10/2022
One of the most amusing things I read last week, was the Business Times interview with Digital Core REIT CEO, John Steward when the REIT announced that it was planning to acquire two data centers in Frankfurt and Dallas. The latter commented that “if the markets don’t cooperate, then we’ll do the smaller deal”. Investors should take note that the “smaller deal” is far less DPU accretive by as much as 36% at only 2% despite some onerous assumptions.
Do markets co-operate with REITs? Ever?
Or are REITs misplaced in having their fortunes determined by the markets, more ever so, for a market looking at further interest rates hikes, expected to go up from another 100 bp, based on the Federal Reserve latest Dot-plot?
What are the functions of a Stock Market?
Since the S-REIT market started 20 years ago in 2002, the stock market functions to provide price transparency, liquidity, price discovery and fair trading for REITs and their related stapled securities.
The market guarantees all interested REIT investors, managers and sponsors have access to all data to execute both buy and sell orders, undertake placements and raise money for secondary offers as well as the trading of perpetual securities. In so doing, it helped in the fair and transparent pricing of securities.
Delusions of REITS, REIT Managers & Sponsors
Are REITS therefore suffering from a sense of delusion that markets must “cooperate” in the pricing of REIT securities? Maybe?
The perspicacious and smart REIT investor seek to invest in REITS with good assets, in the right sectors of the economy, led by enlightened management at good prices. Certainly, the perspicacious and smart REIT investor do NOT expect that markets would ever “cooperate” with REITS when it comes to seeking “transparent prices” as the optimal profits are maximized when REIT securities are mispriced. And this normally happens during market nervousness and weakness, as market are now this year, no dissimilar to the last in 2018 when the Federal Reserve embarked on strong interest rates increases.
Is Digital CORE REIT delusional in expecting that markets would “cooperate” with their acquisition deals?
Digital CORE REIT is the WORST Performing REIT in 2022 YTD. Its share price has collapsed from US$1.16 at end-2021 to US$0.77 as at Fri 23 Sep 2022, when it announced the proposed acquisition deals. This is a terrible 34% crash in price.
At GCP Global, we had warned on Digital CORE REIT to take profits at above US$1.20 in our 1Q2022 REITS Quarterly Classes from its IPO price of US$0.88 cents. We had shared that –
1. Learning from the experiences of Keppel DC REIT, Mapletree Logistics Trust and Parkway Life REIT, all of which hit peak prices when DPU Yield went below 4.2%, Digital CORE REIT was very expensive at close to 4% DPU Yield.
2. Many reservations on Digital CORE REIT raised in my past YouTube videos at
Looking at the latest announcement, it is clear that the viability of Digital CORE REIT proposed acquisitions rest on a few key assumptions of increased occupancy, contracted escalations, seeding future revenue growth and mitigating variable rate exposures.
Investors and traders would certainly find a lot of facts buried in the 33-pager Inaugural Acquisition Presentation
But would be hard put to come up with useful information and analysis based on the ton of data.
Like we have always taught at GCP Global Quarterly REITs classes, a lot of REITS seek to heap data on investors, but it is in inferring the right information and analysis from such data that help the savvy and sagacious REIT investor make his/her millions in REITS.
For more on making sense of Digital CORE REIT latest proposed acquisitions and seeking out those REITS that will survive best in the current rumble and tumble of the current volatile markets, do join us for our next Quarterly Reit class on 26 Nov 2022 to be held at the prestigious Hilton Singapore Orchard where we will continue to identify for you QUALITY REITS and those that are VALUE TRAPS. We are indeed humbled and honored that OUE Group has recognized our Investors Education endeavours of the past 33 years and will be the Official Venue Sponsor.
OUR LATEST MEDIA INTERVIEW ON REITS, TECHNOLOGY & DISRUPTOR INNOVATORS –
1. IS THAT WHY ASCENDAS REIT SURGED TODAY? OUR LIANHE ZAOBAO INTERVIEW TODAY FRI 9 SEP 2022 – Fri 9 Sep 2022, LIANHE ZAOBAO
https://www.linkedin.com/posts/gabriel-yap-8745b822_is-that-why-ascendas-reit-surged-today-our-activity-6973979178803093504-HyJB?utm_source=share&utm_medium=member_desktop
2. REITS AS GREAT INVESTMENTS – National Day Interview 9 Aug 2022, BIZ TECH
3. S-REITS MARKET MUST STEP UP – 19 Jul 2022, BUSINESS TIMES
https://www.linkedin.com/posts/gabriel-yap-8745b822_s-reits-market-must-step-up-our-business-activity-6954980627293097984-tWe6?utm_source=share&utm_medium=member_desktop
4. BETTER INVESTOR EDUCATION AND PROTECTION FOR A THRIVING REIT MARKET – 26 May 2022, BUSINESS TIMES
5. FOCUS ON ROIC & EV/EBITA TO EVALUATE REIT MERGERS & ACQUISITIONS – 17 Mar 2020, BUSINESS TIMES
6. TOO MANY REITS S-REITS MAKING CASH CALLS THAT DON’T ADD VALUE FOR UNITHOLDERS – 16 Mar 2022, BUSINESS TIMES INTERVIEW
7. FIGHT HOTS UP FOR LOGISTICS ASSETS – 24 Nov 2021, BUSINESS TIMES INTERVIEW
8. CHINA REITS COULD GIVE S-REITS SOME COMPETITION – 21 Jun 2021, BUSINESS TIMES INTERVIEW
9. IMPACT OF CHINA REITs ON S-REITs – 14 Jun 2021, LianHe Zaobao
10. WISDOM EYE ON BUSINESS – 25 May 2021, Wisma Geylang Serai, South East Community Development Council of Singapore
11. BOTTOM FISH FOR TECH & CHINA TECH – 25 Apr 2021, BUSINESS TECH ASIA
REITS FOR A GOOD CAUSE
GCP Global students donate to help Covid-19 victims
1. WHAT IS QUALITY IN REITS?
2. HAVE MARKETS REACHED MAXIMUM PESSIMISM?
3. THE ABILITY TO DELIVER DPU GROWTH IS THE KEY IN S-REITS SUPERIOR PERFORMANCE IN 2021
4. SEVEN & HALF YEARS ITCH IN S-REITS – THE ITCH CONTINUES WITH SEVERE RAMIFICATIONS
5. SEPERATING THE SHEEP FROM THE GOAT IN S-REITS
https://gcpglobalsg.wixsite.com/gcpglobal/post/separating-the-sheep-from-the-goat-in-s-reits
6. WHERE & HOW to make your next Million in the Year of the Ox
7. 7th Year Itch for S-REITs and its severe ramifications for the REIT investor
AUTHOR OF MAKING YOUR MILLIONS IN REITS
CHAIRMAN OF JUDGING PANEL FOR THE ASIAN REITS PINNACLE AWARDS 2016 & 2017
HOST OF THE FUTURE OF REITS FORUM, 2016
JUDGE FOR SINGAPORE CORPORATE AWARDS – BEST REITS INVESTOR RELATIONS 2017
HOST FOR SINGAPORE CORPORATE AWARDS – BEST REITS INVESTOR RELATIONS 2019