466
Runt even weakening against Aussie $ - fellow commodity producer.
Show Posts
This section allows you to view all posts made by this member. Note that you can only see posts made in areas you currently have access to.
467
Off topic / Re: Live chat
« on: November 08, 2015, 05:20:43 pm »
Macro economics rule. Wonder what resources will do tomorrow after the 16%+ decline in Chinese imports for October. Will the possibility of more Chinese stimulus help commodities, or will the decline in imports (4th month in a row) cause a further sell off. Your pick.
469
Very few opinions on BAT here. I like it. Absolutely no debt and lots of cash to invest after selling PEPKOR to Steinhoff. They recently upped their stake in Iceland Foods financed partly from the convertible bond issue. New Look has lots of potential especially if they enter the Chinese market. Nothing wrong with Virgin Active.
So, with all the cash it can't be too long before we hear of another offshore aquisition.
The price however is rich, but that would not concern me unduly. Waiting for that aquisition.
So, with all the cash it can't be too long before we hear of another offshore aquisition.
The price however is rich, but that would not concern me unduly. Waiting for that aquisition.
470
Shares / Re: Income from REITS
« on: November 05, 2015, 08:21:55 am »
Further to my reply #12 where I outlined the close correlation between bond yields and listed property yields, it is a given that interest rates will go up in ZA and a December US increase seems more likely now than 1 month ago. Furthermore we will probably be downgraded by the ratings agencies (S&P and co.). This will move bond yields up and consequently listed property yields, meaning a drop in the prices of listed property quoted on the JSE. In other words a bad time to buy REITS. Only consider those with non ZA portfolios for reasons already mentioned previously. I have a mix of both but if selling the ZA focused ones my CGT would be prohibitive.
This just a mild warning to anyone wanting to buy ZA focused REITS now - there will be better opportunities once interest rates are close to topping out.
This just a mild warning to anyone wanting to buy ZA focused REITS now - there will be better opportunities once interest rates are close to topping out.
471
473
Shares / Re: Income from REITS
« on: November 03, 2015, 05:41:28 pm »That is a lot of complicated maths which I will never be able to wrap my head around. But luckily I do not have to. Like I have said a few times now I LOATHE debt. I don't make it and i don't give it. Being invested in bonds is essentially handing out debt so I will never do it. Thanks for the explanation nevertheless. I do only invest in either fully offshore REITs (RPL) or REITs with offshore exposure (TEX). I do it for both financial and political reasons.Was mentioned. I don't invest in bonds either, but to understand REITS you would have to take into account the yield on long term bonds as well. I tried to explain why.
I think one thing you should add the though is the added benefit of a Rand that will incrementally decline against GBP, EUR and USD. So not only will your dividend income grow from the companies gradually increasing their annual dividend payouts but it will be compounded by a weakening Rand. That is how I see it at least.
@Patrick I wouldn't have minded to take a stab at writing a blog post about being invested in REITs but I still know too little to really give anything of any real worth. Maybe nag Mr_D to have a go?
475
Shares / Re: Income from REITS
« on: November 03, 2015, 12:34:05 pm »
Important to note is the correlation between REITS and bonds. When bond yields rise in an interest rate hiking cycle, the price of the bonds declines.
For instance a long term bond purchased at 8% (coupon rate), with a nominal value of 100 and issued at 100 means you will get
8X100÷100 = 8%
Now if interest rates rise to say 9% an investor in a 8% long term bond is no longer prepared to accept 8%. The market value of the
bond is adjusted to take account of the higher interest rate scenario (9%)
i.e an increase from from 8% to 9% = 12,5% increase.
This results in the price of the bond no longer being 100 but:
100-11,1111% = 88,88 (12,5 ÷ 112,5 = 11,1111)
So the investor is taking pain.
The correlation between bond yields and REIT yields means that REIT's will react similarly in a rising interest rate cycle. But unlike with bonds which have a fixed yield right to maturity, REITS increase their distributions annually and usually recover lost ground fairly quickly.
A downturn in the economy will also not be so good for REIT's - watch the vacancies.
My advice:
Consider only those REIT's that have offshore exposure and then primarily those with European/East European exposure as their interest rate hiking cycle is way behind that in the USA and ZA - interest rates there are ultra low and property companies there can borrow at 2-3% to invest in proerties yielding 6/7%. (NEPI/CCO/RPL to name a few). Plus they are Rand hedges !
In ZA, do what gcr did with Woolies, i.e invest in those REITS with property portfolios located in areas where the wealthy shop and live - they are immune to 'hard times' - think HYP.
RES is a special case, they have been ultra successful in nodes neglected by others outside the metros. Also they have meaningful holdings in NEPI,Rockcastle,FFB,Capital.
http://www.moneyweb.co.za/investing/property/listed-property-still-the-top-performing-asset-class/
Note: valuations generally are quite high now, so with a few exceptions may want to wait a while before buying.
I wanted to post this under My Beginners Portfolio, so that gcr and Fawkes85 can read it.
For instance a long term bond purchased at 8% (coupon rate), with a nominal value of 100 and issued at 100 means you will get
8X100÷100 = 8%
Now if interest rates rise to say 9% an investor in a 8% long term bond is no longer prepared to accept 8%. The market value of the
bond is adjusted to take account of the higher interest rate scenario (9%)
i.e an increase from from 8% to 9% = 12,5% increase.
This results in the price of the bond no longer being 100 but:
100-11,1111% = 88,88 (12,5 ÷ 112,5 = 11,1111)
So the investor is taking pain.
The correlation between bond yields and REIT yields means that REIT's will react similarly in a rising interest rate cycle. But unlike with bonds which have a fixed yield right to maturity, REITS increase their distributions annually and usually recover lost ground fairly quickly.
A downturn in the economy will also not be so good for REIT's - watch the vacancies.
My advice:
Consider only those REIT's that have offshore exposure and then primarily those with European/East European exposure as their interest rate hiking cycle is way behind that in the USA and ZA - interest rates there are ultra low and property companies there can borrow at 2-3% to invest in proerties yielding 6/7%. (NEPI/CCO/RPL to name a few). Plus they are Rand hedges !
In ZA, do what gcr did with Woolies, i.e invest in those REITS with property portfolios located in areas where the wealthy shop and live - they are immune to 'hard times' - think HYP.
RES is a special case, they have been ultra successful in nodes neglected by others outside the metros. Also they have meaningful holdings in NEPI,Rockcastle,FFB,Capital.
http://www.moneyweb.co.za/investing/property/listed-property-still-the-top-performing-asset-class/
Note: valuations generally are quite high now, so with a few exceptions may want to wait a while before buying.
I wanted to post this under My Beginners Portfolio, so that gcr and Fawkes85 can read it.
476
Shares / Re: My Beginner's Portfolio Blog(Experiment)
« on: November 02, 2015, 04:48:39 pm »
I am talking about REITS as a group - Get the right ones and you would have outperformed even a good share like WHL on capital appreciation only, let alone the dividends.
SAC was one of the poor performers until they restructured their portfolio to include affordable residential units. I would not now buy those counters with only or mainly local
property portfolios, but rather those I mentioned, incl. RES because of the part overseas exposure. However these are now pretty much fully valued.
The graphs I posted are fact. Now compare your WHL to NEPI over the time period you mentioned, include RES as well (there are others), and take into account the divs.
FFB has been the phenominal outperformer..
(Retirees should certainly balance their portfolios to include REITS)
SAC was one of the poor performers until they restructured their portfolio to include affordable residential units. I would not now buy those counters with only or mainly local
property portfolios, but rather those I mentioned, incl. RES because of the part overseas exposure. However these are now pretty much fully valued.
The graphs I posted are fact. Now compare your WHL to NEPI over the time period you mentioned, include RES as well (there are others), and take into account the divs.
FFB has been the phenominal outperformer..
(Retirees should certainly balance their portfolios to include REITS)
477
Shares / Re: My Beginner's Portfolio Blog(Experiment)
« on: November 02, 2015, 03:35:04 pm »
Backing up what I said (again).
Tax not a worry for me with the right REITS.
Tax not a worry for me with the right REITS.
478
Shares / Re: My Beginner's Portfolio Blog(Experiment)
« on: November 02, 2015, 03:11:48 pm »
@gcr Check the SAC thread http://shareforum.co.za/shares/sac/ to find out about REITS and to see how they outperformed equities by a huge margin over the past 10 years and even this year.
Looks like you missed out on some great wealth creation for fear of paying tax. If you take something like NEPI or RES the outperformance is even higher.
NEPI = 15% withholding tax, so not added to taxable income. RES = locally registered with holdings in NEPI, Rockcastle, Fortress. As RES is not foreign listed income from distributions are added to income (so what ?) but there is no withholding tax.
Take some time to learn about the various REITS, which ones to avoid etc.
Looks like you missed out on some great wealth creation for fear of paying tax. If you take something like NEPI or RES the outperformance is even higher.
NEPI = 15% withholding tax, so not added to taxable income. RES = locally registered with holdings in NEPI, Rockcastle, Fortress. As RES is not foreign listed income from distributions are added to income (so what ?) but there is no withholding tax.
Take some time to learn about the various REITS, which ones to avoid etc.
479
Shares / Re: Managing your grandmothers money
« on: October 22, 2015, 10:40:06 am »
My 10c on REITS - you should be buying for the income/yield and for future income/yield - not for any serious capital growth . Any capital growth is just a bonus. Obviously, there are some property shares which are not REITs and you do look for capital growth - Attaq, Balwin.
and of course some oversea properties give a decent return in dollars/pounds or euros, always nice - but is taxed.
Overseas dual listed REITS like Nepi are only subject to 15% withholding tax - same as dividends on your JSE shares.
Over 5 years Nepi and NPN have provided roughly the same capital appreciation, but Nepi's dividends were much higher. (Dividends not taken into account in the graph).