Discussion in 'Real Estate Investment Trusts (A-REIT / LPT)' started by Simon Hampel, 30th Jul, 2008.
Inside Business - 27/07/2008: Credit crunch hits property trusts hard
Inside Business - 27-Jul-2008
now i like my REiTs , and just like the horrible pre-GFC peaks , they appeal as an alternative to term deposits and fixed interest securities , BUT some sort of easy credit reduction must be due soon ,
some REIT's have kept the gearing ( and/or leverage ) to 40% and below
should investors start calculating top-up targets , or stop-loss prices . ??
some interesting opportunities ( in a low-yield world ) emerging now
keep in mind the risk
i will be watching to see what the cancelled/ soon to be re-floated WALE looks like in raw figures
i will be looking for it to substitute for a fixed interest rate note/hybrid.
The company I work for rotated into AREITS post GFC, up to a maximum weighting of 30% in our flagship 'growth' diversified fund! Since 2016, we have been rotating out and are currently quite bearish about the asset class. They aren't as bad as pre-GFC, but in our view, they are deteriorating on multiple fronts, including M&A activity.
Interestingly, I'm hearing suggestions that the over-priced residential investment market coupled with very tight serviceability rules thanks to APRA may lead to a boom in commercial real estate as people go looking for better yield and non-APRA funding.
Whether that translates to anything meaningful or a positive impact on AREITs is difficult to know.
the major current problem , in the market , is low yield , a tendency towards low returns ( div. and SP growth ) and the risk of major/total capital loss , all wrapped in the need to invest cash .
most of my REIT investments were made 2011 to 2013 , and more recently try to add 'niche' markets like RFF. ( should they not fail or drop below 50% of purchase , i will just have to sit it out )
does one risk unlisted property trusts ??
i don't, but those with sound knowledge in that area , might see some opportunities peculiar to the current times
Actually I was speaking to a mortgage broker the other day who indicated this has largely already happened and the market has already moved significantly - yields are too low now in many places to justify serious attention.
Hi Simon, yes from the front line I can agree that enquiries about commercial lending and interest towards brokers form the commercial team with in major banks is increasing. As they say money never sleeps and the recent APRA changes are simple moving the money to a different sector.
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