REIT-TIREMENT - REITs Investing & Personal Finance

REITs investment & personal finance


Sunday, October 03, 2021

How Much would You've Lost if You had Bought All Singapore REITs at Their All-Time High

Previously I've posted How Much would You've Gained if You had Invested All Singapore REITs since Their IPOs, which compute the returns for all REITs since their IPOs. The overall return is positive for the protagonist-Ah Nuah after 19+ years of REIT investing journey. Today, I would like to view it from another angle, what happened if you bought at all-time high and hold until now? 

Image by Gerd Altmann from Pixabay

This time, let's follow the story of another REIT investor named Gao Suay. His attitude towards investing is totally the same as Ah Nuah from the previous IPO post. Gao Suay invested S$ 5,000 to each and every REIT and BizTrust (which operates similarly to REITs) without doing any research on them. He doesn't follow any news after purchase, never participated in any preferential offer or rights issue, never sold his nil-paid rights for profit nor consideration units after any mergers. 


Familiar? Yes, both of them are doing everything the same way, with one exception where Gao Suay is very suay (bad luck) that he always bought REITs at their all-time high. The first REIT he bought was CapitaRetail China Trust (now known as CapitaLand China Trust) in February 2007. Now, let's look at his performance after 14+ years of REIT investing:

Source: Combination of Stock Cafe, Tiger Broker and SGinvestors.io
* Return is adjusted for 5 to 1 units consolidation, however, all-time high price is not adjusted
^ Sold on last day of trading


From the above table, Gao Suay has invested in 51 counters, which amount to S$ 255,000 capital. To date, he has received S$ 56,537.77 worth of dividends, equivalent to 22.2% of his capital. Due to delisted and suspended counters (which amount to S$ 30,000 of his capital), he has a realized capital loss of S$ 18,159.31. His current portfolio value is at S$ 143,531.35, with an unrealized loss of S$ 81,468.65. Below is a quick summary:

AmountReturn
CapitalS$ 255,000.00-
Current ValueS$ 141,626.89-
DividendsS$ 56,537.7722.2%
Realized LossS$ (18,159.31)-7.1%
Unrealized LossS$ (83,373.11)-32.7%
Total LossS$ (44,994.65)-17.6%


I am feeling an "Ouch" by just looking at the performance above. Let's explore which REIT provided the highest and lowest CAGR. Note that there are 4 counters where all-time high fall in 2021: EC World REIT, Frasers Logistics and Commercial Trust, Parkway Life REIT and Sasseur REIT. Thus, their CAGR might not be a good gauge as it would vary much with short terms price movement.

Highest CAGRValueLowest CAGRValue
1Croesus Retail Trust5.1%Eagle Hospitality Trust-100.0%
2Cromwell European REIT2.8%Fortune REIT-54.1%
3RHT Health Trust2.8%Sasseur REIT-37.8%
4IREIT Global1.8%Parkway Life REIT-34%
5Keppel Pacific Oak US REIT1.8%ARA US Hospitality Trust-20.7%
6ESR-REIT0.9%Saizen REIT-18.2%
7ARA LOGOS Logistics Trust0.3%Manulife US REIT-16.5%
8Starhill Global REIT0.2%Ascendas Hospitality Trust-14.9%
9OUE Commercial Trust-0.4%Keppel DC REIT-14.6%
10BHG Retail REIT-0.6%Frasers Centrepoint Trust-14.6%

From the table above, there are only 8 counters with positive returns, the rest of 43 counters are having negative returns. There is only 1 from MACFK - Keppel Pacific Oak US REIT provided a positive return and 3 MACFK related REITs are within the top 10 lowest CAGR. Nonetheless, let's checkout MACFK (Mapletree, Ascendas, CapitaLand, Frasers & Keppel) performance:

*Frasers Commercial Trust is excluded as it was listed as Allco Commercial REIT initially, without Frasers involvement. 
** Lippo Mall Indonesia Retail Trust is included as it was listed as Lippo-Mapletree Indonesia Retail Trust where Mapletree Capital (a wholly-owned subsidiary of Mapletree Investments Pte Ltd) owned 40% of the manager -  Lippo-Mapletree Indonesia Retail Trust Management Ltd. In mid-2011, Lippo Karawaci Tbk acquired the entire 40% shareholding from Mapletree.
*** PRIME US REIT is included due to the 30% interest in REIT manager by Keppel Capital Two Pte. Ltd., a wholly-owned subsidiary of Keppel Capital Management Pte Ltd and in turn, wholly-owned by Keppel Capital Holdings Pte. Ltd. which is the asset management arm of Keppel Corporation Limited.

Even if Gao Suay only invested in MACFK related counters, his return is not much better. His capital would be S$ 95,000 and his total return would be -S$ 16,469.94. The dividends he received are S$ 16,754.45 and his unrealized loss is S$ 33,224.39. Refer below for a quick summary:

AmountReturn
CapitalS$ 95,000.00-
Current ValueS$ 61,775.61-
DividendsS$ 16,754.4517.6%
Realized LossS$ 00%
Unrealized LossS$ (33,224.39)-35%
Total LossS$ (16,469.94)-17.3%
Image by Justin Martin from Pixabay


In reality, I doubt this would really happen which one keeps buying stocks at their all-time high price. Nonetheless, this "extreme" case study should be a good example to point out that, every stock has its value and the value changing with time, be it a MACFK or not. Here, I would like to quote what I have mentioned in my previous post:

"If one enters a REIT at a high price, even if its fundamental is very good, or be it MACFK related counters, it might take quite some time to have a decent return due to its compressed dividend yield. It becomes worse if the share price slides down due to lower-than-expected results, market sentiment, or more often than not, simply drops for no reason." 


So, next time, when someone tells you to invest in a fundamentally strong REIT at "any" price, think again. Similarly, a REIT with a less renowned sponsor does not equate to a lower return to investors. After all, your return depends a lot on the price you paid and sold. Always do your own due diligence instead of relying on others. And yes, "others" is applicable to the material on this blog.


If you are passionate to learn more about REIT investing, you could refer to the FREE resources on the following pages on my blog:

  1. Personal Finance where I've shared some basic relevant topics like what to prepare before start investing and how to come out with a simple dividend investment plan.
  2. REITs Investing where I've shared my idea and experience on REITs investment. If you find pure wording is boring, then you could start with the comic strip (links at bottom of the page) that I believe you would enjoy reading. 
  3. REITs Analysis where I've shared my review on individual REITs, REITs comparison within the same sector as well as monthly SREITs fundamental review.
  4. SREITs Dashboard where you could find the detailed information on individual REIT and REIT ETF, which is the source of my review post as well.
  5. SREITs Data where you could find an overview of SREITs and REIT ETFs, including consolidated tables for SREITS metrics and average dividend yield & P/NAV

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

8 comments:

  1. Thank you for the great article

    ReplyDelete
    Replies
    1. Thanks for your compliment. Please help to share my blog to your like-minded frens.

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  2. happy to share yr blog... found it easy to read and manoeuvre
    How does one access the SREITS dashboard pdf

    ReplyDelete
    Replies
    1. Thanks for your compliment. For SREITs Dashboard pdf, you could download it from Patreon once you subscribed. Besides pdf, members can enjoy exclusive posts.

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  3. First this is a GREAT site and there are tons of detailed info that helps ordinary Joes to do their DD. However, just looking at the big loser chart's first row, you have AAReit bought at $1.87 (ATH) and to date (at the time of writing, probalby Oct 1st), it's traded at $1.4 (https://www.sgx.com/securities/equities/O5RU), that is only a -25% lost. I'm wondering how do you get the (4,240.64) and -84.8% Loss..

    Please write back.

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    Replies
    1. ie. with 5ksgd at $1.87, he'd bought 2673 shares (assuming we can trade non-integer multiple lots), and at Oct 1st's 1.42, it worths 2673*1.42==$3796.79. Hence the loss is 5000-3796.79==$1203.20

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    2. Oh I see the little * saying "* Return is adjusted for 5 to 1 units consolidation, however, IPO price is not adjusted"

      So it was diluted by 5..?

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    3. Yes, so the all-time high price for AAREIT should be 1.87 x 5 = $ 9.35. I have corrected the remark to "all-time high price is not adjusted". Thanks for your time for reading and commenting on my other posts.

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