08/2021
Acquisitions have been increasingly used by S-REITs to grow their asset size, earnings base and extend their geographical presence. S-REITs have taken advantage of low interest rates and recorded new records on asset acquisitions of $9.06 billion in 2018 followed by $10.24 billion in 2019 and $9.10 billion in 2020, a year ravaged by the Covid-19 Pandemic.
Table 1 – Total acquisitions and Funds Raised by S-REITs from 2018
The staggering total amount of asset acquisitions of $28.49 billion in just three years is the highest ever recorded by S-REITs in any three years, since the S-REIT market commenced in 2002. Moreover, the year-to-date acquisition deals for the first seven months of 2021 amount to $6,.752 billion, certainly no let-up despite the prominence of the Delta variant.
As highlighted in my book, Making Your Millions in REITS, In any REIT acquisition deal, REIT managers have dual obligations. They should make sure that they are able to show and convince shareholders that such acquisition is a positive net present value investment and at the same time, demonstrate that the acquisition is consistent with the REIT’s growth strategy.
Thus, it is very important for the smart REIT investor to fully understand the nature and quality of the assets being acquired, the domicile of such assets and the way the REIT finances such asset acquisitions. REIT managers seek to justify every acquisition as “yield-accretive”, but in essence, is this a sufficient criterion to assess an acquisition? Or are there other many varied considerations involved?
There is a big difference between acquiring an asset at market price, which you and I can do, and getting a raw good deal for investors. Unfortunately, many REITs have done more the former than the latter, with serious consequences to their REIT price. In our upcoming August Quarterly REITs class on 7 Aug 2021, we will condense and distill for you which are the REITs that have been able to do that and which have not done that with severe ramifications to their REIT prices. Do SIGN UP HERE.
Table 2 - GCP Global student investors gain first-hand knowledge and inputs from the CEOs of REITs or their respective Head of Investor Relations at our exclusive Investors Meet
When used in good combination and a sufficient market knowledge and experience, the investor will be able to unearth significant insights that seperate the wheat from the sharf among the S-REITs. The smart investor will get a good perspective of profitability, financial flexibility, dividend safety, management capabilities, and long-term prospects of the REITs.
In the practical world, the smart investor should also understand that good and highly-accretive acquisitions are usually hard to come by during bullish market conditions. They normally coincide with easy-money market conditions when interest rates are low, but asset prices are relatively high. In contrast, during cyclically-down market conditions, there may be many bargain-buys, but financing may be expensive and interest rates are high.
REITs’ Acquisitions YTD 2021
Acquisitions by REITS in the first seven months of 2021 have continued to be fast and furious, building on the momentum from the last three years. July 2019 went down in the history of S-REITS as the month with the largest amount of acquisitions announced with three REITs, namely Suntec REIT, Frasers Logistics Trust and Capitaland Commercial Trust announced acquisitions that totaled $1,424.04 million.
To the sagacious REIT investor, making money from such acquisitions is as easy as picking the right placements (presumably you are a large enough REIT investor for the banks to offer you such placements) from S-REITs looking to fund their huge appetite for acquisitions via private placements due to a limit of 50% gearing which limits their bank borrowings.
Table 3 – Performances of private placements by S-REITS in YTD 2021
From the above table, it is clear that there have been eight private placements by S-REITs YTD 2021. If you had placed your bets well with ESR-REIT and Mapletree Industrial Trust, both REITs and placements were highlighted in our 10th Apr 2021 REITS Quarterly class, you would have achieved remarkable returns of 19% and 11% respectively over a very short three-month period. For a heads up on which possible acquisitions and placements to take and bet big on, do join us for our upcoming Quarterly REITS class on 7 Aug 2021.
In our classes, we help you decipher and analyze S-REITs latest 2Q2021 half-year results and what it will mean for their share prices going ahead. Most analysts buy reports are based on the presentation materials dished out by the REITs, which naturally, will have to dispense with positive information to justify their acquisitions. At GCP Global, we go the further mile to help you adroitly pick the crème de la crème REITs at crème de la crème prices which hold the key to Making Your Millions in REITS.
LESSON LEARNED Growth via overseas acquisitions do not necessarily equate to growth in REIT prices for REIT holders as overseas acquisitions should be analyzed with greater scrutiny due to limited information and lack of independent grounds for verification of certain trends and facts in relation to reversionary rentals, occupancies and tenants’ veracity. 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.
Acquisitions consummated in the past three years are indeed illuminating as S-REITs who have become too adventurous in their foreign acquisitions have also seen their share prices underperformed, in part due to an overhang of funds raised to finance such acquisitions as well as the market’s skepticism of such acquisitions. On the contrary, the REITs that have executed good or even great acquisitions, have been the ones that have performed well. These are the kind of REITs that the smart REIT investor should seek for.
We will help you sift out the bad REITs from the good REITs in our classes.
In my various meda 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.
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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
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OUR LATEST PUBLICATIONS -
1. SEVEN & HALF YEARS ITCH IN S-REITS – THE ITCH CONTINUES WITH SEVERE RAMIFICATIONS
2. SEPERATING THE SHEEP FROM THE GOAT IN S-REITS
https://gcpglobalsg.wixsite.com/gcpglobal/post/separating-the-sheep-from-the-goat-in-s-reits
3. WHERE & HOW to make your next Million in the Year of the Ox
4. 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
5. Tripling Your Money with Global Tech stocks
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