Wednesday, April 30, 2014

More REITS! Current Thoughts

After spending a few hours tonight looking at all sorts of REITs, I think I've managed to find a few that I would quite like to own, based on their current valuations as well as their underlying properties.

Saizen REIT - Is extremely compelling given the defensive nature of their underlying assets. I actually like the narrative behind this REIT a lot, plus the word on the street is that their managers are very shareholder focused and have a stake in it as well, which is always a good thing to hear. (need to verify these claims) Strong balance sheets and freehold Japanese land, this is a story I like! The discount it is priced at is also very attractive, but similar to AIMS AMP, their portfolio is geopolitically concentrated in just one country.

Fraser Comm Trust @ $1.23 looks to me like a nice lovely buy. Fundamentally, I would buy it now, but the technicals are telling me that if I hold out a bit more, I would be able to get it at a slightly better price. $1.23 looks like the ripe price to me. I quite like their underlying assets, especially the ones in Australia. Their assets in Singapore are poised to grow, and it does seem like they have a vision of what they want from the future. Not to mention, a nice NAV discount

AIMS AMP Capital Industrial REIT - This REIT surprisingly has the best UL yield, but it is concentrated in a specific sector and has only geopolitical risk with no diversification of risks. Definitely have diversification of assets though. With a slightly bigger discount, I think this would be good grab, especially for the yield.

Starhill Global REIT - Very good underlying fundamental assets, with the exception of their Japanese properties. However, it is less than 5% of their portfolio, so I guess that can be overlooked. Again, a nice decent discount is present, and a further fall in price would make this even more attractive.

All their technicals are pointing towards a dip in the future, I would consider a lot in all of these, as well as an extra lot in Saizen!

Other tempting choices but with strong caveats are:

Ascendas Hospitality Trust - While I like half of their Australian assets, the other half does not look to me like they have any edge going forward into the future. Australia is where most of their income is coming from as well. Their assets in Japan does not looks to be in a good location at all, but their longer termed service apartments might be a good turnaround for them. Their assets in China does not look to be performing well too. Perhaps the bright spark about it is their Singapore asset which takes up a heft 23% of their portfolio. Valuation looks rather fair but downside seems much imminent than the upside.

Soilbuild Business REIT - Assets are almost entirely fully occupied, leaving upside only due to rental revisions and valuation seems to be very fair. Room for growth seems limited to me.

Mapletree GCC Trust - Only 2 assets in their portfolio, and they do not look like stellar underlying assets. The valuation discount is there, but it still does not seem like a value buy to me, especially with it's lack of diversification. The concentrated risks does not seem to be compensating enough

OUE Hospitality REIT - Similar to Mapletree GCC, this trust only has 2 assets under their portfolio. Although their underlying assets are much more sound and stable-looking to me, I do not have much faith in their sponsor to channel down assets to the trust to acquire. The avenues of growth looks very limited to me for the next few years.

Lippo Malls Trust - Very fairly valued, I think there is a lot of potential growth and room for asset enhancements here, but I would wait for more margin of safety before taking the plunge. They have a strong sponsor and it seems to me like this could be a good investment in the future.

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