06/2019
Over the past decade, many of our Malaysian Investors Students have made tons of money investing in SREITS after attending our Quarterly REITs and Masterclass which are held regularly on an Asia-Pacific basis.
What do the astute Malaysian investors look for before they put their money in SREITS? What are the reasons why Malaysian investors find that SREITS are a “safe” asset class to invest in? How do the Malaysian REIT investors differ from their Singapore counterparts?
1. Falling Ringgit, RM has been a major factor
Just 15 years ago, 1 S$ buys RM2.20. The RM has since depreciated further to S$/RM of 3.04, almost a 40% drop!
Many rich Malaysian families aspire to send their children overseas for their education, especially tertiary education as many Malaysian parents saw foreign education as a means to better job opportunities, help young people make new friends and provide international exposure.
In fact, a whopping 88% of Malaysian parents would consider sending their child overseas to pursue tertiary education, according to the latest HSBC Malaysia Retail Banking and Wealth Management (RBWM) report.
The global report is the second in the "Value of Education" series and represents the views of 5,550 parents from 16 countries and territories. In Malaysia, the findings are based on a nationally representative survey of 350 parents with at least one child aged 23 or younger currently (or soon to be) in education.
The RBWM report highlighted that parents are willing to make sacrifices to fund their children's education but there is often a gap between expectation and reality.
Thus, when we present SREITS to our Malaysian Investor Students, many love the asset class as both capital gains and regular dividends are denominated in a stable S$. The dream of sending their kids for an overseas education is certainly more realizable and narrows the gap between expectation and reality.
When I ask our Malaysian investors to fathom a guess of how the RM will be vis-à-vis the S$ 15 years later from now, many understandably shudder and shake at the very real prospect of the high possibility of another 40% decline which was seen in the past 15 years, repeating itself. If that happens, it could conceivably hit a rate of S$/RM 4.2 in Year 2034! Certainly, investing in SREITS becomes a very common sense, good hedging policy for your kids’ education and preserving your wealth.
Why is it Difficult to Lose $$$ in SREITS?
1. SREITS and MREITS have delivered solid and steady returns to investors, but taking into account the foreign currency fortunes of the S$ vs the RM, the winner is clear.
The M-REIT market started in Aug 2005 following the introduction of the Regulation for REITs legislature. The first M-REIT was Axis REIT. Henceforth, the M-REIT market has experienced phenomenal growth in terms of number of industry players as well as market capitalization growth.
As at end 2005, there were three listed REITs and the number has grown to 17 by the end of 2013. However, the number of listed REITs dropped to 16 by the first quarter of 2014 following the privatization of Al-Hadharah Boustead REIT by its Sponsor.
The growth since then has been muted as the number of M-REITs climbed back to 18 presently, barely 2 new REIT-listings in the past 5 years as compared to 11 for S-REITs.
Nonetheless, Malaysian REIT investors have tasted in their own home ground that REITS are indeed steady and consistent ways to preserve and grow your capital as they have experienced that investing in the following M-REITS since IPO have yielded at least a 120% return on their capital.
Definitely very good returns by any standard metric.
Video Analysis of our Presentation of MREITS
https://www.facebook.com/352565835119256/posts/804547756587726/
But if you are the Smart REIT investor who have been attending our Quarterly REITs or Masterclass, you would have gotten a better deal as investing in SREITS would yield you much better returns. For instance, investing in the All-time Top Performer, Ascendas REIT would have reaped you a whopping S$4.183 million if you had just invested only $880,000 in 1 million Ascendas REIT at the IPO on Nov 2002!
For an even comparison, if you had invested in a motley of 6 SREITS listed in 2006 (as compared to the 6 M-REITs listed on 2005 and 2006), you would have reaped total returns ranging from 104.23% in Keppel REIT to 239.51% for Frasers Centrepoint Trust!
Most definitely a great return from the good better return achieved in M-REITs.
Then, if you do account for the great S$ appreciation against RM since 2005 or 2006, it would have become a grandiose return for the Smart Malaysian REIT investor!
At GCP Global, we have advised our investor students (Over the past decade, we have educated more than 6,000 HNI and UHNI investors, boutique funds and Family Offices across Asia) to position in the best REITS where you reap the best returns for close to 3 decades and such enviable returns are what continue to drive us to greater heights.
1. Going Forward, M-REITs have good prospects, but SREITS would present good diversification strategy
As we have taught in our classes, the quality of the REIT is as good as the quality of its property portfolio. In Malaysia, many iconic properties such as the PETRONAS Twin Towers, Mid Valley Megamall, Pavilion Kuala Lumpur, Sunway Pyramid and The Ritz Carlton Kuala Lumpur are now held under a REIT structure. This could be read as a vote of confidence from property owners to the viability of REIT in Malaysia. This development is also setting the stage for mature properties to be transformed or injected into a REIT structure in future.
Many large Malaysian property players have expressed interest in establishing REITs in the near future e.g. Mah Sing Group Berhad, Malaysian Resources Corporation Berhad, Sime Darby Berhad, SP Setia and WCT Holdings Berhad.
In Singapore, due to the high % of assets already held by REITS, the last 11 listings since 2014 have come from REITS with foreign assets, ranging from China to USA and from hospitality, retail to e-commerce.
Certainly, this efforts diversification for the REIT investor across different geographies and asset classes.
In our annual Malaysian roadshow, we bring SREITS and present at our various partners, namely the banks and stock broking firms to their Institutional Investors, Dealers and Traders. The audience size normally ranges from 100+ onwards per luncheon presentation.
In addition, we have many 1-t0-1 meetings with some of the Malaysian institutions that I used to serve with mandates that invest in REITS. As we like to do Happy sessions, we also have Happy Hour sessions with a few Family Offices, Boutique Funds, UHNI and HNI investors.
Our Annual Malaysian Road Show are normally hosted in KL and Penang for sure and optional for Johor Bahru and Ipoh destinations. The highlight of the Malaysian roadshow is usually the presentation to a group of top surgeons from Pantai Hospitals, Gleneagles and Penang Specialist Hospital as many of the top surgeons have been my students for the past 3 decades. The size of this group has progressively increased from 10 – 20 specialists to 30 – 50 specialists over the years. Many of these medical specialists love to hold their REITS over the long-term as they have limited time due to the emergency medical situations they have to handle and have made consistent and steady returns in doing so.
Why REITS appeal to Malaysia’s Top Surgeons and Medical Specialists 2019
https://www.facebook.com/352565835119256/posts/805953419780493/
Many of our REITS Investors Meets are either a Forum or Symposium allowing the REIT maximum time to profile all aspects of the REIT –
1. Strategy, Sponsors, Assets to understanding the financial impact of the various assets in the flow-down to DPU impact.
2. Future Expansion
3. Entailing Capital Needs
We tend to profile the REITS with sustainable fundamentals as our investors are longer-term retirement-planning kind of investors or those where we think the share prices are plateauing. Many of these REITS have regular yearly Investors Meet with us.
GCP Global Malaysian Road Show with > 2,000 FB Reached, Engagements and Views –
How to grow your REITS portfolio consistently and steadily to $36 million
Our REITS Presentation to Malaysia’s Top Surgeons and Medical Specialists 2019
GCP Global recent publications on REITS with > 1,300 FB Reached, Engagements and Views –
Romancing Retail REITs to Profitable Heights
https://www.facebook.com/352565835119256/posts/785049668537535/
Analyzing 2019 1ST REIT IPO – Buy at IPO or Wait to Buy below IPO price?
What’s Next for REITS after a stunning 1Q2019 performance?
https://www.facebook.com/352565835119256/posts/765834133792422/
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