Opinions on Real Estate Investment Trusts

[esolano]

Just wondering what everyone's opinion is on where REIT is heading this year? All types including: Industrial, Office, Hotel / Leisure, Retail and Diversified.

 

[Bushman]

Just wondering what everyone's opinion is on where REIT is heading this year? All types including: Industrial, Office, Hotel / Leisure, Retail and Diversified.

The bigger A-REITs have been raising a lot of capital and this will lead to two things IMO -
1. reduce the overhang of commercial property, thereby reducing pressure on valuations; and
2. increase the incidence of mergers & acquisitions across the sector.

Things to look at:
a. are they a boring old rent collector or did they rely on transactional revenue in the past (a source of income that is no longer available);
b. what property sector are they exposed to - retail, commercial office, industrial, residential development, commercial development. Each has a different driver and dynamic i.e retail is consumer confidence/household finance, office is business conficence/white collar employment, industrial is GDP (amongst others);
c. who is their debt provider and can they/will they refinance?
d. do they have enough headroom in their loan covenants to ensure they do not get stung by June-December 2009 valuations.

Anyway some bare bones to consider. There is a lot more to look at. A good strategy could be to see the one's the instos/foreign investors are backing (i.e. Charter Hall, FKP has all had strong recent support), what their balance sheets look like and whether there are any more 'older' valuations in their property books.

All this is IMO, off course.

 

[So_Cynical]

I think the REIT's that survive over the next 6 >12 months, will be the next big thing...some of
the current SP's remind me of the bottom of the mining sector, as in how over sold they are.

 

[vincent191]

IMO REITs have been oversold. I have accumulated a fair amount of REITs in my portfolio with a 1 or 2 year planning horizon.

I am punting on the fact that when the green shoots start to blossom I will harvest a bountiful crop.

My selection is those with managable debt and a strong balance sheet. Those with large recent capital raisings attract my attention (GPT, Stockland, Mirvac). At the other end of my scale is Centro. They still have a lot of debt.

I also research those with good first class assets and an attracive land bank. GPT & Stockland hold some beautiful assets and we all know that in all major cities good locations are hard to find.

DYOR. But I really believe that this sector will come good eventually. Every cloud has it's silver lining and every dog will have it's day.

 

[persistentone]

I am looking for Australian REITs whose primary exposure is to home mortgages. Do any of these invest in the mortgages directly, or are all of these REITs primarily holding vehicles for securitized collections of mortgages (e.g., collateralized debt obligations (CDO))?

What are the best investments if you want to bet with the Australian residential real estate market?

 

[Bill M]

I think the REIT's that survive over the next 6 >12 months, will be the next big thing...some of
the current SP's remind me of the bottom of the mining sector, as in how over sold they are.

We have already missed the absolute bottoms mate, I think buying the ETF would be a way to cover most bases. To the O.P. take a look at SLF, it might be better than trying to pick just one winner.

 

[So_Cynical]

We have already missed the absolute bottoms mate, I think buying the ETF would be a way to cover most bases. To the O.P. take a look at SLF, it might be better than trying to pick just one winner.

Bill i posted that on the 1st of July Yet another bottom i called correctly :cowboy:

There's still a couple of REIT's and real estate stocks close to there bottoms, for those that like a little risk.

 

[Bill M]

Bill i posted that on the 1st of July Yet another bottom i called correctly :cowboy:

There's still a couple of REIT's and real estate stocks close to there bottoms, for those that like a little risk.

Ha, My apologies! Didn't notice that, well called.

OK, I ask you a hard question, do you think GMG will survive the next 12 Months and be the respected REIT that it once was? I think it will, particularly with all the Chinese investment, your opinion?

 

[persistentone]

We have already missed the absolute bottoms mate, I think buying the ETF would be a way to cover most bases. To the O.P. take a look at SLF, it might be better than trying to pick just one winner.

If no one can name individual REITs that specialize in Australian residential property, can someone at least tell me where to find a list of all income securities that are associated with REITs?

 

[white_goodman]

im still wary of the valuation risk to some companies...

theres been very little transactional evidence this year, office especially, and if you were to find a REIT go under and a 'fire sale' of sort, it would have a flow on effect to the valuations of other properties...

I mean i still suspect some 10-20% still to come off some A grade assets

 

[persistentone]

im still wary of the valuation risk to some companies...

theres been very little transactional evidence this year, office especially, and if you were to find a REIT go under and a 'fire sale' of sort, it would have a flow on effect to the valuations of other properties...

I mean i still suspect some 10-20% still to come off some A grade assets

I agree with this, and great point about the flowthrough effect. Look at the Chapter 11 of General Growth in the US and how this one situation basically floored every stock in the business to generational lows.

In any case, I agree with you about office properties. That's why I am not asking about the office REITs in Australia. Residential is more interesting. Australia has non-recourse loans and Australia didn't get much rise in unemployment during the downturn. So presumably Australians can still afford their mortgages (even if they don't like deterioration in property values).

So again I'm trying to find Australian REITs that focus on residential property. This could be apartments, residential mortgages, distressed mortgage securitizations, etc. But it has to be focused on *Australia*.

 

[white_goodman]

well you could give Mirvac a whirl, Stockland also has a high interest in apartments but they also do office and retail...

 

[Largesse]

I agree with this, and great point about the flowthrough effect. Look at the Chapter 11 of General Growth in the US and how this one situation basically floored every stock in the business to generational lows.

In any case, I agree with you about office properties. That's why I am not asking about the office REITs in Australia. Residential is more interesting. Australia has non-recourse loans and Australia didn't get much rise in unemployment during the downturn. So presumably Australians can still afford their mortgages (even if they don't like deterioration in property values).

So again I'm trying to find Australian REITs that focus on residential property. This could be apartments, residential mortgages, distressed mortgage securitizations, etc. But it has to be focused on *Australia*.

Can you direct me to where I'd get a non-recourse home loan in Australia please.

Thanks in advance

 

[white_goodman]

Can you direct me to where I'd get a non-recourse home loan in Australia please.

Thanks in advance

yeh twas wondering about that one, isnt that the john dory in the US, hence the leaving the keys in the letterbox scenario

 

[persistentone]

Can you direct me to where I'd get a non-recourse home loan in Australia please.

Obviously I meant the opposite sorry.

I'm interested in Australian home mortgage REITs since Australian mortgages are all *recourse* loans.

 

[Largesse]

damn.... was genuinely hoping you'd be able to direct me to an Australian lender that would provide me with a loan on those most generous of terms!

 

[Bushman]

Pure Australian land bankers/housing developer is Peet Ltd (PPC).

Agree with Stocklands and Mirvac as the large caps with residential divisions.

Not sure about any listed mortgage funds. they tend to be unlisted.

 

[So_Cynical]

I ask you a hard question, do you think GMG will survive the next 12 Months and be the respected REIT that it once was? I think it will, particularly with all the Chinese investment, your opinion?

Funny u should ask cos i had another look at Goodman last nite and came to the conclusion that i was a bloody idiot not buying at 16 cents back in March :crap: GMG dominate the industrial property scene in Sydney.

If property really is all about "position position position" then GMG is the only real player, way out in front with daylight second....i haven't looked at there financial position lately but with there cash flows i would imagine finding refinancing wouldn't be a big issue.

well you could give Mirvac a whirl,

Mirvac have alot of hotels, so very exposed to the tourism down turn...and on the flip side the turn around when it comes...also there shopping centers are not in prime positions very much second tier.