for several REITs including CapitaMall Trust (SGX: C38U), Keppel REIT (SGX: K71U) and Ascendas REIT (SGX: A17U). Moody’s believes that the lowering of the amount of secured debt in relation to unsecured debt for the REITs has given them more flexibility for their financing. Secured debt requires collateral – usually taken to be the REIT’s properties – while unsecured debt does not, making the latter a slightly safer form of debt for the REITs.

    However, Moody’s upgrade does not necessarily mean that the REITs are safer. In tougher economic climates such as that experienced in 2007-2009, credit is usually scarce. This can mean that creditors will want even tougher terms for their credit, be it in the form of more collateral or higher interest rates, which is the danger that Fitch was warning about. Low interest rates are prevalent in the current environment but there’s no saying when or if these rates will rise (for example, Japan has been in a near-zero interest rate environment since at 1996).

    If interest rates rise, REITs will find that their interest coverage ratios will start to compress and refinancing will become tougher.

    The last time Ascendas got downgraded by Moody’s was in 2009 due to possible debt-refinancing difficulties, and further downgrades would have been re-enacted if the ratings agency saw the REIT’s ‘fixed interest coverage dipping below 4’ at that time. In Ascendas’s recent third quarter earnings presentation, its current interest cover ratio was 5 – that’s 20% higher than its previous danger point. 44% of Ascenda’s total debt of $2.19b will be due for refinancing by 2015 and if the REIT has to refinance it at higher interest rates, it might just lower its interest cover ratio, spurring negative action on the part of rating agencies. This can lead to a vicious cycle of:

    Downgrades → pricier debt → interest-payment difficulties → downgrades​


    All these have a possibility of happening, but nobody can know for sure if it will really happen. How can we lessen such risks though? Well, the answer’s simple – we can look for REITs with higher interest coverage ratios and a smaller ratio of Debts/Assets or Gearing. After all, no company or trust ever went bankrupt by taking on no debt.
     
  9. zuolun

    zuolun Well-Known Member

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    Singapore REITs Risk Profile to Deteriorate, Says Fitch Ratings

    City-State’s Real Estate Investment Trust Sector May Have to Diversify Funding Sources

    By Rachel McCormack
    March 20, 2013

    Singapore REITs Face Risks from Debt Reliance

    Singapore’s real estate investment trusts (S-REITs), the sector’s second-best performers in Asia in the past year, may have to diversify its funding sources as they are not prepared for an “interest rate shock”, Fitch Ratings warned.

    In a special report released on March 18, the rating agency said that the city-state’s real estate investment trust sector is exposed to various risks due to its debt reliance. The uncertainties include refinancing difficulties and exposure to interest-rate shocks, Fitch said, citing findings from its 'Singapore REIT Sector Study'.

    "The availability of low-cost debt capital has led to the increasing use of debt to fund asset acquisitions, new developments, asset improvement programmes and unit holder payments," Fitch noted. This trend is likely to continue this year, and "competition for assets that results from the use of leverage will put downward pressure on underlying asset yields".

    Therefore, the rating agency expects the financial risk profile of the Singapore real estate investment trust sector to deteriorate.

    Singapore’s Real Estate Investment Trust Sector “Not Really Well Equipped”

    Johann Kenny, director at Fitch's corporate rating team, told Bloomberg in an interview following the release of the report: “Singapore REITs are not really well equipped to withstand an interest rate shock.” He further explained that while currently Singapore REITs have a stable operating environment, their dependence on bank debt means they do not really have potential from an interest rate perspective to face a massive shock in interest rates.

    Fitch pointed out that Singapore’s REITs, the biggest fundraisers in the city-state’s initial public offering (IPO) market in the past year, generally have a weak liquidity profile because of their reliance on short-term debt, as the short-dated maturity of leases on commercial property limits funding options. "In the event of a sudden move to higher interest rates, the gap between asset yields and interest rates would widen owing to the much slower pace at which asset yields are prone to self-correct," the rating agency added. If interest rates do go up, the property trusts can switch to secured borrowings or securitisation as most of their assets are unencumbered. They could also dispose of assets or raise equity to cover fixed charges, Fitch pointed out in its report.

    S-REIT Sector Still Resilient

    That said, Singapore’s REIT’s are still a fairly resilient asset class, Fitch believes. Pointing to the real estate investment trust sector’s higher revenues and margins during the 2008-2009 global financial crisis, the rating agency said in its report: "The revenues and profitability of the S-REIT sector are underpinned by the strong economic fundamentals of Singapore."

    Fitch Ratings expects revenues to grow across all segments of Singapore’s real estate investment trust sector this year. As for profitability -- measured by net property income (NPI) and earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (EBITDAR) – the rating agency expects fairly stable NPI and a slight decline in EBITDAR.

    Singapore’s REIT index has outperformed Japan and Australia across 5 years

    13 February 2013

    • Singapore Exchange lists 22 Real Estate Investment Trusts (REITs), the largest number of REITs listings in Asia (excluding Japan).
    • Singapore REITs market has consistently outperformed Japan and Australia across 1, 3 and 5 years.
    • 22 REITs listed on SGX maintain indicative dividend yields that range from 1.5% for CapitaMall Trust to 7.9% for Sabana Shariah.
    Singapore Exchange (SGX) has established itself as the Asian REITs hub having the largest number of REITs listings in Asia (excluding Japan). SGX lists 22 Real Estate Investment Trusts (REITs) sub-categorised across Diversified, Industrial & Office, Residential, Retail and Specialty sectors. The Industrial and Office subsector consisting of 11 REITs constituents makes up more than half of the total S-REITs market capitalisation of 49 billion.

    Over the past 5 years, the Singapore REITs market has consistently outperformed other regional markets, returning +29.27%. Similarly last year, the FTSE ST Real Estate Investment Trusts Index was the third best performing sector index with performance gains of +36.67%. Price performance across 22 REITs ranged between +20.11% for Parkwaylife REIT to +78.38% for Frasers Commercial in 2012.

    [​IMG]

    The difference in total returns across regions in the REITs sector can be attributed to differences in management structure, tax concessions in the industry as well as distribution requirements to list a few. In Singapore, REITs are mandated to distribute 90% of their profits to investors in return for tax savings from the government.

    This has resulted in attractive yields in the S-REITs market represented by a current dividend yield of 4.76% from the FTSE ST REITs Index. The table below details the historical dividend yields for the respective 22 REITs while our recent market update here features the ongoing schedule of earnings releases and distributions.

    Since the start of 2013, the FTSE ST REITs Index gained +3.99% while the FTSE ST Real Estate Holdings and Development Index gained +3.67%. The price performances of all 22 REITs varied from -2.94% for Ascott Residence to +11.52% for Mapletree Commercial year to date.

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  10. zuolun

    zuolun Well-Known Member

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    CapitaLand's Ascott group bags Nanjing serviced residence management contract

    April 8, 2013

    CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has secured a contract to manage its first serviced residence in Nanjing.

    The contract was awarded by Nanjing Lek Yuen Property Development Company Limited, a major property developer in Nanjing.

    Citadines Baijia Lake Nanjing, which will have approximately 290 apartment units, is slated to open in the second half of 2014.

    The latest addition means Ascott will be the largest international serviced residence owner-operator in China with more than 8,300 apartment units in 46 properties across 18 cities.

    Citadines Baijia Lake Nanjing has a prime location near the well-known Baijia Lake. It is very close to the Baijia Lake 1912 commercial area, Shengtai Road retail street, British School of Nanjing, Jiangning Hospital, and a university zone with 15 universities. There are convenient amenities such as restaurants, pubs, shopping centres, supermarkets, banks and clinics nearby. The property is also next to the metro stations of Lines 1 and 3, and a 15-minute and 25-minute drive from the Nanjing high-speed railway station and airport respectively.

    Residents can choose from a wide range of studio to three-bedroom apartments to suit their lifestyle needs. All apartments will come with a fully-equipped kitchen and separate work and sleeping areas. The comprehensive facilities at the serviced residence include a gymnasium children’s play area, residence lounge, breakfast lounge, meeting room and business centre.
     
  11. zuolun

    zuolun Well-Known Member

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  12. zuolun

    zuolun Well-Known Member

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    CapitaCommercial TrustBearish Rounding Top Breakout; TP 1.515

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  13. zuolun

    zuolun Well-Known Member

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    SREITs was a good buy 6 years ago esp. SuntecReit & CMT, the earlier ones, prior to the GFC.

    If one had held SREITs long-term in one's portfolio since 2007 or b4 the past 12-months extraordinary spike; one would have already made good capital gains + dividends, by now.

    I used to play SuntecReit (lot size: 100 lots) ranges from 1.05 to 1.15 & 1.20 to 1.40 from 2008 to end-2010.

    I knew some buy-and-hold long-term retail investors who hold SuntecReit around prices bet. 1.05 to 1.40 are paring down (partial or full stake) to lock-in their profits, recently.

    For new investors who're still interested and willing to takeover SREITs from the buy-and-hold long-term big FUNDS/players after a 6-year bull run in this particular industry, I believe the risk/reward should be much higher now.

    [video=youtube;kn481KcjvMo]http://www.youtube.com/watch?v=kn481KcjvMo[/video]
     
    Last edited: Mar 27, 2013
  14. zuolun

    zuolun Well-Known Member

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    OSK's review on CapitaCommercial Trust 26 Mar 2013: Neutral, S$1.61, TP: S$1.70

    CapitaCommercial Trust: Rise of another icon

    We visited CapitaGreen’s showroom yesterday morning and were wowed by its:
    i) 40th -floor sky garden and restaurant,
    ii) innovative technology which directs cool air inwards, and
    iii) unique dual facade that cuts solar heat, among others.
    Set to be CapitaCommercial Trust’s next growth driver, it offers c. 700,000 sq ft of Grade-A office space and is scheduled to receive its TOP by 4Q14. Due to a dearth of immediate drivers, however, CCT is still a NEUTRAL and its SGD1.70 TP remains unchanged as the contribution from CapitaGreen would only stream in by FY15.

    CapitaGreen’s unique features include:
    i) a high ceiling (3.2m vs the typical 2.8m-2.9m),
    ii) sky terraces on the fifth, 14th and 26th floors,
    iii) a gym and pool on level 38,
    iv) column-free efficient floor plates that ranges in size between 12,000 sq ft to 26,000 sq ft, and
    v) a cool void at the top of the building that draws in cool air from the ‘sky forest’ on the top floor.

    Unique design helps save utility cost.
    Not only is the cool void a unique architectural feature, previous studies have shown that the cool air it draws in
    could reduce the average temperature in the building by two degrees. Through this, we expect CapitaGreen’s utility cost to be lower than that of other office towers.

    Strategic location a key selling point.
    CapitaGreen is located in the heart of Singapore’s CBD, and is served by the Raffles Place and upcoming Telok Ayer MRT stations. In addition, CapitaCommercial Trust has indicated that tenants of CapitaGreen will have priority access to the GoldenShoe car park which currently features 1,053 parking lots.

    Decent yield from new building.
    CapitaGreen is a joint development by CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia. In this project, CCT owns 40% equity interest as well as a call option to acquire the remaining 60% within three years upon receiving its temporary occupancy permit (TOP). We expect the building, involving a total development cost of SGD1.4bn, to generate a forecast yield of 5.1%-6.3% when occupancy stabilizes.

    SREITs as at 6 March 2013
    [​IMG]
     
  15. zuolun

    zuolun Well-Known Member

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    nottibird,

    CapitaComm & SuntecREITDon't follow the crowd.

    ”The man who follows the crowd will usually get no further than the crowd. The man who walks alone is likely to find himself no one has ever been”. — Alan Ashley-Pitt

    Singapore REITs debt levels surge despite robust operations

    19 Mar 2013

    What could be the risks?

    According to Fitch Ratings' special report on SREITs, the availability of low-cost debt and the demand for dividend distributions in an environment of falling asset yields is leading to an increasing use of debt in Singapore Real Estate Investment Trust (SREIT) funding mixes.

    The increasing leverage of SREITs poses several risks to the sector, including refinancing risk and exposure to interest-rate shocks.

    The competition for assets that results from the use of leverage will put downward pressure on underlying asset yields and further exacerbate this trend.

    Here's more from Fitch Ratings:

    Short-Dated Lease Maturities: A structural feature of the commercial property market in Singapore is the short-dated maturity of leases.

    This feature poses a challenge to the funding options available to SREITS. SREITS have, typically, resorted to short-term borrowings to manage asset/liability mismatches.

    Interest-Rate Sensitivity: Over the past six years, SREIT funding costs have benefited from falling short-term rates. However, in a normalised interest scenario, coverage metrics appear weak.

    In the event of a sudden move to higher interest rates, the gap between asset yields and interest rates would widen owing to the much slower pace at which asset yields are prone to self-correct.

    In a rising-interest-rate environment, SRETs may be able to switch to secured borrowings or securitisation given that the majority of SREIT assets are unencumbered.

    Alternatively, SREITs may be required to resort to asset disposals or equity raisings in order to provide sufficient coverage of fixed charges

    Weak Liquidity Profiles: With reliance on short term bank debt, the liquidity profile of the SREIT sector is generally weak. Fitch Ratings expects the asset/liability duration mismatch to persist across the SREIT sector over the medium term.

    A shift towards capital market-supplied debt, which has longer duration that bank debt, is yet to gain momentum and remains a longer-term prospect.​

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    Groupthink is a concept refering to faulty decision-making in a group. Groups experiencing groupthink do not consider all alternatives and they desire unanimity at the expense of quality decisions.

    Analysts rated 'BUY' on S-REITs Oct 2012 Vs S-REITs prices on 19 Mar 2013:

    1. CapitaMall Trust Closed @ S$2.09 on 19 Mar 2013 (Hit historical high @ S$2.23 on 29 Oct 2012)
    TP S$2.36 - DMG 23 Oct 2012​

    2. Ascott Residence Trust Closed @ S$1.355 on 19 Mar 2013 (Hit historical high @ S$1.385 on 12 Mar 2013)
    TP S$1.37 - OCBC 24 Oct 2012​

    3. CapitaCommercial Trust Closed @ S$1.585 on 19 Mar 2013 (Hit historical high @ S$1.675 on 1st Feb 2013)
    TP S$1.66 - DB
    TP S$1.73 - CIMB​

    4. Suntec REIT Closed @ S$1.725 on 19 Mar 2013 (Hit historical high @ S$1.795 on 12 Mar 2013)
    TP S$1.66 - Maybank Kim Eng 10 Oct 2012
    TP S$1.64 - DB
    TP S$1.79 - CIMB
    Upgraded To Buy - DMG​

    5. CapitaMalls Asia Closed @ S$2.10 on 19 Mar 2013 (Hit historical high @ S$2.26 on 4 Feb 2013)
    TP S$1.80 - CIMB
    TP S$2.15 - Jefferies​

    6. Frasers Commercial Trust Closed at historical high @ S$1.385 on 19 Mar 2013
    TP S$1.37 - CIMB
    TP S$1.31 - OCBC 10 Oct 2012​

    7. Mapletree Comm Trust Closed @ S$1.305 on 19 Mar 2013 (Hit historical high @ 1.445 on 15 Feb 2013)
    TP S$1.33 - DB
    TP $1.39 - CIMB​

    Why We Buy High and Sell Low — Based on TA, chart pattern on 21 Nov 2012 (ref. individual charts below), many SREITs prices had almost hit the peak then; retail investors would have been better off now 19 Mar 2013 if they did the reverse, i.e. SELL instead of BUY/Averaging down SREITs based on Analysts' reviews in Oct 2012.

    Birds of the feather flock together

    CapitaMall TrustTrading extremely extended from its 20d SMA

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    Ascott Residence TrustTrading extremely extended from its 20d SMA

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    CapitaCommercial TrustTrading extremely extended from its 20d SMA

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    SuntecReitTrading extremely extended from its 20d SMA

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    CapMallAsiaTrading extremely extended from its 20d SMA

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    FrasersCommTrading extremely extended from its 20d SMA

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    Mapletree Comm TrustTrading extremely extended from its 20d SMA

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