Jan 2023
2023 will mark the 21st Year of S-REITs in Singapore. Contrary to many media exhortations and bankers marketing, it is actually EASY to lose money in S-REITs – the statistics is almost 50%! Rather, it has been DIFFICULT making money in S-REITs in the past 21 years. And the year that ended 2022 has pressed home the point again.
Let’s delve into what the last 21 years of data points for S-REITs and what it portends for the new year 2023. As we have always taught in GCP Global (we enter 2023 as our 34th Year in Financial Education and REITS Education and loving every minute of it), the empirical data is always the BEST evidence of how profitable (or not) it is to invest in S-REITs.
1. There is almost a 40% chance of LOSING money in S-REITs
The compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits or dividends were reinvested at the end of each period of the investment’s life span.
For REITs, the CAGR is one of the most accurate ways to calculate and determine returns as REITs can rise or fall in value over time. It measures a smoothed rate of return. Investors can compare the CAGR of tow or more S-REITs to evaluate how well one performed against another, against a peer group or against a market index.
It can be rather tedious to calculate as it requires full attention to details in relation to the cumulative amount of dividends paid by each S-REIT since its IPO. However, at GCP Global, we just love been meticulous and detailed in presenting such findings at our Quarterly REITS Investment classes . The next REIT class is on a Sat, 25 Feb 2023. Sign up HERE to enjoy our Early-Bird Special.
There were 38 S-REITs listed on the SGX as at 30 Dec 2022. What is shocking is that 14 out of the 38 S-REITs posted negative CAGR as at 30 Dec 2022! This is an incredible 36.8%! Thus, contrary to many media exhortations and bankers marketing, there is almost a 40% chance of losing money in S-REITs!
Table 1 – 14 out of 38 S-REITs registered negative CAGR at end-2022
2. Having the WRONG REITs can DESTROY your investment portfolio
Table 1 also showed clearly that 14 out of 14 S-REITs suffered Capital Loss when you compare their year-end 30 Dec 2022 to their respective IPO prices. Some of the worst REITs included Manulife REIT, Prime REIT, Lippo malls, ARA Hospitality REIT, United Hampshire, Cromwell REIT, Keppel Oak Pacific REIT, Frasers Hospitality Trust and OUE Commercial REIT. These 9 REITs posted Capital Loss of more than 40%. This is HORRENDOUS CAPITAL DESTRUCTION! Shocking indeed? Will they continue to bleed in 2023? We will address this in detail in our next REIT investment class.
WHAT 2022 HAS SHOWN THE SAGACIOUS REIT INVESTOR
The first rule of making money and growing your wealth is “DO NOT LOSE YOUR CAPITAL”. The second rule is “DO NOT FORGET RULE ONE”.
From our weekly YouTube channels postings and REITS Quarterly classes, we have learned these hard lessons –
1. Value Traps like Manulife REIT and Prime REIT have destroyed capital for investors.
2. Even Mapletree REITs that have become too ambitious in relentless acquisitions will suffer https://youtu.be/ZatlhRNcTEo
It is clear from the historical performances of S-REIT that avoiding losses and side-stepping Bad Apples is KEY in making money and growing your wealth.It takes a lot of hard work and continuous watchful eyes to catch the turning points in S-REITs, brought about by either deterioration in business fundamentals or absurd acquisition decisions by Sponsors or Managers. Join us for our upcoming Quarterly REITs class entitled “Crunch Time for S-REITS – Tackling Operation Efficiencies in Rising Interest Rates & Impact on DPU Growth” on 25 Feb 2023 at the Hilton Orchard Singapore and enjoy the EARLY-BIRD SPECIAL PRICE.
In the new year 2023, we aspire to continue do this well for our GCP Global investors who are mainly hedge funds, index funds, REIT funds, Family Offices and UHNIs which now total more than 8,000 internationally.
In our upcoming REITs class, we will still be monitoring closely a few variables like –
1. 10-year Treasuries yield
2. The reversion of the 2-year vs 10-year bond yield as detailed clearly in our recent Lianhe Zaobao media interview on Wed 16 Nov 2022
1. Other proprietary indicators that we have used and tested through thick and thin conditions in our last 33 years of investment teaching and education.
2022 has continued to exemplify what we have been teaching all last 33 years –
LESSON LEARNED
1. It takes a lot of hard work and continuous watchful eyes to catch the turning points in S-REITs, brought about by either deterioration in business fundamentals or absurd acquisition decisions by Sponsors or Managers
2. Nonetheless, S-REITs have provided investors with long term sustainable total returns if you know how to pick the Winners
3. But to be able to achieve that, it is imperative for the investor to be able to pick the right REITs for your portfolio to achieve 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.
OUR LATEST MEDIA INTERVIEW ON REITS, TECHNOLOGY & DISRUPTOR INNOVATORS –
1. S-REITS UNDER SEVERE STRESS – Our Lianhe Zaobao Interview Wed 16 Nov 2022
https://www.linkedin.com/posts/gabriel-yap-8745b822_interview-reits-inverse-activity-6998608672159412224-N3q-?utm_source=share&utm_medium=member_desktop
2. UPCOMING Q3 RESULTS WILL BE PIVOTAL FOR S-REITS FOLLOWING ONE OF THE WORST ROUTS – Our Business Time Interview Thu 20 Oct 2022
https://www.linkedin.com/posts/gabriel-yap-8745b822_interview-business-reits-activity-6988662368247414785-ecfD?utm_source=share&utm_medium=member_desktop
3. IS THAT WHY ASCENDAS REIT SURGED TODAY? Our Lianhe Zaobao Interview FRI 9 SEP 2022
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
4. REITS AS GREAT INVESTMENTS – National Day Interview 9 Aug 2022, BIZ TECH
5. S-REITS MARKET MUST STEP UP – Our Business Time Interview 9 Jul 2022
6. BETTER INVESTOR EDUCATION AND PROTECTION FOR A THRIVING REIT MARKET – 26 May 2022, BUSINESS TIMES
7. FOCUS ON ROIC & EV/EBITA TO EVALUATE REIT MERGERS & ACQUISITIONS – 17 Mar 2020, BUSINESS TIMES
8. TOO MANY REITS S-REITS MAKING CASH CALLS THAT DON’T ADD VALUE FOR UNITHOLDERS – 16 Mar 2022, BUSINESS TIMES INTERVIEW
9. FIGHT HOTS UP FOR LOGISTICS ASSETS – 24 Nov 2021, BUSINESS TIMES INTERVIEW
10. CHINA REITS COULD GIVE S-REITS SOME COMPETITION – 21 Jun 2021, BUSINESS TIMES INTERVIEW
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 https://gcpglobalsg.wixsite.com/gcpglobal/post/%E4%B8%83%E5%B9%B4%E5%8D%8A%E4%B9%8B%E7%97%92-seven-half-year-itch-for-s-reits-its-severe-ramifications-the-itch-continues
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