In REIT Method launching webinar, I mentioned that AmanahRaya REIT (ARREIT) property portfolio is too diversified and I feel that it lacks focus. I did not highlight much on this REIT in throughout this course too because in my opinion, there are better M-REITs to invest in.
However, in this post, I am going to make it up to you by discussing ARREIT, based on the recent downgrade from BUY to HOLD by Maybank IB Research.
I would take analysts’ review with a grain of salt. However, when there is a downgrade like this, it’s worth checking.
Look at this snapshot.
Let us analyze these:
1. Drop in the REIT’s income due to a non-performing asset – Wisma UEP, Subang Jaya. Big Red Sign – it currently only has 30% occupancy. Good thing is that other assets have full occupancy.
2. Almost certain to sell off Wisma UEP. Proceeds from the sale will be retained in the REIT (read: no distribution to investors, then again there is no obligation to do so because these are gain, not income). This is in contrast with Axis REIT, which distribute its proceeds from sale of one of its asset in Bayan Lepas, Penang last year.
3. Also there is a plan this year for AA. Aims to acquire office property – not a wise move as there is oversupply in KL & Klang Valley if you recall the information in the 2012 REIT Investing Outlook report.
4. “…to raise funds from capital market”. This could means rights issue. I believe you are wise enough now on how to deal with rights issue, not only for REIT, but also for any stocks for that matter after reading the previous bonus content on this – https://reitmethod.com/wise-things-rights-issue/
5. “Management aims to beef up asset quality by disposing less strategically-located properties and imposing stricter requirements for future acquisitions. This is positive for ARREIT, as it will eventually change investors’ negative perceptions on the trust’s asset quality.”
First, the management is aware that this REIT is clearly not a favourite among investors.
Second, does this mean the management had been “casually” acquiring assets for the past few years, without really evaluating their long term profitability?
Nonetheless, late is better than never. It’s good to see that this REIT is making improvement and time will tell if it will emerge as a star again.
Assume I’m your family doctor. Even if I am the best doctor in the world giving you the best advice or medication (if needed), you won’t get result if you don’t heed my advice or take the prescribed medication.
So I want you to click on the check list above to progressively track your progress or after you have completed all learning modules; if you’ve gone through all modules, there’s no reason why you don’t get result ~ big or small.
I just don’t see how you can fail to get results if you follow everything down to the T.
Give REITMethod a fair chance you deserve, don’t skip over important modules. If you are thinking to refund due to ‘not getting results’, we will request you to fill in the same check list and then call you to understand what are your exact expectations not being met, before we process your refund.
REITMethod is MORE than just information, tactics or strategy because it is about (re)-moulding your mind how to think to create a sustainable, consistent and growing investment portfolio.
This is called Module 0 because I honestly deem without these 3+1 things, you won’t achieve the outcome you want – whether it is REIT, property or stocks investing.
This is the single most longest lesson in the entire course, and the purpose of this module is two fold.
Firstly, is to understand what are the 3+1 most important elements causing people NOT to get the desired results they want in investing.
Secondly, it is a ‘test’ – if you can finish the lesson in one go without skipping any parts, then it means you have the ability to see things through until it comes to fruition.
FYI, this was only added in 8 years after this online course was started – lessons distilled from my own experience observing the ‘winners’ and the ‘losers’.
Reference: Unsold Completed Units on the Rise (Oct 2018)
DOWNLOAD & Take this mp3 file with you so you can listen to this lesson while you are commuting or ‘on-the-go’ without Internet connection
To really drive home the point of Focus in investing, watch the clip below
You can do anything you set your mind to, but you cannot do everything you set your mind to. The man (woman) who chases 2 rabbits catches NONE.
You paid to learn in REITMethod, focus on what you have set your mind to.
How human mental flaws are causing investors to lose out massively on making sustainable returns from stock market (most eye opening revelation ever below)
How can you be one of the owner of the office building where you work or the favorite malls where you shop by investing in REIT?
What kind of investment return you can expect from a REIT? What does these terms mean – yield, DPU, NAV, Ex-Date, AEI, WALE, etc?
If you are a Muslim, can you invest in REIT?
These very first intro lessons will explain all these in detail.
This second part of module 1 will cover the more advanced terminologies of REIT investing.
Jargons like NPI, Dividend Payout, Cap rate compression, etc.
What makes REIT investing consistent and guaranteed?
Having said that, what is the normal return you can expect from REIT compared to other investment options?
And how does REIT risk-return compare to company stock and real estate property?
Is the dividend payout from REIT taxable just like your stock dividends?
Watch the lesson below to get the answers.
We drill deep and pitch REIT stocks against property stocks, bonds and brick-&-mortar property investment.
The truth is, no investment vehicle is perfect.
It comes to the concept of appeasing your risk appetite and diversification, without getting into diworsification.
Investing is all about getting a return on your money while securing return of your money, at a rate which beats the inflation rate.
You calculate REIT net return of investment yourself by doing some simple primary school maths.
Also, you will come to realize that a great REIT should have increasing DPU Y.O.Y (year over year) as it grows its asset portfolio, regardless of economic condition. But how do you determine if this was the case in the past? How do know if it got potential in the coming years?
This video will reveal it all to you.
DPU is touted as the primary number to evaluate when it comes to selecting a great REIT investment.
And we have seen the factors which will directly contribute to the DPU number.
In this module, however, we will consider some of the more subtle, and often overlooked criteria of a good REIT investment.
A member, Phyllis Pang, asked:
What other factors can determined a good trustee? Does a good trustee comes from an established bank most of the time?
The precise answer to this is very short and direct.
A reputable trustee is registered with the Securities Commission.
All REITs (and unit trusts, for that matter) use one of the trustees from this list. See the list below, retrieved from Bursa Malaysia website.
Therefore, if you were to invest into any REITs or Collective Investment Schemes (CIS) in any country or jurisdiction, make sure they are have a trustee registered with the the financial regulatory body of that country.
That being said, it is worth highlighting that REIT is a highly transparent and regulated industry.
There are also much higher requirements in corporate governance when compared to listed companies who can be controlled by owning a 32% share of the stock. In REITs the manager is appointed and all assets are held in trust by the Trustee. The manager is normally the promoter of the REIT at listing but they can be removed if they do not perform and they cannot vote in any Related Party Transaction.
14 Pages in total
[pdf-embedder url=”https://reitmethod.com/wp-content/uploads/2012/04/mreitconf-trustee.pdf”]
The simple answer to this is – you DO NOT need to.
The dividend you receive from REIT is already net of tax – this, we have covered in Module 2.
Withholding tax for REIT is in a class of its own – it’s only at 10% compared to withholding tax for company stock dividend of 25%.
See this – my very own tax brochure from Pavilion REIT.
The withholding tax at 25% is stated as NIL
Additional info
Even for dividends from company stock, you only need to declare this if the company is paying dividend under the old imputation system (to be abolished in 2013). Refund is only applicable if your tax rate is below tax bracket of 25%.
For company which pays dividend under the new single tier system (implemented since 2008), no further tax is being deducted from dividend paid credited or distributed to shareholders. Read: you do not need to declare such dividend in your tax return. That means, no claim back is applicable.
For more info, you can read the below.
Watch how I use the fastest way to open an online stocks brokerage & CDS account in 10 minutes without needing to sign any hard copy documents.
Or even leaving your desk! (aka getting your butt off the chair :D)
Other options include Moomoo Malaysia
Conventionally, here’s the tedious process:
1. Open a Central Depository System (CDS) account: you can do this by approaching an authorized depository agent such as stockbroking company and some banks.
-provide photocopies of IC (identity card)
-pay a one time fee RM10
You will receive the account document by mail.
2. Open a trading account with stockbroker: this will be done simultaneously when you open the CDS account.
-need to provide income statement
-fill out trading account form
-the stockbroker will check your credit status at CTOS (Credit Tip-off Service) and stockbrokers’ defaulters’ list – in order to qualify you and set your trading limit
*****
What is a CDS account?
a) it allows you to buy and sell shares
b) it also allows you to trade non-equity counters such as bond and warrants
c) it is something like a bank account – you keep cash in bank accounts, you keep shares in CDS accounts.
d) you will get CDS account statement monthly. If there is no activity, you will still get the statement on June and December.
Fees are calculated per transaction (buy or sell). They are:
a) brokerage fees – 0.1% to 0.4% excluding GST, cash- upfront account like Rakuten Trade stockbroking account shown above normally is on the lower end (0.1%)
b) Clearing fees – 0.03% of contract value subject to cap of RM200
c) Stamp duty – RM1 for every RM1,000 worth of value, for stocks of mid and small cap companies in Malaysia will be waived with effect from March 2018 for 3 years
I can honestly share my life lessons with you on investing, above, because I’ve personally been thru the ‘self-awareness’ and ‘awakening’ phase.
Example, I used to be able to generate a few hundreds % of returns in one night (after putting in the strategy and waiting for 6 months) for just a few clicks of keyboard. And in USD. In my mid 20’s.
But the questions are: Is this sustainable and repeatable? Was I a genius to be able to reap this kind of returns?
The answers are NO, No and No.
And lastly, this is the thing you need to know. The pain of losing 10% is much more than 10% gain. REIT is the only non-risk-free investment vehicle that could ensure you still reap reasonable investment returns (in the form of use-able cash flows) even though the entire market crashes in short-mid term – so that you don’t lose faith and get traumatized by irrecoverable investment losses.
Why I lost almost 60% on my Blackberry (stock ticker: RIMM, refer to Ameritrade snapshot above) stocks even though I practiced value investing ~ I had to cut loss because it never recovered. The story below on Blackberry shows us why Value Investing methodology alone will never work if you don’t understand business trends and the economy.
Some examples where I reject interview requests or even CEO invite because I am focused on adding value and delivering results to REITMethod members and my 1on1 clients.
I can’t afford distractions. Remember, keep the main thing, the main thing.
Distraction is the only luxury of the poor
Proof: Being Indistractable Is a Modern Superpower, used by people like Bill Gates & Elon Musk.
