AREITS Maybe a time to buy

Hi I am looking at Buying AREITS for yield to have money coming in.
Have been looking at BWP Trust, Goodman, and Stocklands.
Just wondering if this seem ok as I am new to this

Len

 

@Simon Hampel - that's one helluva correction. If only we had crystal balls to guide us in guessing how many tenants will be going belly up (I'd be avoiding shopping centres would be feeling the pinch as many food court/fashion tenants fail - their returns will be rather flat/negative, whereas those that hold commercial offices/industrial which aren't exposed eg - Distribution Centres or Offices with Government tenants will remain quite strong).

 

Trusts. No reserves. Not for me.

 

Is it worth a long (2+year) investment?

Yes they will be smashed in the short and maybe medium term until we recover but at what discount is it worth a small % of a portfolio?

As much as people are now buying from home I think that once the lockdown in lifted people will want to do things outside the house, eat, shop, socialize, anything outside the bloody house

I have a small holding in VAP which has dropped from $90+ to $50 and now back to $58. I was thinking of putting a little more into it at that price (mid $50's)

 

Lots of REIT’s will be struggling with debt covenant issues given lots of tenants will not be paying. I’d say it is a brave decision to buy now. I think there is a lot more pain to come for REITS and the market more generally. Market might look attractive around GFC lows

 

I guess it depend what the long term prognosis is for brick and mortar retail. I think it's a dying breed anyways, so would not be buying anything that holds a lot of it at all...especially not now.

I think this will be a big shift in the way a lot of companies do business moving forward.

 

Retail reits easily the cheapest on trailing yields. For good reason. I wonder how much rent cut Solly Lew and John King Wang now for next 5 years. 60%?

 

And after all the "good news" of malls shutting and rent not payable. VCX and SCG up over 10% today. The stockmarket is stupid sometimes (often actually).

 

Back down today. Feels like long retailers, short REITs is the trade.

 

Could be OK for the long term, I wouldnt invest in them yet , I Have been loading up on RFF @ $1.65, but should be just as good or better buying now @ 1.93 with the boom in soft commodities in recent days, with both demand and supply shocks, with some countries banning exports . Has a 6% indexed yeild meaning rising compounding yield, on 10 year leases should get 8%p/a + CG. meaning you should double your money every 5 years. Also had good perfectly timed rains, labour shortages have quickly abated, meaning yeilds can at least be maintained and probably increased.

 

Just look at S&P/ASX 200 A-REIT [XPJ] It's peak in Nov 2007 was circa 2400 and it fell to 565 in March 2009. I would need to see similar capitulation to dip my toes in and I wouldn't touch discretionary retail who's model was slowly but surely being disrupted by online e-comm's for a while now. Sorry for the link. Can't insert an image right now

https://www.google.com/search?q=asx...so=_742FXtLHCpmE4-EPm4emiA01:0&wptab=OVERVIEW

 

We only have one REIT in our portfolio, namely ARF.

It went up 21.74% today (yep, up 21.74% in ONE day) .

Thanks ScoMo.

PS
Still down 36.94% from its 20 February price .

 

yes, i reckon too. i note GMG has been trading at close to 40% discount on price at start of year, good value at that price

 

I traded Vicinity a little. Got out at $1.225 today. I don't think anything's a particular hold. Have actually swapped to holding retailers, since they'll screw the landlords big time in the Common Wealth of Australia (where you wealth is commonly shared).

 

Don't fall for recency bias. Just because something was worth $1 three months ago and now selling for 50c doesn't mean it is a bargain.

 

Thanks Fargo had a look at RFF brought at $1.87 happy with these.
Also invested in CIP & DDR & AQR last friday
CIP pure sheds should be ok with the retail is heading
DDR debt lower and thinking the owner has a lot of skin in the game.
AQR was a toss up with that and Viva energy reit I think there maybe some growth.
These will sit along side my Milton, Argo, Afic. Maybe I need SOL or Brickwoods
Looking for a LIC/LIT with international focus sorry not into EFT's

 

How did I miss this post about my favourite topic Reits?

As the regulars would know I am heavily invested in Reits, though I mostly hold unlisted property trusts. How are they holding up and is it a good time to buy in?

The 2 listed reits I hold being CLW & COF have copped a beating price wise, in line with everything else. Maybe even more so than the market in general. But I am still happy to hold them both. They both still paid out there full distributions for the march quarter and so far have not announced a reduction in future distributions. Sure there could be a reduction in future income from them, as there most likely will be with most assets during this crazy time. But overall looking at the assets they hold, they should hold up ok. Would I buy more right now? Honestly I am tempted with COF, as it is priced so well right now for office assets that should be able to survive this mess. But I probably wont be buying any more reits, as I have been saying for a while now that I am way to heavy in property trusts and have been looking at re balancing towards general equities for some time now.

On the unlisted side which I have holdings in about 15 different funds, so far they have faired well. Its still early days but most are still distributing as per normal. I do hold a few that are exposed to retail ( luckily not many ) and they have ceased distributions for now. I am in regular communication with a number of the managers and I am actually glad they are holding off on distributions. Especially with retail its better they hold onto extra cash flow until they see this thing through. Would rather loose some income short term than run into cashflow issues and they need to sell assets in a distressed market. On the office side which most of my holdings sit there has been no reductions yet. And I don't think there will be if maybe a small amount. Most of the office funds I hold have solid tenants. Either government or large national tenants. Have some industrial also and they should hold up well.

The point being is, with reits it really depends on what you buy or hold. I wouldn't go and buy a reit index personally. I would rather pick individual managers and assets that I feel could survive during a market downturn. Though this market downturn is not your average downturn and could pose risks that were not accounted for.

Overall so far the property trusts are doing the job that I expected them to do when I went into this segment. Continue to pay me an income in the good and bad times, even if it may be reduced during the bad. Look at it this way, a majority of the funds I hold are now paying me 7% yield or more based on my purchase price over the last few years. Lets say during a major downturn like now the overall yield drops by 50% which I think would be worse case, then I end up with a minimum 3.5% yield for a while. I don't see that as a terrible outcome, considering the current climate.

OK. Rant over.

 

Buying COF now and assuming no dividend change yields close to 10%. Happy days.