Two REITs You Must Watch Right Now!

Back on 23rd Oct 2018, we were very excited to have Mr. Ian Tai

Ian Tai is the founder of BursaKing.com.my, a proprietary tool he developed to help investors seek out great stocks on Bursa Malaysia to invest in.

Ian founded Bursaking.com.my, a site dedicated to empower retail investors to build wealth through ownership of fundamentally strong stocks listed on Bursa Malaysia and the SGX. Ian is active as a columnist with articles on stocks and personal finance featured on KCLau. com, MajalahLabur. com, the Fifth Person, Value Invest Asia, and Small Cap Asia.

Ian is also a dedicated dividend investor, where he focuses on investing in REITs to help him generate passive income.
We will chat more with him about how he constructs his portfolio and which REITs he is looking at this moment.

 


Full Transcript

Stanley: Hello everyone, welcome to a value invest Asia, Facebook Live; our monthly  Facebook life, where every man will try to find great investors to talk to on their investment process, and understand, and learn from them of how they create their portfolio. This month we are very, very privileged to have a good friend of mine, who is the founder of busoking.com.my in Tai; HE Is the founder of busoking.com.my, and he; this is a proprietary tool that he created to help investors seek out great stock on Buso Malaysia on how to invest. But Ian is also a very dedicated income investor.

So, he looks for income stocks and some of his favorites is actually reads, and in particular S. Read, which is what we’re going to talk to him about today. Two of the estimate that he recently have bought and [unclear 01:12] his brain and learn why he chose them, and what did he see’s in these two REITs, right? before I passed the mike to Ian, I just want to give a shout out to our sponsor for this video who is making, helping us making this video possible which is brokers F S M one, and F S M one is a broker in Singapore, and is what we call a discount brokerage, and they are really one of the cheapest brokeragese out there in Singapore today, and definitely, they also disrupting the market, where previously the brokerage in Singapore, Was sort of overcharging a lot of investors; So definitely, if you’re looking to start a new brokerage account, do check them out at F S M one. So let’s get back to the show. Hello, Ian how are you?

Ian: Hello, Stanley how are you?

Stanley: Very good, very good. Thank you for coming to our show. Yeah; I think maybe some of our audience might not be familiar with you yet; why don’t you give a brief background of yourself. How do you get started investing in, what really is Busoking.com.my 33]

Ian: OK thank you so much; First and foremost, it’s a privilege to be on your show, and quite excited to be here, and, in fact it’s actually my first, my first show, [unclear 02:48] 

Stanley: Sorry it took so long.

Ian: Alright, so basically. My name is Ian, and born and bred in Malaysia, mom is from Singapore.

Stanley: Okay!

Always have an attachment to Singapore; or do I have lived most of my life in Malaysia, but I still go on to Singapore once or twice within a year. So that’s actually a little bit about myself. 18]

Stanley: Okay!

Ian: So, how would I get started?

Stanley: Yes!

Ian: So, basically; actually is from a friend, Alright, so, a college mate of mind, when I was studying in Larose, Alright, so I think he was into investing, and so I was just, you know, a number of guys who just graduated from school, and;

Stanley: Right!

Ian: School means like, secondary school, and in Malaysia where we don’t necessarily have O levels, we have something of equal averages, S.P.M. After I have actually passed my S.P.M. the next step is to go into, you know, is to either go into S.T.P.M. or A-Level

So, I chose A-levels; After that, I thought that everything should be, you know, just for the path line, you know, go to school, get a good grade, hopefully get a good job.

Stanley: Get a good job?

Stanley: Yes, yes, yes.

Ian: But that was me when I was like eighteen years old, I give some friends of mine. [unclear 0418]  Ian you should read this book. So you wish for that;

Stanley: Okay!

Ian: So, it all started from him, so all credit to him.

Stanley: And then after reading the book what, what; why, why did you decided not to take the traditional path of going and get a job?

Ian: Because after that you kind of like question and say, hay oh, there’s another way of doing things than just going to school, and you know;

Stanley: Okay!

Ian: Good job and stuff like that, so that’s another way entrepreneurship way, the investment way, to educate, to make about the living. So I’m actually contemplating between the two so at the end of the day the excitement in the world of entrepreneurship in the world of investing it’s kind of a more exciting than, than, You know, passing your exams,

Stanley: Yes!

Ian: You know, get a 9 to 5 job. It seems that is the more exciting way.

Stanley: Okay!

Ian: So, that it’s actually the seed that has been planted by a friend, and which actually growth. Alright?

Stanley: Right!

Ian: So, But it’s a difference between me and my friend at the time. My friend was in investing, so what he did was; he’s actually quite [unclear 05:38], and so; so at the age, at a young tender age of eighteen years old, he actually opened his own stock brokerage.

Stanley: That’s interesting. How does he do that?

Ian: I don’t know. You know, he just tells the whole class; he walked in, into the glass and then he said Ian [unclear 06:04] and I said hey, guys, guys, guys come, come on [unclear 06:06]

Stanley: Okay!

Ian: Really? [Unclear 06:10] Booker [unclear 06:12] then he opens up his newspaper. That’s the newspaper, and he obviously, you know, he opened up to the stock section, right?

Stanley: Okay!

Ian: Then he tells his classmates including myself, I bought this, I bought that, I bought this, I bought that; [inaudible 06:27]

Stanley: Okay!

Ian: And after a few months later we never hear him talk about it again.

Stanley: So, you never prop him up? You know, rap his wound little bit.

Ian: Actually we don’t need to rap his wound, because a few [unclear 06:47] someone would actually ask him hey what happen to your stock. Your stock investment, you know. Then he would just say oh man, I lost like [inaudible 06:58] my capital, buying all this, this and that, this and that.

Stanley: Okay!

Ian: [Unclear 07:06] actually so that’s a; that could be the first knowledge of wisdom. When it comes to investing, you don’t just buy, you don’t just open a brokerage account and just buy this, and buy that, and hope for the best, right?

Stanley: Yes! Okay.

Ian: Maybe. And some way the time I was reading Robert Kiyosaki book and he talks about, a lot about investment education. Into the sea. People should be, you know, should get educated first before they go into any, any kind of an investment;

Stanley: Okay! And then, Okay! maybe, maybe jump a little bit ahead, after you read that book, is there any investment book that you really adheres to, that you kind of see it as your Bible, after that?

Ian: There’s no one particular book; of course, after that, I begin to explore around, of course, I read a lot of course, probably because I get a lot series, [inaudible 08:07].  And when it comes to stock investing, I will actually, I will go with Pat Dorsey if you know morning star;

Stanley: Yup!

Ian: So, he has this book called “The Five Rules of Investing”

Stanley: Okay! Yes!

Ian: So, I actually have that book, and I read it, so that is one of the beginning stages of me learning about financial statement and stuff like that.

Stanley: I see; Okay! yes.

Ian: So, now the story continues on from [inaudible 08:39].

Stanley: Then, so now, after a while, you learn how to invest, so maybe, share with, us what is your particular style of investing right now, how do you invest now?

Ian: For me, for me, I actually invest primarily for income,

Stanley: Okay!

Ian: Actually there are two things in stock right now, one is, reservation of capital, means that the thing you invest, it must actually reasonably be resilient; Alright, so that capital; my capital is actually can be preserved, otherwise [inaudible 09:17]

Stanley: Right!

Ian: You can actually read Robert Kiyosaki book, you can’t help it but, you know, you are, you are actually expecting some form of cash flow from any sort of investment that you get into.

Stanley: Yes, I see, okay. So, you focus a lot on cash flow; I see more and more people joining now, so if you guys are here say Hello to Ian. and if you have any questions for him you know just comment down below. We do already solicited some question beforehand and I think we actually have quite a list, close to fifty of them. So if we don’t go through all of the questions that you have a summit, I am really sorry about that because of time constraint, but we try to get through some of the more interesting ones. For, for, okay. We want to talk a little about income investing, and especially today we talk about REITs, Right! When we select REITs, what are some of the key things that you look at when you when you’re looking at a REITs?

Ian: Okay! so, here right now. Let me just borrow a friend, of a framework, Alright, that has been a principle for investment, but some of our good friends; Alright, to actually further explain how, how this thing can actually work for me. And as well as for you; the framework is actually you know the investment quad ranting by the fifth%, Alright? [inaudible 10:56-58]
Stanley: Okay!

Ian: I believe they also copy from one of mine. [Unclear 11:07-09] but anyway my kudos to that, but is a good friend but…

Stanley: It’s a good friend but it’s timeless anyway so;

Ian: So, of course, the number one is business, Alright? the first priority is business, so we always look at; when it comes to REITs, then we look at the quality of the properties;

Stanley: Quality of the other properties, right? okay.

Ian: So that’s number one, right? After you have actually look true the quality of the properties, Alright? by the rate, how do you assess the quality of the properties? one of the things is, if the REITs doesn’t have a lot of properties then you can go through financial of each and every single property.

Stanley: Okay!

Ian: If they really have a lot of properties then you go through the sentiment the financial results;

Stanley: Right, Okay! and what were you looking for, if you’re looking at them individually?

Ian: Individually, I would look at the I.R.S. okay first of all, as a financial guy you, you would actually look at the finances; the revenue, and net profit, the net property income. So this is which I would look at first; the costs; you want to properties to be occupied by tenants, so, therefore, you look at occupancy rate, make sure they’re above 90% or 95%.

Stanley: Okay! Wow, above 90% Okay! yes.

Ian: Alright, so, that is the benchmark law. I mean, there are some things in Malaysia law; they don’t even have ninety% occupancy rate. Not going to name them but; when you;

Stanley: You can name them no problem, I don’t mind.

Ian: I mean there say you, if it’s a retail REITs; I mean it depends on your country a lot. Like me, if I’m familiar with Malaysia and you go to some Malaysian shopping mall,

Stanley: Okay! So you actually check, check them out physically?

Ian: Yes!

Stanley: Okay! cool.

Ian: That would be the; that would be the thing; that’s the beauty of Reitsma because; because you get to actually go to, you get to go shopping malls to actually, to actually check out the properties. I think that spark my, actually initially sparked my interest in estate.

Stanley: Okay!

Ian: Alright, because; I find that Singapore it’s a different country, and it’s like one thing to be connected, you know, it’s not like Malaysia you know, you have to drive from one shopping mall to the next, but Singapore is amazing, you know. Everywhere is quite; [unclear 13:48] connected to [unclear 13:49] so that makes, so that makes it very interesting.

Stanley: Okay! so you can just spend whole day, just you know, roaming around one, one shopping mall to other;

Ian: Of course you can do that as a [unclear 14:01] but you need the research work, it’s just what; is it’s more about being observant, Investment mindset; actually even like Stanley, are you know, are most of the listeners actually, do they come from Singapore?

Stanley: So, we; our audience I think are mostly fifty, fifty, so half of them in Singapore behalf in Malaysia but you know we always, we always say that investing shouldn’t be restricted geographically, because it’s the [unclear14:32] is the most easy to diversify right, so anyone can invest anywhere, and that’s really what we are advocating for.

Ian: So basically for me is like this, to only purposely go do [unclear 14:44-46] let’s say for example; let’s say, thirsty one day in Singapore, very thirsty, and then I just want to get a can drink, and walk around Singapore and I found myself a grocery store, [unclear 15:01] Alright!

Stanley: Okay!

Ian: You have passed through that cast all life, don’t know how many, how many thousands, how many hundreds times already, you know just to get some simple supplies, stuff like that, little do many people know that it’s actually a problematic company;

Stanley: Yes!

Ian: [Unclear 15:22] quite well. So all you take, it’s a bit of observation.

Stanley: So, you really, you know find your stocks from your personal experience a lot. In just by observing you know, going to mall, seeing how things are doing, right?

Ian: Yes!

Stanley: Okay! cool. Okay! we have also a quite popular question that I think quite a few number of people ask including, Howard, hope I pronounced your name correctly; so he’s basically asking what they think about interest rates, you know, when people are talking about interest rate increasing, and many brokers are giving a report that interest rate increase means that, you know, it will hit the REITs. Is that a worry for you, is that even something that you look at?

Ian: that one is such a quite interesting; Alright! So, frankly speaking interest rates are around so we have to jump queue a little bit.

Stanley: Okay!

Ian: some REITs, Right! Yeah we have to look at that, Alright! So some of the [unclear 16:32] so they are fixed rate; there. it doesn’t matter how your interest rate can go up or come down. If it’s based on a fixed rate it’s a fixed interest rate. And some is based on a floating rate, so in that case, the interest cost may actually go up, If the interest rate actually goes up.

Stanley: Okay!

Ian: So basically to cap, for me to cap that; I think some REITs [unclear 16:57] I think, most, some of the better REITs, they usually have a high proportion of that which is based on a fixed rate, over a floating rate.

Stanley: Okay!

Ian: So, that’s my way of looking at things [inaudible 17:13] So if you buying risk like that, then maybe you have a much better night sleep.

Stanley: Okay! I guess.

Stanley: Okay! a way to, I guess cushion your, your, resisting, let the, let, the REITs manager find a manager that’s good at finding good financial source and cost to manage their own costs; so you pass that we pass the cost down to them and make sure they do a good job.

Ian: Yes, yes, Yes!

Stanley: Okay! Yes, I think less, a lot less, dive right into the two stock bed, that you recently told me about and it’s quite interesting pick, I would say. I will just named the first law, right?  you told me that you have recently invested in S-tree called Maple tree North Asia commercial trust, and another one is Fraser logistic and industrial trusts. I look at both, and both of mainly invest in property outside of Singapore, right? and at relatively high yield, Maple tree North Asia has about 6.7% yield, and Fraser Logistic giving us more than seven% yield. Let’s, let’s start with Maple Tree of North Asia commercial trust. Why of all the rate you, you, you narrowed down to this?

Ian:  Okay! basically, to me [inaudible 18:46] you know, to me sponsors actually are very important when it comes to REITs investment, Alright? because a sponsor like Maple tree, they have a lot of development projects, all kinds of [inaudible 19:00] projects, and, and if, and if they’re very efficient when it comes to developing properties, good quality ones, and they’re very good investment, and they’re very good in Capital Management which is either REITs management or private fund management, Alright? so if they have development pipeline. If they have a pipeline of development, Alright? that means for all the REITs, whether it’s Mapletree North Asia, Mapletree logistics, actually a half logistic as well, I just think that’s not

Stanley: Okay!

Ian: For further information; Maple tree commercial as well as Maple thee industrial. So, so for all these four REITs, right, it depends on the pack line, and of course, there is room for growth, because, there are a huge pack line. So, Actually I like all Mapletrees. If I got enough money I’d probably buy them [inaudible 19:55].

Stanley: Okay! But so far you own mainly Mapletree North Asia and Mapletree logistic.

Ian: But quite recently I; Okay! Logistic is because I bought it at really, really, dirt cheap price. Yes

Stanley: Okay!

Ian: Now it doesn’t drop back to my, my dream price, like which is one dollar luck. North Asia trust. What got me is that initially, I didn’t buy it because; I thought, you know, North Asia trust is used to be called greater China commercial partner.

Stanley: Yes! greater China, yes.

Ian: Alright, so I [inaudible 20:38] that the trust has three properties; one is Festival walk, which is Yareatsing in Hong Kong, and the other one is actually Circular Plaza, and the other one is Gateway Plaza. If I’m not mistaken.

Stanley: Okay!

Ian: Right! So, there are only three properties, so at the time they don’t really; it doesn’t seem like it’s moving much, it doesn’t seem; it’s doing: the three properties are doing Okay! It’s you know, you’re saying which is, [unclear 21:10-12] Maybe around April; April June, some in the middle stages of this year. They changed the investment mandate, right?

Stanley: Okay!

Ian: They change the investment mandate; they say okay we are going to expand geographically, from, we’re not just going to invest in China properties or Hong Kong

properties, but we are going out to Japan. North Asia. [unclear 21:39] They actually bought like six freehold properties in Japan.

Stanley: Right, Okay!

Ian: Okay! so now I’m like hey [inaudible 21:48-55] like something are very good it’s just that they don’t have a good story, but I like those refer growth.

Stanley: Potential insight, Okay!

Ian: Yes! because a lot of people say you new, you invest, but if you don’t buy back growth. but for me, you want to invest in a REIT that not only pays good dividend now but growing with dividence;

Stanley: In the future. Okay! yes.

Ian: So the Japan thing is actually a group solely by itself. So there. [unclear 22:30] So I begin to actually dig further. But is the first reason, that’s part of my interest on the REIT. [unclear 22:39]

Stanley: Okay! and then what else the research on?

Ian: Of course, once you have done all the fundamental analysis

Stanley: Fight to Hong Kong and see the property.

Ian: Say?

Stanley: You fly to Hong Kong and see the property.

Ian: If I got money to buy that. I would probably buy the lot, I mean [unclear 23:00] I’m a bit too simple, Alright? because I know like Singapore REIT [unclear 23:11] is much better than in Malaysia;

Stanley: Okay!

Ian: People just tend to trust Singaporea.

Stanley: Okay their brand, their brand name.

Ian: Singapore [unclear 23:23-25]

Stanley: It’s a good point talk about the currency right because. Yes, the REITs are domesticated in Sing dollar, but the REIT itself they have property in greater China so Hong Kong, [unclear 23:42] and also now the Japanese yen. This is also a popular question, I think Mike is asking it, also with the trade war, right? and you see Asian currency depreciating. Wouldn’t that be a risk for you? Do you see that risk by holding so much asset that is linked to say the rimming be all, I don’t know what will happen to the Japanese yen also.

Ian: So, of course, there is a risk, actually everything there’s a risk; Alright? when you invest, there is still a risk. So for me, I mean it depends on your question, not like, for example, I am a Malaysian, I own Malaysian ringgit; so is that` [unclear 24:24] owning Malaysian ringgit. Of course, it is a risk because; you know that the ringgit is not as strong as the Sing dollars, so if you’re packing your wealth mostly in Malaysia ringgit, then of course, on the risk is that what if the ringgit drops?

It happened a few years ago. So, so that’s the thing. For me, I just think as long as the currency is relatively stable I mean the Labor. Whereby the perform of the currency it’s not like there will be; Just numbers like [unclear 25:04] If the thing is relatively stable; in fact, I just find this out; anything that is better than the ringgit, am go kill him;  having it.

Stanley: Okay!

Ian: I mean you see. It’s still a nice country to live I mean. [inaudible 25:21] stock right? Like if you can trace back to what our study has asked previously why do I invest; so one of the reason is capital preservation.

Stanley: Yes, Okay! yeah I totally agree on that.

Ian: Why not go away for currency which is far more stable, Alright?

Stanley: Okay!

Ian: To me Hong Kong dollar which is packed to US dollar, I think that one is quite okay. Well maybe, it will be there, Japanese yen, no matter what will still be there, I believe so? Of course, you asked me whether there’s a risk. There is still a risk there.

Stanley: Okay! yeah fair enough, fair enough; you just. In a way, you already diversifying the way our currency risk by investing outside of Malaysia for you, for you. Okay! interesting; okay now, now, after you say, done your homework of understanding, say the North Asia property and you like to have growth potential. How do you know when, when you should be investing in; do you look at this valuation? What’s your thought there?

Ian: Of course, with the fifth%, the investment quadrant, the last quadrant it’s a valuation quadrant, right?

Stanley: Okay!

Ian: So, [Inaudible 26:49] few metrics off valuation you just to complete the gross then you. If you compare; I tend to compare multi; the years before that. So far Maple three, there are data goes all the way back to 2004. In the most minute one;

Stanley: Okay! [unclear 27:09] the gross dividend year, for each year and then see whether is it the highest or is it the lowest? if it’s below average then you should be Okay! if it’s above average then you have to see whether you are willing to take it up. But for me, I bought Maple tree; let’s see, my own data.

Okay! so, at the time I actually purchase the REIT, Alright? so my purchase price was one point one, one;

Stanley: Okay!

Ian: Okay! so deep, the deeper you were, some 0.5%.

Stanley: Okay!

Ian: My gross dividend use to be around 6.7%,8%

Stanley: Which is quite similar to now as well right?

Ian: Quite similar to now; so you’re buying now you should be getting more or less what I’m getting. Okay?

Stanley: Okay!

Ian: If I compare with the previous years, the lowest is 6.31, 0.31.

Stanley: Okay!

Ian: The highest is seven point two nine that was like way back in 2014.

Stanley: Okay!

Ian: So, I thought, It is actually closer to the average, although it’s actually below the average by a bit, by 6.7, 8% I say, Okay! I think I can grab it.

Stanley: Yes, yes, because; it is income stock, so what you’re saying is you basically look at the dividend, you blend the average throughout the years, see what you have been, and if it is a reasonable price you don’t have to buy it at the cheapest point but you know, as long as it’s reasonable, you’re fine with investing in it, right?

Ian: Correct, so, that’s one of the metrics. the other metrics of course I guess; another tip is that N.E.V right, [unclear 29:16] value must increase.

Stanley: Okay! And it has been the case for micro trip, okay.

Ian: Maybe has increased now vision trust. And with that, I will also compare with Its price up, so it’s P.B. ratio, as to value. So you would compare that and at the bank when I buy the REIT at that time the price to any reasonable, Zero point eight four.

Stanley: Okay!

Ian: 16% below the value, so I taught, just grab some. If you can get more but.

Stanley: Okay! I see.

Ian: [unclear 30:09] completing few valuation metrics on V.S.S.

Stanley: Okay! yes, It goes back to one of the questions previously ask on, on, our question form, Dennis asking you; do you use things like margin of safety when looking at the REIT, because, you know, what Warren Buffet of engineering Frank always talk about margin of safety, but if we include that, you know, almost all the real we cannot buy. How do you see volume safety in this case?

Ian: It really depends on the plan, Alright? different people who have different stocks like for example Benjamin Graham who is, he’s actually well known for buying anything that is below the book value, Alright? so that is his way of thinking, maybe it is not so much in cash flow, it’s more like okay the business is about one hundred dollars if [inaudible 31:12], Alright? so that is his primary focus, but that’s not my primary focus. [Unclear 31:20] I didn’t Americans are a little bit different because; the tech structure over there, it’s really a bit different and so they tend to actually go with something. They were going with something, it’s quite good fundamentally good, but it may not necessarily pay very good dividend use.

Ian: Because of the tax structure; it’s nothing really the business, your business is still warm up, or actually investing a lot of very strong cash flow, cash flow used in kind of businesses, it’s just that the cash is actually been spot inside [unclear 31:55] account or they are been redeployed for other investments so it’s their key to capital gains.

So, that’s why they don’t really use, so that’s why they have another metrics are going about it. But for me, it’s actually more about building a second resource income from for my own stock portfolio. And therefore though my emphasis on, my emphasis on margin of safety is a bit less in that in that sense, Alright? Unless you want to say, Okay! I, if you want to look at it Maple tree now vision, as you may see that price to N.E.B is actually zero point eight four. You need to [unclear 32:43] buying the properties owned by the REITs, at sixteen% below its book value, Alright! So, is that a good safety margin then it’s debatable? To me yes, because; I’ve already bought them;  if you haven’t bought with them they probably say no.

Stanley: Karena is asking a good question also; just now you talk about the interest rate Reese and how you mitigate it by investing in research that is having more fix fixed interest rate at. But Maple tree itself, Maple tree of North Asia they have a gearing close to almost 40%. In Singapore, the softly bit is roughly about forty-five%, Alright? so it is a concern for you, as such leverage?

Ian: Let’s, See, Okay! I’m looking at my; at the latest lighter. [Inaudible 33:50] ratio is thirty-eight point eight… [Unclear 33:53-58]

Stanley: Very, very accurate OK. But even…

Ian: To me it’s not really a concern.

Stanley: Okay!

Ian: Because, number one; they just bought property, it’s not like they have bought property like ten years ago, they just, they just bought it like few months ago. So, here’s the thing, Alright? If you have a REIT that it’s not so if you have a REIT that it’s not really into growing your assets it’s good to keep whatever they have. In general, their gearing ratio should be lower, because; you’re not buying anything.

Stanley: Okay!

Ian: But if it’s this, Maple tree now vision trust. They have actually bought six properties. So technically speaking, they should actually have a little bit higher gearing ratio. If they don’t borrow how are they we going to finance the; how are they going to finance the purchase of the. Price issue and stuff like that. But I think for [unclear 35:06], I think it’s quite reasonable because actually if they buy Japan properties, I look here. The Japanese loaner, the interest rate is actually lower, possibly lower than Singapore,

Stanley: Definitely!

Ian: So; we’re not right?

Stanley: Okay! Interesting, yes Also if the REIT is able to give us higher growth potential you don’t mind, you know. You don’t mind you having a slightly higher leverage rate shoulder. I really want to move next to Fraser logistic, and I should trust because; I find it quite interesting as well. But before that, I think, Lamb is asking us, I think one question is, I think, maybe in, on the mind of many of our audiences. For income purposes, right, yes you investing in REIT it’s a good income, but what’s, what’s the difference between buying that, and maybe just buying index fund like an E.T.F? either REIT E.T.F. or even just Straits Times index E.T.F. Those will also give you, I guess three, 4% of the new, how do you see that different?

Ian: Okay, so the difference between E.T.F and?

Stanley: And REITs

Ian: Okay! So for me; I was asked this question, Alright? how does an investment give me cash flow? So there is a very, very, to me is a, question, Alright? Is something that would put for them. So for REITs, it’s very simple, the logic is. That REIT own portfolio of properties, Alright? and these properties are tangible and they have tenants paying rent or income to this property owners, right, and of course, why do we buy REITs, because; we don’t really have three billion dollars to actually buy, buy, them off. Thankfully there’s, thankfully true REITs they actually broken it down to like pieces of units. And this piggyback a little bit off that property, so that’s REITs. But for E.T.F. I think E.T.F is small, it is designed more as a price tracking mechanism.

Stanley: Okay, so you mean…

Ian: Price tracking mechanism is like for example in Malaysia we have the K.F.C.I. E.T.F.

Stanley: Okay!

Ian: So, it is designed to actually trace the performance of the K.L. stock market

Stanley: Yes, Okay!

Ian: Okay! So, basically he has a ratage of stocks, Alright? not too sure how they calculate it, there must be a good reason for Something in there, I have no idea. Why, but there’s a breakage, like how many goes to [unclear 38:11] how many goes to [unclear 38:12]. A drone as. D.G. maxes and stuff like that, and then they build a portfolio and they just invest accordingly. So, so it’s very hard for me to compare the difference between. If [unclear 38:24] If I may say, you’re hard-working you investment in [inaudible 38:30]. You doing so much research then you just bang on one now and again.

Stanley: I guess you’re saying that in a sense if you want to just track the market which, which you know, the market has been doing quite well, I mean so years or so and it’s quite decent return, if you just want to track the market E.T.F definitely is a good way, but why you’re buying particular REITs in, in terms is; I get a sense that you feel that this REIT can outperform the E.T.F. Would you say so?

Ian: Yes, and no, Well I mean I like to get down to the specifics stock. You know, everything I want to buy, everything I buy, I want to know in the final the final details.

Ian: Okay! so basically he has a ratage of stocks, Alright? not too sure how they calculate it, there must be a good reason for Something in there, I have no idea. Why, but there’s a breakage, like how many goes to [unclear 38:11] how many goes to [unclear 38:12]. A drone as. D.G. maxes and stuff like that, and then they build a portfolio and they just invest accordingly. So, it’s very hard for me to compare the difference between. If [unclear 38:24] If I may say, you’re hard-working you investment in [inaudible 38:30]. You doing so much research then you just bang on one now and again;

Stanley: I guess you’re saying that in a sense if you want to just track the market which, which you know, the market has been doing quite well, I mean so years or so and it’s quite decent return, if you just want to track the market E.T.F definitely is a good way, but why you’re buying particular REIT in, in terms is; I get a sense that you feel that this REIT can outperform the E.T.F. Would you say so?

Ian: Yes, and no, Well I mean I like to get down to the specifics stock. You know, everything I want to buy, everything I buy, I want to know in the final the final details.

Stanley: Okay! you just enjoy the process more.

Ian: And just enjoying life, like, for instance, you’re going to buy [unclear 39:35] I want to know how many factories they hold. That is called the active [unclear 39:37] you want to know  [unclear 39:39-54]

Stanley: Buy the whole market; Okay! I understand, okay let’s just move on to Fraser logic and natural trust, for those of you who may not be familiar with this trust, it is sponsored by Fraser central point properties. Is also quite a large property company in Singapore. And the main bulk of the industrial and logistic property is now in Australia. And so, yeah what about the street why, why, why, do you like it?

Ian: So. This one is because, number one I like to sponsor, Fraser. Alright? so. Not every single Fraser’s three I like. Alright!

Stanley: Okay! which one you don’t like?

Ian: I think that the one; maybe I’m not into the commercial reasons commercial trust

Stanley: Okay!

Ian: You find the units are not so much any higher but not so much into some of their properties. Center point trust that one is a, I think that one is a good group. You know [unclear 40:10] Cost a point. Really an asset. Because; when I go to Singapore I was [inaudible 41:18-21]. Thing when you’re really, really, really, Alright so…

Stanley: Okay! our Singapore friends if you have any recommendation enough point to you know let me know now below. Oh right yeah going back to the logistic

Ian:  Okay! so now going back to the logistics, I like it because actually first, industrial reason, in Singapore because [unclear 41:56]. So, therefore, there is a limb therefore there a limit when it comes to the Lend-Lease, all industrial properties or maybe all properties, most of the industrial properties in Singapore, if I’m correct its lease home, not free home. And Fraser’s logistics trust in Australia, so it’s free home, most of it. Most of the property owned by Fraser’s logistic trust is free home; So that’s one advantage over Singapore; another advantage is the land lease period, and the lease home period is actually thirty years in Singapore, but if we hoist three Hola it’s like. For everyone, Alright, offer is good as for everyone.

Alright, that’s, that’s another thing. One more thing that I like about F.L.T is this; In Singapore Land, is scarce so if you want to actually invest in if you want an industrial rate to actually quickly expand in Singapore it’s quite hard to do so. But in Sydney, but in Australia, peculiarly do Fraser logistic, because they have rights of first refusal R.O.F.R. to properties, Alright? That’s why the sponsor is very important, Right? So, you can actually. They can actually buy; you are given the first choice to actually buy logistics and industrial properties developed by Frasers properties Australian F.B.A.

Stanley: Okay!

Ian: Very interesting company, Alright, so to me I envision F.B.A. as a machine that develops properties. And it, it is actually one of the biggest, if I’m not mistaken one of the biggest property development companies in Australia. Alright! It is so? Alright! So, if as long as it continues to generate properties like this, then, of course, F P A N F L D which is the Fraser’s logistics trust would have how healthy pack line of properties for them to choose to actually grow in the future, Alright?

Stanley: Again going back to the potential growth of the REIT.

Ian: It’s very important because; you want growing dividends right? So, that one is very important. Okay! but I bought it like Month ago, I mean, quite, quite, quite, a long time ago; not to say a long time, I mean like five, six months or late this year; until I got an Australian, Australian focus kind of real. Until a few months back where it actually changes its investment mandate, and then, when I bought from the REIT that time, it has around sixty properties in Australia. Now they have eighty plus properties. Because; they changed investment mandate, and then they buy another twenty properties, industrial properties;

Stanley: What do they change to?

Ian: Actually now, they now include Europe. In their investment mandate.

Stanley: Okay!

Ian: So, let me, I think they bought a lot of properties in Germany, and as well as in the Netherlands, twenty of them.

Stanley: Okay!

Ian: So you got a chance to; so, of course, you [unclear 45:48] when B.M.W or Volks Wagon come here [unclear 45:53]. Distant are like prime and the quality type of property [unclear 46:07]

Stanley: Okay! I see; when you’re talking about logistics, industrial properties, Right! I think this is a question by Augustine. Of course, the largest logistics REIT in Singapore is Ascendas REIT, and Ascendas REIT previously is very focused in Singapore industrial, but they also bought a huge chunk in Australia now and now with the recent acquisition in the U.K. as well. Do you compare the two when you are buying it, you know? if you have a view on Ascendas? why do you choose this over Ascendas?

Ian: Can be very honest? With you?

Stanley: Okay! So, you know where you don’t see any quality difference between the two, Right!

Ian: Yes and no; I mean I said this week Right! Okay! so it all goes back to how much you can afford stuff like that. Of course, F.L.T. one dollar plus and said this rate is about fifty to sixty to seventy, so to a Malaysian you can own a lot more F.L.T. units than Ascendas REIT. So, so, therefore, that actually influenced part of the decision. And second thing is, of course, the you don’t use it that you is actually a consideration. Alright! So, F.L.T is actually paying a lot more, than six, seven%, over five or six% by Ascendas, a main, a main decision maker, for me.

But in terms of quality, with that say, if those of you who are actually listening out there and say I got some% last week actually to me so good REIT. As a good price. At a good price can; I consider to buy? Well, people consider to buy I believe so. Alright! Is just a matter of price preference,

Stanley: Okay!  Cool. The 7% you definitely attract that—you… Okay! I think our time is almost up but before you go, I think I really want to pick your mind and maybe you can give some advice to our audience especially if someone is just starting out invest in REIT, What will you recommend the first step how do they go about investing in REITs, and what’s, what’s the one, maybe some of the good REITs that they can even consider.

Ian: Okay! there are about forty plus REITs, this in Malaysia and Singapore. So, the first thing to do is to actually… You can actually stop by the properties Alright? so you don’t it; if you are listening from Malaysia you just check out I. G. B. REIT, not asking you to buy, the reason why tell these REITs is because it only has two properties, right? There is a lot of details about these two companies, a lot of details about these two properties, Alright? and the financial report is actually very easy to read.

So, one wisest thing is that you download the annual reports and then you just read them Alright! To be honest with you. This isn’t really asking you to buy Right! then once you’ve got that done then you move on to something which is far more complete. Research more properties, then you take it on from there. of course, if you are coming in from Singapore then you can start off with [unclear 50;24] To me is a very boring bit but, but then he has so much, properties to stop [unclear 50:31] It’s just the Clementi Mall and, you know, I forgot the other one; Paragon I think. So just read, just read the two and you will get some insights, Alright? so that’s the first thing. next thing is, you may want to check out value [unclear 50:53] What it call [unclear 50:54]  I believe, I do not know what.

Stanley: We are we have a date that it has to I have to, of course, thank you a lot of it is returned by you.

someone is just starting out invest in REITs, What will you recommend the first step how do they go about investing in REITs, and what’s, what’s the one, maybe some of the good REITs that they can even consider.

Ian: Okay! there are about forty plus REITs, this in Malaysia and Singapore. So the first thing to do is to actually. You can actually stop by Starring Inga and Lewie Butler, Alright? so you don’t it. if you are listening from Malaysia you just check out I. G. B. REITs not asking you to buy, the reason why tell these REITs is because it only has two properties, right?

There is a lot of details about these two companies, a lot of details about these two properties, Alright? and the financial report is actually very easy to read. So one wisest thing is that you download the annual reports and then you just read them Alright! To be honest with you. This isn’t really asking you to buy Right! Then once you’ve got that done then you move on to something which is far more complete. Research more properties, then you take it on from there. of course, if you are coming in from Singapore then you can start off with [unclear 50;24] To me is a very boring bit but, but then he has so much, properties to stop [unclear 50:31] It’s just the Clementi

Mall and, you know, I forgot the other one; Paragon I think. So just read, just read the two and you will get some insights, Alright? so that’s the first thing. next thing is, you may want to check out value [unclear 50:53] What it call [unclear 50:54]  I believe, I do not know what.

Stanley: We are we have a date that it has to I have to, of course, thank you a lot of it is returned by you.

Ian: Well, you know a lot of effort a lot of top processes, a lot of, you know, brain have been actually burn Just to actually to write this, I thank you, very, very good.

Stanley: yeah [unclear 51:34] just go to Value Invest Asia and you go to our REITs section I think most of the REITs, almost all the REITs we will have we have a report on them so it’s a good way for you to get started on them. yeah, so thank you so much for your time Ian, before you go right, of course, another shout out to our sponsor F. S. M one which is one of the lowest costs brokage now in Singapore, you can just go down to F.S.M one .com and check out their pricing, and a lot of times when we are investing the security and the safety of our money is very important, right?

But when you’re investing with F S M one all our money is kept with custodian bank, local bank in Singapore so, it’s quite safe, and they really offer us one of the best platforms I’ve ever used as a broker, and I’ll give you the last word Ian. Before you go why don’t you tell us a little bit about your; why don’t you tell us a little bit about your website bursaking.com.my and what’s it about.

Ian: Okay! so bursaking.com.my is platform [unclear 52:48] it’s actually meant to be platform, so this is a lot. I’m actually in touch with my fellow subscribers, Alright, so, whereby they will actually tell me; they will actually show me all kind of questions about stock investing. And the banker who actually supports them with all kinds of materials, Alright? for example, we have stock data we have case studies.

Alright? we have all kinds of tools slash intrinsic value calculator and stuff like that. All these tools are provided to this subscribers to actually enhance their skills, and your knowledge when it comes to stock investing, or, of course, some of them are free some of them are actually based on; some of the services are actually available under paid membership. Alright? So, this is actually booserking.com.my, so if you want to know more about REITs and stuff like that, the mind you can actually just you know drop you know drop me an e-mail or you can just go to booserking.com.my to subscribe the free new [unclear 53:58] and stuff like that and you are given a fresh new studies on a weekly basis twice l of belief.

Stanley: Yeah, definitely check that out if you especially you’re interesting investing in the Bursa Malaysia market. Do check out Bursaking.com.my so, thank you very much, Ian, for your time I hope we can speak to you again.  BYE, BYE.

 

END

 

 

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2 thoughts on “Two REITs You Must Watch Right Now!

  • November 9, 2018 at 7:10 am
    Permalink

    Think you need someone to proofread the written word (check of spellings as well) before going into print.

    Reply

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