01/2021
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 does the seven-year itch affect S-REITs?
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 spread the words, 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 week, Lianhe Zaobao gave a rave review of the book. You can read the English translation here or at GCP Global Facebook Page.
So does the seven-year itch affect S-REITs? You bet, and the ramifications have been severe and huge.
REITs Total Returns and the Seduction of REITs in the 40 years 1971 - 2010
As mentioned in my book, I was first attracted to REITs in a big way after I retired in 2009 in my early 40s to travel and live around the world. As the US REITs market is the oldest REIT market in the world, it was noteworthy that US REITs only suffered losses 8 out of the 40 years when I studied the first available data from 1971 to 2010, a period of 40 years. Intuitively, the odds are indeed very favorable mathematically. In fact, there were only 3 occasions when US REITs suffered back-to-back Year-on-Year declines in the same period.
That to me is a good indication of how much you can lose. Conversely, if you can win BIG in those other 32 years when the REIT market is up, you can make Millions in REITs, something that I have successfully achieved and hence the motivation for writing the book to share how I did it.
Table 3 – US REIT performance since 1970 – 2010 registered only 8 losses out of the past 40 years; Source – National Association of Real Estate Investment Trust, NAREIT
My investments and real-time teachings (we just entered our 32nd Year in Education in 2021) in REITs are largely driven to earn sustainable and steady risk-adjusted returns similar or exceeding equities, but with less variability and volatility to safeguard GCP Global student investors (which total more than 8,000 globally) investment portfolios and multiply their wealth.
Coupled with my 32-years experiences in the investment field, first as possibly Singapore’s Youngest Head of Research at the age of 28 years old, working in Wall Street from 1996 to 1998, and then running the Institutional Sales desks at various financial institutions, they have helped me tremendously in knowing when to bet on REITs in a big way.
S-REITs Seven-Year Itch
As 2020 came to a close, S-REITs seven-year itch has severe ramifications for the sharp and smart REIT investor.
Although there are 39 REITs (excluding illiquid ones like BHG) listed at end-2020, there are 24 REITs which have listed on SGX prior to 2013 which will have a 7-year track record by 31 Dec 2020.
Table 5 – 7-Year Performances of the 24 REITs which have listed on SGX prior to 2013 which will have a 7-year track record by 31 Dec 2020.
It may come as a shock to many REIT investors that a huge 14 out of the 24 REITs suffer from the seven-year itch and are trading below their respective IPO prices at end-2020 as compared to their prices 7 years ago at end-2013.
Yes, only 10 out of the 24 REITs managed to post prices above their IPO prices at end-2020. 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. Readers of our book “Making Your Millions in REITs” will be able to understand further the underlying reasons for such a phenomenon.
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 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 years ago from attending our Quarterly REIT classes, you would have been able to double your investment capital in 7 years – yes, REITs can deliver outsized returns, if you know which to pick, and we have not even include the quarterly and/or half-yearly dividends received.
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
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.
The share prices of Lippomalls, Sabana REIT, OUE Commercial REIT and ARA Logos Logistics (then known as Cache Logistics) have been on a constantly downtrend in the past 7 years, something 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 46% - 85% in the past 7 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 investment 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 9 Jan 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 Millions in REITs.
Clearly, the above exemplifies what we have been teaching all these years –
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 class of 9 Jan 2021 as we help you to side-step the Rotten REIT apples and help you pick the Best REITs to Position into for 2021 to grow your investment portfolio steadily and to achieve consistent returns.
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 profit 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 –
1. Wise Investor Cracks the REIT Myth
2. Reality Bites for REITs – Our Live Session with Mr Adrian Chui, ED & CEO, ESR Funds Management – 17 Dec 2020
3. Sizing up the epic Sabana, ESR-Reit showdown and riding high on Electric Vehicle, EV stocks – 11 Nov 2020
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. “I Made a Mistake” – Best Advise for the Sagacious REIT investor
2. Tripling Your Money with Global Tech stocks
3. The Ability to Deliver DPU growth is the Key in S-REITs superior performance in 2020
https://gcpglobalsg.wixsite.com/gcpglobal/post/the-ability-to-deliver-dpu-growth-is-the-key-in-s-reits-superior-performance-2020