[sgbuffett]

Before we go on to the article. I want to share my own experience. This is what happened to me for land lease.

Many months ago I bought some Landlease Reits. Quickly ran through the basics but my strategy was to buy a collection of Reits not one so I collected Suntec , Landlease, Capital Land, Maple etc. I did not intend to buy after that round and hold whatever I bought forever. The pandemic was a one off event that cause Reits to plunge and for me it is one off investment. I am not a fan of Reits to buy regularly. ...I think the total returns us not impressive overall if one buys when they are fully valued.

What I realise is compared with normal stocks, Reits have a lot more corporation action. Some examples are the restructuring of Maple Reits,..numerous rights issues etc.

One of these is Landlease rights issue. I got a small number of rights to buy the stock at 72cenfs and the stock was trading at 78cts at the time a big 8% discount. I decided to try my luck and subscribe to 5 times in excess of the rights I was given. 

Guess what I got all the excess rights Isubscrubed for.. this happens when mnay investors choose not to take up the rights and let it expire worthless. It could be they ran out of cash to subscribe given so many rights issue were made in the last 6 months involving Reits. Not doing so results in getting diluted and losing out to other investors who take up the rights 

What I  learn from my short experience as a reits shareholder is you need to set aside cash to take advantage of these rights. To keep the investment positions contain you need to keep the dividends collected instead of reinvesting them immediately to deal with rights issue. The overall cashflow may not be high if you are thinking of passively living off Reits without selling them.

https://financialhorse.com/why-i-bought-...obal-reit/

[ROFLMAO]

Reit managers earn big buck when they make new acquisition ..So reit will always have right issue problem.. The worst kind of reit manager is that they just want to earn fee and acquire lousy property ( or maybe forced to buy unwanted property unload by the sponsor)

[sgbuffett]

Reit managers earn big buck when they make new acquisition ..So reit will always have right issue problem.. The worst kind of reit manager is that they just want to earn fee and acquire lousy property ( or maybe forced to buy unwanted property unload by the sponsor)

Yeah I realised that. It's like they give you $10 in dividends then take back $100 in rights.

They should renew the property by selling off low quality ones and buying high quality property.

But turn over should be kept low. It cannot be a reits find property to buy every other year as goods ones are hard to come by and the manager is not selective if he is buying often.

The interest conflict between sponsor and manager is also something that concerns me. The developer sponsor now has a ready buyer for his developed assets and the Reits become a vehicle for off loading. The manager is often closely related to the sponsor.

[ROFLMAO]

Yeah I realised that. It's like they give you $10 in dividends then take back $100 in rights.

They should renew the property by selling off low quality ones and buying high quality property.

But turn over should be kept low. It cannot be a reits find property to buy every other year as goods ones are hard to come by and the manager is not selective if he is buying often

One tell tale sign will be the reit DPU keep on decreasing even after new acquisition

[sgbuffett]

One tell tale sign will be the reit DPU keep on decreasing even after new acquisition

Yes. As a rule, the DPU must always rise with new acquisition. Otherwise why acquire when your existing assets are yielding higher than the one you are buying.