Simply put, “book value” refers to the overall worth of a REIT’s tangible assets.
When we split the REIT’s market price by its value, we get a value that we may use to determine if the REIT is overpriced. A REIT that is expensive will have a P/B Ratio of more than 1.5x, but anything less than 1.2x seems appropriate in today’s market.
Keppel DC REIT trades at a price-to-book ratio of 2.22x (P/B ratio) at its current price of $2.53 a unit, which is clearly expensive.
Why did Keppel DC REIT drop?
The price drop in Keppel DC REIT, according to our research expert, is most likely related to recent acquisitions and increased loans. Many investors believe Keppel’s recent operations were badly executed, causing its stock price to plummet.
Is it a good time to buy REITs now Singapore?
With COVID-19 in place and REIT prices in most sectors declining, this appears to be a good moment to invest in REITs. Singapore REITs actually plunged 70.56 percent during the global financial crisis of 2008. So, if you’re eager to go into REITs today and watch your portfolio grow, you must also be willing to watch it shrink.
Time in the market, as with any investment, is preferable than timing the market. As a result, always prepare ahead and assure your ability to hold.
If you’re unfamiliar with REITs, REIT stands for Real Estate Investment Trust, and S-REIT stands for Singapore REITs.
A REIT is a type of real estate investment trust that pools money from investors to invest in a portfolio of income-producing real estate properties.
REITs vary from regular equities in Singapore since they have a special tax transparency treatment. To be eligible, Singapore REITs must pay out at least 90% of their taxable revenue to unitholders in the same year that the income is received.
Disclaimer: This list is by no means complete, and anyone considering investing should conduct their own research. Information is current as of September 9, 2020.
Is Keppel DC REIT?
The distribution per unit (DPU) of Keppel Data Centre (DC) real estate investment trust (Reit) was S$0.02462 for the third quarter ended September 30, 2021, up 4.5 percent from S$0.02357 a year ago.
The increase in DPU was attributed by the Reit’s manager to contributions from DPU accretive acquisitions and asset enhancement initiative (AEI) projects. The Eindhoven Campus in the Netherlands, which has two data center facilities, was purchased for 37.2 million euros (S$58.2 million) in September 2021.
Gross revenue increased 2.5 percent to S$69.3 million in the quarter, compared to S$67.7 million the year before.
What does Keppel DC do?
The first data centre real estate investment trust to be listed in Asia, Keppel DC REIT invests in a diversified portfolio of incoming-producing real estate assets principally utilized for data centers, as well as real estate and assets that serve the digital economy.
Why are Singapore REITs down?
The rental revenue of REITs will almost probably fall in the current situation caused by Covid-19. The hospitality trusts are the most vulnerable because to a dramatic drop in tourist numbers worldwide as practically every country is on lockdown. They will feel the pain right away.
Mall REITs with turnover rent agreements will be impacted as well, since their tenants’ revenue will drop dramatically, forcing them to provide rent subsidies. In the short term, office and industrial REITs with lengthier lease lock-ins (or WALEs) will do better, but as the economy declines, corporations will reduce their leasing demands, and rental rates will fall as well.
When earnings drop, so do asset values. When appraisers look at a property with a lower earning capacity, they will lower the price. This could force the REIT to sell assets or execute a rights issue in order to meet its gearing covenant or the MAS’ leverage ceiling (currently set at 45 percent debt-to-asset ratio).
Prices are pushed even lower in a dismal economic situation with low market sentiment, as many asset owners want to sell. In order to determine asset prices, valuers must compare similar transactions and reduce their valuations in lockstep.
All of this creates a vicious cycle that usually ends with a very dilutive rights offering at a cheap price to “save” the REIT.
As an investor, just when you think things couldn’t get much worse because you’re already losing money on the REIT’s stock, you get a capital call that demands you to pay additional money or risk being substantially diluted.
Why did Mapletree Industrial Trust drop?
In a regulatory filing posted after trading hours on Tuesday, the Reit recorded a 17.9% increase in distributable income for the nine months ending in September, although DPU fell 30% year over year (Oct 26). The rights issuance in February, which decreased DPU from $0.0331 in 9M FY20 to S$0.0195 in 9M FY21, including the SS$0.0065 payable on December 17, was substantially to blame for the reduction. On Tuesday, the Reit’s units rose 1.9 percent, or S$0.005, to S$0.026.
Is 2021 a good time to buy REITs?
So far in 2021, real estate investment trusts (REITs) have performed admirably. The real estate sector’s almost 30% total return (price plus dividends) until the end of August handily outperformed the S&P 500 Index’s 21%+ return.
Even better, several variables indicate that REITs will continue to outperform other assets in the remaining months of 2021.
The first is a lack of high-yielding crops. Both the 10-year Treasury note and the S&P 500 are currently yielding a pitiful 1.3 percent. REITs, on the other hand, pay out more than double that, with an average yield of 2.7 percent, making real estate equities one of the best-paying sectors in the market.
Does Buffett like REITs?
Warren Buffett and his holding firm, Berkshire Hathaway (BRK. A) (BRK. B), rarely invest in real estate, but when they do, they prefer REITs over rental properties, as we highlighted in a recent piece.
Is REIT a good investment in 2021?
Three primary causes, in my opinion, are driving investor cash toward REITs.
The S&P 500 yields a pitiful 1.37 percent, which is near to its all-time low. Even corporate bonds have been bid up to the point that they now yield a poor return compared to the risk they pose.
REITs are the last resort for investors looking for a decent yield, and demographics support greater yield-seeking behavior. As people near retirement, they typically begin to desire dividend income, and the same silver tsunami that is expected to raise healthcare demand is also expected to increase dividend demand.
The REIT index’s 2.72 percent yield isn’t as high as it once was, but it’s still far better than the alternatives. A considerably greater dividend yield can be obtained by being choosy about the REITs one purchases, and higher yielding REITs have outperformed in 2021.
Who owns Keppel REIT?
Keppel REIT, which debuted on the stock exchange on April 28, 2006, is one of Asia’s premier real estate investment trusts (REITs), with a portfolio of Grade A commercial assets throughout Asia’s important business centers.
Keppel REIT’s goal is to provide Unitholders with consistent income and long-term growth by owning and investing in a portfolio of high-quality income-producing commercial real estate and real estate-related assets throughout Asia.
The REIT manages over $9 billion in assets in Singapore, as well as the important Australian cities of Sydney, Melbourne, and Perth, as well as Seoul, South Korea.
Keppel Land Limited, a wholly-owned subsidiary of Keppel Corporation Limited, is the sponsor of Keppel REIT. Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte Ltd, is in charge of it (Keppel Capital). Keppel Capital is a leading asset manager in important worldwide markets, with a diversified portfolio of real estate, infrastructure, data centers, and alternative assets.
Seller is not a foreign person
When the vendor is not a foreign person, the purchaser of a USRPI is not required to withhold. The purchaser can validate the seller’s non-foreign status by getting a withholding certificate from the seller confirming that the seller is not a foreign person under penalty of perjury. The Treasury Regulations specify the format for withholding certificates.
Qualified foreign pension funds (“QFPF”)
FIRPTA and FIRPTA withholding are not applied to any disposition of a USRPI held directly or indirectly (through one or more partnerships) by a QFPF or an entity entirely owned by a QFPF, as well as distributions received from a REIT. A QFPF is any trust, corporation, or other organization or arrangement that is I created or organized under the laws of a country other than the United States, (ii) established to provide retirement or pension benefits to current or former employees, (iii) subject to government regulation and provides annual information reporting about its assets and income, and (iv) subject to government regulation and provides annual information reporting about its assets and income.
Despite the fact that FIRPTA does not apply to QFPFs, they may nevertheless be subject to US federal income tax on USRPIs. For example, income and gain from a USRPI that is regarded as ECI without respect to FIRPTA (e.g., income from directly held US rental real estate investments) is nevertheless taxable in the United States. In addition, unless a tax treaty reduces withholding, ordinary income dividends from a REIT may be subject to regular 30 percent withholding.
Publicly traded exception
If a class of stock in a corporation is regularly traded on an established securities market, stock in that class is not treated as a USRPI in the hands of a person who held 5% or less of that class (or ten percent or less in the case of a publicly traded REIT) at any time during the previous five years (or, if shorter, the seller’s holding period) at any time during the prior five years (or, if shorter, the seller’s holding period). As a result, if a foreign owner held less than the threshold percentage of shares during the relevant period, the sale of shares of a regularly traded class of stock by such foreign owner will be exempt from FIRPTA and FIRPTA withholding.
Domestically controlled REIT’s
Gain from the sale of shares in a “domestically controlled” REIT is not subject to withholding tax under FIRPTA because shares of a “domestically controlled” REIT are not recognized as a USRPI. A “domestically controlled” REIT is one in which non-US people possessed less than 50% of the fair market value of its shares, directly or indirectly, during the five years preceding the date of disposition or, if shorter, the time during which the REIT existed. Certain “wash sales” of domestically owned REIT stock, as well as the determination of REIT share ownership, are subject to special requirements.
Taxable sale of USRPI by USRPHC
FIRPTA does not apply to a stock disposition by a USRPHC if the corporation holds no USRPIs on the date of the stock disposition and all USRPIs owned by the corporation during the previous five years (or shorter holding period) were disposed of in transactions in which the full amount of gain realized was recognized for US federal income tax purposes.
