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Erm, I clicked on your link. This is what I saw from your " Singapore Reits Comparision Graph" :
- Kep Reit has got high gearing,
-but it has low Price/NAV. (By the way: NAV= Net Asset Value)
And the following is my intepretation of what I saw:
-High gearing means high risk (of bankruptcy).
-While Low Price/NAV means that the current price paid for every dollar of Kep Reit's Net Asset is cheap. Since Kep Reit is cheap, one can get a higher return by buying into it.
-Thus the Risk-Return ratio of Kep Reit = High Risk/ High Return.
-What is there to short for such a balanced Reit?
-Shouldn't you call to short reit that has High Risk/ Low return (and so overvalued) e.g. PLife Reit?
marubozu1688 ( Date: 29-Jul-2013 15:51) Posted:
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Potential candidate to short! High gearing!
http://mystocksinvesting.com/singapore-reits/are-you-ready-to-short-singapore-reit/
Keppel Reit on Friday announced that it has successfully raised gross proceeds of S$119.7 million in an issuance of 95 million new units to institutional and other investors.
The money raised will be used to buy a 50-per-cent stake in 8 Exhibition Street, a property in Melbourne, Australia, it said, confirming an earlier online report from BT.
The issue price of S$1.26 per unit carried a 2.58 per cent discount to its adjusted volume weighted average price of S$1.2934 for trades done on Thursday.
As the limited amount of liquidility that is currently in the system flows to pursue SPH reits, it resulted in Keppel Reits being oversold and SPH Reits being overvalued. This presented a good opportunity for accumulation of Keppel Reits. The following are positive points about Keppel Reits:
1) Investment in Austrialia prime office space:
Austrialia has reached the end of its commodity investment journey and the country is now planning to shift its economy focus. Mostly likely than not, the focus will be landed on the country's already well-developed financial sectors - international trade theory of comparative advantage. This would result in demand for more office space in the prime area.
2) Fund flowing back from SPH Reits
Singapore like many of the developed economies are shifting toward becoming a service oriented country- fall in manufacturing data. Like Austrialia, this means more demands for office space which lead to higher rental and valuation gains. On the other hand, with the opening of more new malls in 2 years time, retail spaces such as those owned by SPH reits will become abundant. To make things worse, Clementi Mall charges one of the highest rent among comparable malls- the sustainability of those rental charges are doubted. All these mean that liquidity will once again flow back to Keppel Reit once investors get over the excitement of SPH's new reit and rationality picks up.
3) Rising Interest Rate is not a significant concern
Singapore % rate is highly pegged to US % rate, which is dependent on US bond purchasing program. According to Fed, the QE program would most likely end by mid 2014. Until then, we could safely assume that there will be no significant rise in % rate and Kep reit could enjoy another year of financial leverage. Furthermore, MAS might choose to depreciate the SGD, which is at its all time high, over inceasing the Singapore % rate. This might be necessary to prevent a sudden spike in interest rate which would cause the high amount of local housing debts to beome Non Performing Loan (NPL). Simply put, interest rate might still stay low for a period of time even after mid 2014.
As such I retain my TP at $1.82. As the market get bullish, more liquidity will flows in along with professional fund managers, who tend to rely more on Fundamental Analysis (FA) rather than Technical Analysis (TA). So more foucs on FA might be needed- TA is a self-fulfulling prophecy.
Keppel REIT is bearish.
http://mystocksinvesting.com/singapore-stocks/capitamall-trust/is-it-a-good-time-to-buy-singapore-reit-now/
A number of investors are rather concern of Kep Reit's high leverage ratio. Although it's true that financial cost will increase once interest rates start hiking, that is hardly the full story. Interest rates normally go up during economy recovery, which allows management to increase rental fee that will offset the higher financial cost, at least partially. There is a recent article on Singapore's commercial property rental expect to rise, you can verify it.
Anyway, the spotlight is not on whether the rental fee would rise more than the financial cost. Rather, the mainpoint here is revaluation gain from the properties. For the past few years, property developers have largely been focusing on residential properties, and so commerical properties have been neglected. As the economy recovers, business activities will increased and commercial properties (CP) will experience high demand and low supply. Property developers may quickly turn toward developing CP, but the it will still take them at least 2-3 years before the new properties are ready to recieve new tentants. The then higher interest rate would also make it expensive to develop new properties. All these give Kep Reit a strong potential for high revaluation gain. I have given it a TP of $1.82.
P.S. Only good management teams could recongnise and exploit the opportunities offered by the low interest rates environment, which prevail for the past few years. Therefore when compared aganist lowly leveraged reits, Kep Reit's high leverage ratio is actually a display of strenght rather than weakness.
sean123 ( Date: 02-Jun-2013 10:12) Posted:
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visited 77 King street in Sydney, guess who is their tenant Apple and FB, Just opposite LV outlet!
http://sbr.com.sg/residential-property/more-news/3-reasons-why-keppel-reit-ratings-could-clinch-moodys-ratings-upgrade
You can check the comparison table here for Singapore REIT.
http://mystocksinvesting.com/singapore-reits/singapore-reits-comparison-table-for-dividend-investing-as-passive-income-june-2013/
marubozu1688 ( Date: 02-Jun-2013 12:02) Posted:
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sean123 ( Date: 02-Jun-2013 10:12) Posted:
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bought quite some lots of K-reit, recently it kept dropping, can anybody analyze this counter?
marubozu1688 ( Date: 24-May-2013 13:24) Posted:
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Be careful of the sell off in Singapore REIT.
http://mystocksinvesting.com/singapore-reits/singapore-reit-sell-off-should-you-take-profit-now/
K-REIT dropped 3.8%!
Geneva88 ( Date: 22-May-2013 09:17) Posted:
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Sounds good! Sign of investor confidence in the stock.
guoyanyunyan ( Date: 21-May-2013 10:30) Posted:
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Goldman Sachs to buy Keppel REIT stake for $279.9m
Goldman Sachs Group Inc. agreed to buy a 6.7% stake in Keppel REIT from a subsidiary of Keppel Corp., the world’s largest oil-rig maker, for $279.9 Million.
Goldman Sachs will purchase 180 million units of the real estate investment trust for $1.555 per unit, according to a statement to the Singapore stock exchange today. The price represents a 3.5% discount to Keppel REIT’s closing price yesterday.
Goldman Sachs is betting on Singapore’s office market where rents are expected to start rising next year. Prime office rents may climb 13% per annum in the two years to 2016, according to a May 3 report by Standard Chartered Plc. Keppel REIT is the largest landlord of office assets in the island city, the bank said.
Keppel REIT owns the highest-quality office portfolio among office SREITs, Standard Chartered’s analysts Kai Yip and Regina Lim wrote in the note. Prime office buildings such as Ocean Financial Centre, One Raffles Quay and Marina Bay Financial Centre Towers 1 and 2, make up 80% of its portfolio’s 2.37 million square feet (220,180 square meters) of net leasable area, according to the note.
With the sale, Keppel Corp. will cut its stake in the REIT to 51.5%, according to the statement. The sale will be completed by May 27, the company said.
Keppel REIT shares dropped as much as 3.4% toS$1.550, and traded at $1.555 at 9:02 a.m. local time, heading for its biggest drop since July 20. The trust has gained 20% this year compared with the 13% advance in the FTSE Strait Times Real Estate Investment Trust Index.
...Last Done: $1.565...