S-Reits: Gd analysis

The reason for the highest yield spread for SReits against other markets is due to the proportion of industrial, healthcare or emerging market REITs within the index.

In the case for Singaporean industrial properties, these are leasehold interests so the yield profile against Japanese assets is always going to be higher. Did’nt know that abt Jap assets

Hotels, Indonesian/Indian healthcare/retail properties trade at higher yields than office & retail properties.

So basically although the SReit index trades above its peers – there is a reason for it! And should not imply that SReits are cheap.

A reader made this comment on http://atans1.wordpress.com/2013/01/10/s-reits-cheong-all-the-way-says-ocbc-sec/

S-Reits: “Cheong all the way” says OCBC Sec

Especially industrial Reits ’cause of the 7% yields.

“Looking into 2013, we believe S-REITs would likely retain their shine, underpinned by three key drivers. First, the sector offers the highest yield spreads among its peers in other major markets. Second, S-REITs are likely to be in favour amid the uncertain macroeconomic outlook, given their defensive low beta nature. Lastly, the outlook and financial position of S-REITs are generally positive, which should translate to firm performances going forward.”

S’pore Biz Review

I wouldn’t be a seller, but I sure am not going to add to my exposure to Lippo-M, AIMSAMP or Fraser Commercial, or to buy any other reit. But watching like a hawk to find a reason to sell.

Lippo Reit: OCBC is bullish, but Indon economy is slowing

http://sreit.reitdata.com/2012/05/02/lmir-ocbc-14/

So am I. But Indonesia’s economy grew at its slowest pace in 18 months amid a slowdown in exports as demand from key markets such as the US, Europe, China and India weakened.

Worse, the Indonesian rupiah has fallen 8% against the US dollar in the last twelve months: a weak currency may hurt the purchasing power of domestic consumers and dent demand. Remember domestic consumption accounts for nearly 60% of its economy.
http://www.bbc.co.uk/news/business-17980123

Other analysis, info on LMIRT:

http://s-reitinvestmentblog.blogspot.com/2012/05/analysis-of-lmir.html

http://diyvalueinvesting.blogspot.com/2012/04/lmir-q1fy2012.html

Money for jam

I’m a shareholder in Lippo Malls Indonesia Retail Trust that has called for a massive rights issue (S$336.8m) that will not be underwritten by the five Joint Mgrs (StanChart, CIMB, Credit Suisse, BoA and UBS). Market is too volatile for them to risk their money for “peanuts”? In normal markets, they would be entitled to a fee of 2- 3% for underwriting the rights issue. This would have worked out to fees of between S$6.7m- S$10.1m.

But the five of them (StanChart, CIMB, Credit Suisse, BoA and UBS) are getting a total of S$1.5m (or 0.45% of amt to be raised) to do bugger all as I see it. This is 31.25% of the fees that will paid in relation to the rights issue. The rest of the fees will go to StanChart (financial adviser), lawyers, accountants, printers and so on.

Guess LMIR didn’t want to upset the investment banks who were planning to underwrite the issue.