What is Niche REIT? This is a newer lesson added by the end of 2019, given the new information and ever-evolving REIT sector.
Niche REIT will supercharge your portfolio like never before, tapping onto big trends like communication and cloud technology.
Here’s the lowdown on niche REITs, taking Airport REIT as detailed case study.
And some of the niche REITs mostly located outside Malaysia
This question got asked so often that it warrants a lesson on its own.
Example like this:
It’s 2 different thing actually – retail REITs vs retail businesses
Because it all boils down to what really constitutes the entire tenants portfolio in a retail mall.
Would retail malls completely go obsolete?
No, but only the strongest will survive.
(Even some investment analysts got it all wrong)
Watch the below:
And this is the only way retail malls can survive going forward
This is gold. Seriously.
In summary, Data Centre REITs assets consist of properties that house storage & computer systems and other associated components. Specifically, DC REITs are highly specialized buildings with integrated climate control infrastructure and various system redundancies such as backup hard disks & power supplies.
What is so special about DC REITs is that they are NOT reliant on high volume of consumers’ traffic or human tenancy.
On the contrary, they are usually isolated, situated away from population centres.
In fact, most data centres are also usually literally ring-fenced with deterrent barriers from intruders, and 24 hours security measures. Access to data centre properties are also highly restricted.
Data centre REITs can usually be characterised as having long and stable leases as tenants.
Data centre REITs may not be as common as other types of REITs but with the increasing proliferation of big data, AI and fast internet connectivity, DC REITs are in for exponential growth in the coming years.
More related information
Google to invest up to $2 billion in Polish data centre, paper says
Google, Deutsche Bank agree to 10-year cloud partnership
Emerging markets to propel Asia-Pacific data centre sector in real estate
Similar to rental from residential property, rental from commercial property managed by REIT falls under 2 categories – short term and long term.
What are they and which one is preferred?
Watch below
Nothing can defy the law of supply and demand. In the context of office MREITs, the rentals (and consequently, their stock prices) had been facing downward pressure. This will persist for long time.
However, there is light at the end of the tunnel, provided the REIT manager is nimble and innovative enough to actually ‘walk towards the light’
Understand more below:
No matter how much you have to start investing in REITs, this lecture will actually show you what to buy as your very 1st REIT counter.
No more procrastination.
Also, this will answer some questions I get over the years – ‘Should I be heavy in this REIT counter but not another?’
or
‘Should I allocate more to this REIT counter but not the other?’
If these are your thoughts that’s preventing you from buying a REIT counter, then this is perspective is going to help you.
In this case, Action is Better than Inaction.
(After investing though, the reverse might be true)
Whenever a REIT stays at a relatively high distribution yield for extended period of time, you are highly advised to not only look at the most recent year (1 year) DPU.
You want to scrutinize the trend of its DPU (uptrend or downtrend) for the past 5 years before deciding to invest.
You will be stuck between a rock and a hard place if you bought high stakes into a REIT at a relatively high distribution yield but that yield % keeps on going down in the upcoming years due to down-trending DPU.
Any investment vehicle or investing approach – without this flywheel element, wont get far.
It will burn you out and suck you into an abyss, leading you to nowhere.
The feeling of – Neither here nor there.
With it, you rise to the top – given time.
Watch as I explain below:
If the title of this module does not sound deliciously self-explanatory enough to you, I don’t know what will.
So make sure you don’t miss a second of this module.
Update: 7 Nov 2012
PAVREIT has been treating me very well with over 33% in paper capital gain (excluding income distribution) since I initiated long position Dec 2011.
Value Added AEI is bearing fruit, and Asset Acquisition is well on track. Gearing ratio is super low at 19%. That speak volumes of the REIT manager capability as it has been achieving its target since I last reviewed analyst report back in Q2 2012.
However, I would not recommend buying this now. Firstly, it is already fairly valued, and secondly, current net yield is low due to surge in stock price YTD.
**The below was the write-up in 1H 2012***
Fact#1: Half yearly distribution policy, so no dividend payout this quarter.
Fact#2: 100% dividend payout to investors.
Fact#3: 2nd largest M-REIT
Fact#4: Forecasted 2012 DPU: 6.1 cents/unit
Fact#5: IPO price 7 Dec 2011 – RM 0.88
NAV
Fact: 98% NAV – Pavilion Mall (asset value up after re-evaluation, up from 96% previously)
Occupancy
2% NAV – Pavilion Tower (100% occupancy expected by mid 2012, up from 70% in Dec 2011)
Rental income
Net profit exceed forecasts due to stronger retail sales and car parkings ticket collection during CNY and F1 Grand Prix
AEI in the pipeline
Mar – Aug 2012: Reconfiguration of TANGS Fashion Lifestyle Store to a new high street fashion precinct (Value added AEI, expecting to increase rental income)
Side effect: Temporary closure of 5% of NLA* – likely affecting total rental income in Q2 and Q3 2012.
Q3 2012 – 2014: Pavilion Mall extension
AA In the pipeline
2013: Fahrenheit 88 Mall
2015: New 6 storey Mall in Subang Jaya
Gearing ratio
19% (Excellent)
Outlook: Sanguine
Disclaimer: Long in PAVREIT
*Net Lettable Area
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In this Part C, we will spend half an hour time to analyse the largest REIT in Malaysia, in terms of market capitalization. And it’s no other than Sunway REIT.
This is where we really apply the stuff we learnt in Module 1 and Module 3 into good use.
Onto the video folks!
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In Part A, we have analyzed Axis REIT inside out, and discovered it is a gem with a lot of potential due to its solid fundamentals.
In this Part B, we will look at the one and only healthcare REIT in Malaysia. And probably the most defensive.
So should you buy it now? Or should we dig further into its financial statements and look at the big picture instead?
The decision making process is within this video tutorial.
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Finally, we’ve come to the part where we applied what we have learnt in all previous modules.
All tutorial videos in Module 5 will show you, interactively, how to read REIT annual report before you invest. And if you are already invested, how do know if the REIT investment in your portfolio is still a good investment to hold on?
Believe me, you can do this yourself without breaking a sweat. You can fire your financial advisor now 🙂
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Part B of Module 4 picks up where we left off in Part A.
Note that we are no kidding when we said, the best way to inspect a REIT’s asset portfolio is to go shopping at your local shopping malls, when it comes to investing in retail REITs.
Onto the video, folks!
[10 Nov 2012, LCF : The content in this video may be updated and will be refreshed in Q1 2013 after all 2012 Annual Reports are released]
**For detailed review on IGB REIT fundamentals, please refer to my blog articles as below:
IGB REIT Prospectus Post Mortem and Infographics
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Module 4 is where the excitement begins. We go behind the scenes of what makes up each and every of the REITs trading in Bursa Malaysia.
On top of that, we give the REITs their 1 to 5 star ratings based on their DPU, WALE and Defensiveness factor.
I shall let the video tutorial below speak for itself.
[10 Nov 2012, LCF : The content in this video may be updated and will be refreshed in Q1 2013 after all 2012 Annual Reports are released]
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…as of now (Nov 2012).
It’s nothing personal, or sentimental.
Take a look at the report below. Post your thoughts below 🙂
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