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STEADY AS SHE GOES FOR SREITS

By Gabriel Yap

STEADY AS SHE GOES FOR SREITS

The half-time result for 2017 is out – SREITS continued to be one of the best asset classes for the smart investor, as predicted in our series of SREITs articles -
https://einvesthub/btonline/com.sg/as-sure-as-daylight-sriets-shine
https://einvesthub/btonline/com.sg/sreits-get-pounded-by-trump
and in our last 2 REITS Investment classes (classes are held every quarterly) entitled “Tactical Profitable Positioning in REITS” and “Which are the Good Value Reits to have in your Portfolio”, we have suggested that for the opportunity-seeking value investors, black swan events like Trump pounding on SREITS are probably the best time to top up on REITs when they are selling at maximum fear. This has indeed, turned out to be the classic “Buy when there is blood on the Streets”.

Despite initial jitters, SREITS have gotten past the fears from the recent Mar and Jun rate hikes by the Federal Reserve. SREITS have continued to strongly outperform against other sectors in the Singapore market. SREITS have averaged YTD gains of 12.39% (without including average dividends of 6.3%) in 1H2017.

Investors who have heeded our observations and learned in our REIT investment classes the skills to pick the best performing REITS would have enjoyed returns of 17.22 – 23.51% in 1H2017.

Best 10 REITS Share Price
30/06/2017
Share Price
30/12/2016
Price
Change
%
Change
CDL HT $1.655 $1.340 $0.315 23.507%
Lippomalls $0.445 $0.370 $0.075 20.270%
Capital Retail China $1.640 $1.370 $0.270 19.708%
Viva Trust $0.885 $0.755 $0.130 17.219%
Mapletree Logistics Trust $1.195 $1.020 $0.175 17.157%
Ascendas HT $0.825 $0.705 $0.120 17.021%
Frasers Logistics Trust $1.070 $0.925 $0.145 15.676%
Ascendas Reit $2.610 $2.270 $0.340 14.978%
Mapletree Commercial Trust $1.595 $1.395 $0.200 14.337%
EC World Reit $0.810 $0.710 $0.100 14.085%

The top-performing REIT, CDL HT which posted a 23.51% gain was highlighted in our investment classes as participants were the first to appreciate a slow and gradual improvement in AR, Occupancy Rates and RevPar for hospitality REITS at the beginning of the year. In fact, another hospitality REIT – Ascendas HT, made the Top 10 Best Reit list with a 6th place finish, posted gains of 17.02%.

In fact, the other hospitality REITS that we have highlighted in class, also did very well, posting gains of 11.54% - 12.88%.

Hospitality REITS REITS
POUNDED BY TRUMP
Share Price
30/06/2017
Share Price
30/12/2016
Price
Change
%
Change
OUE Hospitality Reit $0.745 $0.660 $0.085 12.879%
Far East HT $0.670 $0.600 $0.070 11.667%
Frasers Hospitality Trust $0.725 $0.650 $0.075 11.538%

It was pointed out that the SREIT hospitality sector suffered the most serious bout of sell-off in November 2016 following Trump’s elections. It was clear that valuations were not in sync with improving fundamentals which materialized 2 months later. Thus, this is another case how the smart investor should invest at the trough, taking into account calculated risks and profiting from it – this is what we teach in our quarterly REITS investment classes.

We also hosted an Investors Meet for our students and participants with Viva Industrial Trust which involved a good detailed tour of Viva Business Park which we believe the bits and pieces improvement will continue to help Viva beat consensus DPU, thereby providing boosters to its share price. We are very happy to see that Viva made the list of Top 10 Reits for 1H2017 with a 4th place finish with a gain of 17.22%. We will continue to identify the next movers of SREITS, before the move, in our REITS investment class.

SREITs continued to face an uncomfortable mix of low growth, heightened valuations after 1H2017 share price run-up, coupled with rising risk to distributions from an anticipated rise in interest rates in the next coming quarterly results. Nevertheless, what we believe holds the key in trading SREIT profitably is – knowing at your finger-tips if the next quarterly DPU is gonna be up or not, which normally is the lynchpin for share price outperformance.

The 1H2017 Top 10 performers have borne out this belief – other than CDL HT and Frasers Logistics Trust which announced acquisitions towards the last week of June, most of the other Top 10 SREITS had outperformed based on the ability to eke out steady and accretive DPU growth for the quarter, CDL HT, Capital Retail China, Ascendas Reit and Mapletree Commercial Trust in particular.

How does one navigate and gain first-hand analysis resulting in good gains in your REIT portfolio? Do sign up for our next REIT class, timely arranged for Saturday 5th Aug 10 am to 1 pm - https://www.eventbrite.com/e/create-a-correction-proof-portfolio-with-reits-tickets-34928440907

Gabriel Yap
Gabriel Yap

Mr Gabriel Yap was an eminent stockbroker and investment banker who retired in 2009 to devote himself to philanthrophy. He is well-known as the Investment Guru, having being regularly interviewed in the news media like Channel News Asia, Bloomberg TV, CNBC, Mediacorp Radio. Together with the famous Fortune Times, Mr Yap hosted the inaugural Asian REITS Awards 2016 in Singapore. Mr Yap was both Chairman of The Future of REITS Forum as well as Chairman of the Fortune Times Asian REITS Awards 2016 Judging Committee comprising of the leading CEOs, deal makers and who’s who in the Asian REIT sector.

Mr Gabriel Yap has lectured for almost 30 years – He has lectured at the famous Asian Development Bank, Monetary Authority of Singapore, Institute of Banking & Finance, SGX, ASME, SIAS and Share Investors. He has also trained the Top Producers at major insurance companies and banks. He has also trained students for the grueling CFA course and has lectured and delivered academic papers internationally.

Mr Gabriel Yap has also sat in the EXCO of the 13th Association of Small & Medium Enterprises, ASME. Mr Yap has also served in the EXCO of SIAS.