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REITs will mean revert

Many think that just because of  a good year run, REITs are the go to investment. I don’t believe this is the case.

Sectors take turns to outperform. Think about whether REITs can keep going up at this pace.

I fear many are switching to this sector due to low interest rate and that they are the most easily understood instruments.

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momo

Sunday 21st of April 2013

Hi Drizzt, So have Singapore REITs mean revert?

Kyith

Sunday 21st of April 2013

hi momo, i don't think so. In fact the trend is strong. They are getting to frothy prices that still offers a good yield at the expense of risk.

many have left the down rental cycles and the yield that you see now is based on renewing at high rentals.

but if you stay with a good manager i guess it is still better.

take a look at Aims Amp which is doing redevelopment and generating shareholder value.

habsb

Friday 19th of October 2012

Hi Drizzt

thank you for sharing this. But I'm pretty familiar with US REITs, so what I was asking for, is sort of the same kind of information but for the Singapore REIT world. I'm not based on Singapore and all what I know about Singapore stocks is pretty much what I find on your website.

Best Regards - habsb

habsb

Monday 8th of October 2012

Hi Drizzt thank you. Do you mean that Singapore REIT are NOT mortgage REIT ? (I don't know anything about them). What's their dominant business model then ? Best Regards - habsb

Drizzt

Saturday 13th of October 2012

hi habsb,

mortgage REIT invests in mortgages! so when the homeowners pay their mortgages, they pay this REIT. if you would like to know more about the US reit world, you can take a look at this shared book > http://www.scribd.com/doc/27222666/Investing-in-Reits

habsb

Tuesday 2nd of October 2012

Hello Drizzt

I've discovered Singapore stocks through your blog, and I'm quite happy with my investments so far. Concerning REITs, could you please explain in a few words the main differences between US REITs (like NYSE:NLY) and Singapore REITs ?

Best Regards -- habsb

Drizzt

Sunday 7th of October 2012

hi Habsb,

thanks. i hope i lived up to what you require. I am not sure what is the main difference. US have more variety of REITs. i do find mortgage REITs to be the dominant theme there. There are data center REITs lie Equinix if i remember. My friend swears by Equinix. Data center is a pretty interesting domain as well.

Jackson

Sunday 30th of September 2012

Actually during 2007 the dividend yield spread over the risk free rate was at lows because people were very bullish and thus demeanded less compensation (i.e spread) to take on the risk of investing in reits.

It was during the crisis in 2008 where everyone was panicking did the spreads really shoot up high.

But yes the current spread above the risk free rate is still above the mean value.

Following is a link to a chart of the SIBOR over the years.

http://www.salary.sg/wp-content/uploads/2009/06/historical-sibor2.png

Current 3m Sibor is about 0.38%. average reit yield is about 6%. i would agree the reit yields are slightly below their means but the SIBOR is really too low.... and especially with the kind of inflation we are getting. i cant help feel so trapped.

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