07/2021
A lot of apoplectic REIT investors are twisting themselves into pretzels these days, trying to understand what’s going on in the REIT market while agonizing over the 7.5-year itch, which we first wrote about in our January 2021 publication entitled “7-YEAR ITCH FOR S-REITs & ITS SEVERE RAMIFICATIONS”.
So, has the zeitgeist changed for S-REITs?
The seven-year itch is a popular belief, that happiness in a marriage or long-term romance declines after around seven years. The idea puts a specific time on a generally observed phenomenon that divorce rates rises around that time period globally.
The titular phrase was first made popular in 1955 by the play The Seven Year Itch, by George Axelrod, and gained wild popularity following a film adaptation starring Marilyn Monroe and Tom Ewell.
Presently, the titubation of such phenomenon has been expanded beyond personal relationships, both spousal and casual in nature, to encompass periods of dissatisfaction or unhappiness in any situation like buying a house, enjoying the satisfaction of a sports car or working at one’s present full-time job. Often, severe repercussions are felt when the seven-year itch bites.
So how has the seven-year itch affected S-REITs? Has the itch broadened out to 7.5 years now as at end-June 2021?
Before I dish out the findings, I would like to share with you that my maiden book “Making Your Millions in REITs” have made it into Times Top-10 Bestsellers. As pointed out by my brother-in-law, Michael, I am deeply honored to share the limelight with ex-President Obama, incoming Vice-President Kamala Harris and ex-President wife, Michelle Obama in the Times Top-10 Bestsellers. I am just elated that I made the Elite List barely two weeks release of the book. Thank you all for your kind support and endorsement and do continue to tell your family members, pals, business associates and friends of my book.
Table 1 – I am deeply honored to share the limelight with ex-President Obama, incoming Vice-President Kamala Harris and ex-President wife, Michelle Obama in the Times Top-10 Bestsellers, barely two weeks after the release of “Making Your Millions in REITs”
Earlier in the year, Lianhe Zaobao gave a rave review of the book. You can read the English translation here or at GCP Global Facebook Page.
The ramifications of the 7-Year Itch ramifications have been severe and huge for the REIT investor. Of greater significance is that the situation has not improved in the past 6 months of the current year. This meant that if you have invested in the wrong underperforming REITs, you would have turned more apoplectic with each passing month as the losses grind at you. The whole idea of investing into safe steady REITs is to be able to grin every 3 or 6 months when you receive your steady and consistent dividends, rather to be grind at.
S-REITs 7.5 Year Itch
As 1H2021 came to a close, S-REITs 7.5 Year itch has severe ramifications for the sharp and smart REIT investor.
Although there are 38 REITs (excluding illiquid ones like BHG and good bye to Soilbuild REIT, one of the worst performing REITs which has now been privatized) listed at end-1H2021, there are only 23 REITs which have listed on SGX prior to 2013. Thus, these 23 REITs have a 7.5-year track record as at 30 Jun 2021.
So how have they performed?
Table 5 – 7-Year Performances of the 23 REITs which have listed on SGX prior to 2013 which will have a 7.5 - year track record as at 30 Jun 2021.
Revelation Number 1
It may come as a shock to many REIT investors that an awful 11 (would be higher if Soilbuild REIT is still listed) out of the 23 REITs suffer from the seven-year itch and are trading below their respective IPO prices at end-Jun 2021 compared to their prices 7.5 years ago at end-2013. This is a whopping 47.8% of Losers vs just 52.2% of Winners. This means that REIT selection is key in Making Your Millions in REITs, something that we have emphasized all along in our REIT investment classes, media interviews and book.
Yes, only 12 out of 23 REITs managed to post prices above their IPO prices at 30 Jun 2021. It is even more gruesome when most REIT investors have the notion that REITs are relatively safe and sound investments as they pay regular dividends and are less volatile than underlying equities.
Of course, such a phenomenon is not new to GCP Global student investors as we have guided and forewarned on such REIT behavior in our classes. An integral part of our education program is to help our student investors to adroitly avoid the bad hats. This holds the key to making your millions in REITs. Readers of our book “Making Your Millions in REITs” will also be able to understand further the underlying reasons for such a phenomenon.
Revelation Number 2
Table 6 – Top 5 Best Performing S-REITs in past 7.5 years, 2013 – 1H2021
In analyzing the Winners, the Top 3 REITs, namely Mapletree Industrial Trust (MIT), Ascendas India Trust and Mapletree Logistics Trust (MLT) delivered impressive returns of more than/close to a 100% capital gain in the past 7.5 years. This means that if you had the ability and skills to pick the Top-5 Performing REITs (I am a Top-20 shareholder of Frasers Centrepoint Trust (FCT) since IPO, a Top-20 shareholder of Ascendas India Trust and am a shareholder of MIT, Ascendas REIT and MLT) 7.5 years ago from attending our Quarterly REIT classes, you would have been able to double your investment capital in 7.5 years – yes, REITs can deliver outsized returns, if you know which to pick, and we have not even included the quarterly and/or half-yearly dividends received in our calculations. Do refer to our book “Making Your Millions in REITs” for details of Total Return calculations of all the S-REITs.
Table 7 – Total Gain in FCT would be $2.86 million for every 1 million shares bought at IPO
Using Frasers Centrepoint Trust as an illustration as I have used in my “Making your Millions in REITs” book since I have been a Top-20 Shareholder for FCT since IPO, 1 million units of FCT costing a total of $1.03 million at IPO would have yield total dividends of $1.43 million in the past fourteen years till end-2020. The same 1 million units of FCT bought at $1.03 is worth $2.46 million at 31 Dec 2020. Thus, the total gain is $2.86 million! And as long as you remain as its shareholder, you will continue to reap dividends every half-yearly (FCT just revised its DPU policy from quarterly to half-yearly). FCT’s CAGR worked out to 9.95% per annum for the past fourteen years. You will continue to double your investment capital in FCT every 7 years approximately if this trend continues.
Table 8 – Total Return in FCT is 277.44% and it’s CAGR would work out to 9.95% per annum for the past fourteen years. You will continue to double your investment capital in FCT every 7 years approximately if this trend continues.
Analyzing the Losers
Table 9 – Worst-5 Performing S-REITs in past 7 years, 2013 - 2020
In my various media interviews throughout the decades,I have been most emphatic that when “REITs turn Bad, They Never turn Back”. Thus, we have always taught in our investment classes on how to identify such Rotten Apples before they turn bad, not scream and shout only after they have turned bad, which many bloggers and research reports seem to indicate.
Table 9 shows the Worst-5 Performing REITs in the past 7.5 years. The share prices of Lippomalls, Sabana REIT and OUE Commercial have been on a constantly downtrend in the past 7.5 years, a phenomenon that we forewarned GCP Global investor students in our Quarterly REITs classes. The share price of First REIT started its decline 2.5 years ago, again something we identified for our student investors then. Note that these REITs would have destroyed your investment capital by as much as 41% - 85% in the past 7.5 years. For more on how we were able to identify the early warning signals, do read the full discourse in our “Making Your Millions in REITs” book.
Steady dividend income is one of the primary reasons for investing in REITs. REITs have a fairly stable income stream from rental collections paid by tenants bounded by their lease agreements over a certain period of time. Hence, the regular and stable nature of such cash dividend income is highly rated. Thus, it is actually rather difficult to lose money in REITs, unless you had picked the Rotten Apples and/or Value Traps. In our regular REIT classes, (the next upcoming class is on 7 Aug 2021), we seek to help you to spot and shove such REITs so that you can enjoy the regular and stable nature of such cash dividend income from the good REITs whose share price also increases steadily to help you build your income in REITs steadily and consistently.
Clearly, the above exemplifies what we have been teaching all these years –
LESSON LEARNED
1. S-REITs have provided investors with long term sustainable total returns. 2. You can double your returns from REITs with the right selection of REITs in your investment portfolio. 3. But to be able to achieve that, it is imperative for the investor to be able to avoid the bad REITs and let the good REITs achieve for you, consistent and steady returns over the years and decades. 4. Side-stepping bad apples is part and parcel of REIT investing. The Smart and Sharp REIT investor needs to understand perspicuously when to ditch these apples before they turn bad or to recognize conditions that will make these apples turn back subsequently.
Being able to adroitly pick the crème de la crème REITs at crème de la crème prices hold the key to Making Your Millions in REITS
The above study becomes more worrisome if we look at the performances of REITs that listed on SGX after 2013 ie. Those with track record of less than 7.5 years. Understandably, due to limited investible local assets, most REITs that IPO since 2011 are predominantly with assets in foreign land and even local REITs have been increasingly looking overseas for growth via acquisitions. However, growth via overseas acquisitions do not equate to growth in REIT prices for REIT holders as overseas acquisitions should be analyzed with greater scrutiny due to limited information and sometimes, a lack of independent grounds for verification of certain trends and facts in relation to reversionary rentals, occupancies and tenants’ veracity of the REIT’s IPO portfolio or acquired properties post IPO.
For instance, most analysts buy reports on REITs acquisitions are based on the presentation materials dished out by the REITs, which naturally, will have to dispense out positive information to justify their acquisitions. The smart investor should always question if indeed some of the information dished out to justify the acquisitions are indeed verifiable to justify the price paid. This becomes a more difficult process if the properties are located in countries that are less well-known to the investor or it becomes difficult to independently verify some of other key metrics underlying the REIT’s asset portfolio at IPO or future acquisitions.
JOIN US in our upcoming REIT class on 7 Aug 2021 as we help you to side-step the Rotten REIT apples and help you Master the REITs in Your Portfolio to help you grow your investment portfolio steadily and to achieve consistent returns. Being able to adroitly pick the crème de la crème REITs at crème de la crème prices hold the key to Making Your Millions in REITS. Take advantage of our Early-Bird Special price which has been extended to 15 Jul 2021 by popular demand.
Feedback from our last few classes –
“You are my first investment teacher to start my journey in investment. Attended most of your lessons in SGX (20 – 25 years ago). Yes, Very fulfilling. One of the best profits I ever done (on Osim stock recommended then). Thanks to you and God. Amen”
Mr Joe Chan
Went on to build a university and hospital in Cambodia
“Pinterest shot up 24% because of the metrics you shared... wished I bought it earlier...”
Mr Darren Tan,
Owner & Entrepreneur
“Thanks for the very comprehensive presentation. Really changed my mind on the tech stocks. Look forward to the next class”.
Mr Lionel Loo
Who has been attending our regular classes for almost 7 years now.
GCP GLOBAL RECOGNISED AS ASIA’S FOREMOST EDUCATOR IN REITS IN THE SINGAPORE CORPORATE AWARDS 2019
https://www.facebook.com/gabrielyap17/videos/740467253053012/
OUR LATEST MEDIA INTERVIEW ON REITS, TECHNOLOGY & DISRUPTOR INNOVATORS IN 2Q2021 –
1. China REITs could give S-REITs some competition – 21 Jun 2021, Business Times
2. IMPACT OF CHINA REITs on S-REITs – 14 Jun 2021, LianHe Zaobao
3. WISDOM EYE ON BUSINESS – 25 May 2021, Wisma Geylang Serai, South East Community Development Council of Singapore
4. How to Make Millions in REITs – 30 Apr 2021, FM96.3 HAO in Mandarin
5. Bottom Fishing for Tech & China Tech – 25 Apr 2021, BUSINESS TECH ASIA
https://youtu.be/QVqUfI2Bsxw
6. How do investors spot REIT mergers that destroy value? – 19 Apr 2021, PRIME TIME MONEY FM89.3
https://www.moneyfm893.sg/guest/gabriel-yap-gcp-global/?fbclid=IwAR0_qCcYb3fEpyCjQ-8zbPxHOSP9FxUaXWWHR-k8KGIDL-zCZleW8kfWCm8
7. Mainland Investors flock to S-REITs – 26 Apr 2021, LIAN HE ZAOBAO
https://www.facebook.com/gabrielyap17/photos/pcb.1315235015518995/1315233215519175/
8. Most S-REIT mergers have destroyed shareholder value? – 16 Apr 2021, BUSINESS TIMES
9. Opportunities to Accumulate Tech and China Internet Stocks – 11 Apr 2021, BUSINESS TECH ASIA
10. How to Make Millions in REITs – 30 Apr 2021, FM96.3 HAO in Mandarin
11. Bottom Fishing for Tech & China Tech – 25 Apr 2021, BUSINESS TECH ASIA
https://youtu.be/QVqUfI2Bsxw
12. How do investors spot REIT mergers that destroy value? – 19 Apr 2021, PRIME TIME MONEY FM89.3
https://www.moneyfm893.sg/guest/gabriel-yap-gcp-global/?fbclid=IwAR0_qCcYb3fEpyCjQ-8zbPxHOSP9FxUaXWWHR-k8KGIDL-zCZleW8kfWCm8
13. Mainland Investors flock to S-REITs – 26 Apr 2021, LIAN HE ZAOBAO
https://www.facebook.com/gabrielyap17/photos/pcb.1315235015518995/1315233215519175/
14. Most S-REIT mergers have destroyed shareholder value? – 16 Apr 2021, BUSINESS TIMES
15. Opportunities to Accumulate Tech and China Internet Stocks – 11 Apr 2021, BUSINESS TECH ASIA
REITS FOR A GOOD CAUSE
GCP Global students donate to help Covid-19 victims
OUR PARTNERSHIP WITH MONEY FM89.3 IN ITS MAIDEN LAUNCH OF MONEY MATTERS https://www.facebook.com/352565835119256/posts/1126789454363553/
OUR LATEST PUBLICATIONS -
1. SEPERATING THE SHEEP FROM THE GOAT IN S-REITS
https://gcpglobalsg.wixsite.com/gcpglobal/post/separating-the-sheep-from-the-goat-in-s-reits
2. WHERE & HOW to make your next Million in the Year of the Ox
3. 7th Year Itch for S-REITs and its severe ramifications for the REIT investor
https://gcpglobalsg.wixsite.com/gcpglobal/post/7th-seven-year-itch-for-s-reits-its-severe-ramifications
4. “I Made a Mistake” – Best Advice for the Sagacious REIT investor
5. Tripling Your Money with Global Tech stocks