The great advantage of buying property on the stock market is that its easier to sell at market related prices than physical property.
Another advantage is as one has not to pay for an entire building and can own as small a part as one wishes for.
In the present circumstances it is probably wise to make property at least a 20% part of ones portfolio. Of such property held it would be wise to hold at least three quarters overseas. Loan Stock such as RPL is now at very reasonable prices with many pure overseas Property Unit Trusts and Ordinary Property Stock shares. Carefully examine all of these.
Remember these are long term investments.
On the local scene do investigate property in the industrial sectors as these usually give better returns than offices,retail or home units.
A very good idea is to read all the older posts as they contain much wisdom and do not go out of date esily.
Jul to Dec 2016
The reason one purchases real estate stock on a stock exchange is and has always been to receive a good income .
Now there is conformity around the world with REIT's having come into being with more or less the same rules. Here in South Africa the property unit trusts have and are still taxed in the hands of investors which has the advantage of being a lower rate than company tax for most investors. The loan stock falls under slightly different rules.
Its absolutely necessary to consult a tax advisor so not to run foul of the receiver of revenue.
I purchased the first PUTS to be launched some 30 plus years ago, they were from SAGE and Standard bank if I remember correctly !
Over this period the capital side of the stocks increased by about 5% per annum on average and the income averaged about 7%.
A very good income indeed. In about three periods in this space of time the capital value doubled almost every decade during short bursts covering a couple of years. This then leads investors to think this real estate is the same as shares and all in sundry climb in only to be disappointed there after!
Last year many new REITS were listed as Europe and Britain were in such a period of fast capital growth. These REITS have now mostly declined by about 20% plus not helped by negative growth there.
I have sold all these and am concentrating on either loan stock and Puts that are local or hybrid that have a local and overseas content. DO YOUR OWN RESEARCH BEFORE PURCHASING AND REMEMBER REAL ESTATE IS LONG TERM.
IN: Hybrids I like are now FFA/B, RDF,GRT, RES LOCALS , SAC,BWN
OUT FOR ME ARE ROC,RPL,TEX.
AS ALWAYS ONLY MY OWN PERSONAL OPINION
REITS are now fully operational, as its a year since we changed to this format.
How ever during the last six months all property stocks have virtually been in the doldrums. Now ever local stocks are starting to out perform the most overseas offerings.
The overseas REITs I feel might be investigating are TEX,RPL,SRE,RES,ROC.
WE HOLD RDF,RPL,TEX at this time.
I have held RDF since it was first listed, how ever I have now sold it as I feel that there too much office space out there. When looking at the local market one should look for niche holdings such as ILU which is concentrating on letting residential property. It is the second trust to do this. Octodec under the Wapnicks have done this successfully for years.
The CEO Gerald Leissner who has headed Arrowhead gives me enough confidence to buy.
CPF is becoming a pure logistics play and is shedding their office portfolio.
I now hold CPF,RPL and INDU
There has been considerable churn in the listed real estate markets on the JSE in the past year as the property trusts ,property loan stock and shares all converted to REITs.
Added to this many new stocks entered the market. All these REITs created excitement and prices moved up to rapidly. One has now to be careful about which one should buy as some are of indifferent quality. Consolidation is needed.
Overseas REITs are still very popular, but one should be careful about where they are situated. Some regions such former Eastern Europe might be drawn into regional political instability. Then the expected returns on some REITs is so high that they are likely to fall if another recession hits the region.
I MYSELF WOULD NOT TAKE A REIT IF ITS PE WAS ABOVE 20 NOW.
DEMAND LOCALLY HAS ALSO SLACKENED.
REITs I hold at the moment are CPF,RDF and RPL.
I am especially excited about CPF as it serves a niche market, namely logistics. It has terminals in many places and its getting rid other industrial and office properties. There is a simply huge new logistic property being developed in Natal which it will also be part of.
In these uncertain times, what with the stock markets world-wide at or near all time highs ,it make sense to me at least to have some assets in property companies. It would seem as if our property unit trusts and loan stocks have retained at least for the moment some of their attractive features they had before converting to REITS !
EARING YEILDS AND PE ON 19/2/2015 ARE AS FOLLOWS
EY % PUTs PE
15 CPL 7
8 EMI 12
6 FPT 16
4 SAC 21
5 SYC 17
The interest paid is usually near the earnings yield.
I should think in these uncertain times as our government grapples with land ownership it would be wise to hold overseas REITS as well.
Gains since Jan 2014 are:-
CCO + 6%
ITU + 9%
NEP + 55%
ROC + 86%
TDH +41 %
A new REIT is STP and also note that TDH is not a true property company as it has other components.
We personally have around 50% of our portfolio in the property
sector at the moment. These are long term holds.
They are:- CPL,EMI,RDF,RPL,ROC.
4/11/2014 Unfortunately in the sector of property where always the very best trusts and loan stock could be found, these days, a great deal of sub-standard REITs are listing! I am at a loss to understand why? All I can think is that they hope to be taken out by the better class REITs at some stage , as it costs a great deal to list on the exchange. In the last dozen new REITs only ATT seems to have any real value.
Since one chooses REITS for a good income stream, it is better to take those that have been around for at least five years and have an increasing income stream. That will then insure that there is some capital growth as well.
The REITs that I hold at the moment are LONG TERM :-
I stupidly sold ROC and ATT although they are new funds on the block when the market went hay wire at the beginning of October. I shall definitely think about repurchasing them again in the near future!
15/9/201 At this stage all property unit trusts and loan stock have been converted to REITS (REAL ESTATE INVESTMENT TRUSTS)
As I have not yet received any yearly financial reports ,I do not know what differences if any or rules relating to will be allowed inside the REIT structure.
How ever I have noted that local South African REITS have been heavily out performed by REITS on our exchange that concentrate on overseas portfolios. This has happened as there is a certain nervousness about the governments policies going forward re land reform. This is quite silly as such measures if ever adopted will be discussed by parliament and then passed. So if passed would give plenty of time to exit local REITS.
I do remember when the stock LIBERTY INTERNATIONAL before it was broken up before the recession had reached a very high PE ratio. When the recession hit in 2008 it lost about 40% of its value. The point that I am making is that most of these overseas REITS are so overpriced that they do not justify the price that is being paid for them now as they are ever unlikely to grow into those prices.
On the other hand there many local REITS covering the South African property market that are reasonably priced. After all ,these days on the stock exchange its so easy to sell if it seems that legislation that does not suit one is going to be implemented.
HERE IS A LIST OF LOCAL, LOAN STOCK AND UNIT TRUSTS THAT ARE NOW CONVERTED SINCE 9/JULY/2009 AS THE RECESSION ENDED THAT CONTIUE TO DO EXTRAORDINATELY WELL,WITH GOOD MANAGEMENT STRUCTURES-
CAPITAL GAIN TO DATE SEPT 2014
REDEFINE +92 %
CAPITAL +142 %
DO REMEMBER INTEREST RECEIVED WAS THE MAIN PURPOSE OF THESE ISTRUMENTS AND CAPITAL GAIN WAS INCEDENTAL.
A VERY GOOD OVERSEAS REIT AT THE MOMENT IS ROCKASTLE(ROC) WHICH HOLDS ONLY OVERSEAS PROPERTIES WHICH HAS RESILIENT,CORONATION(INDIRECTLY) CAPITAL,NEPI AND AS STOCK HOLDERS. ITS PE IS NOW STILL UNDER 12 AT THIS JUNCTURE.
AT A LATER STAGE I SHALL MENTION REITS THAT I FEEL HAVE GOOD POTENTIAL.NOT ALL THE ABOVE HAVE REASONABLE PE's AT HE MOMENT.ALWAYS DO YOUR OWN RESEARCH AS THIS IS ONLY OUR PERSONAL OPINIONS.
7/4/2014. Really I am having trouble understanding the new designations within the various sectors ,as many different types of property have been thrown together. There was nothing wrong with our original unique labels, but all the "new" ones was supposedly done so that overseas investors would also understand our structures! New legislation which is in the pipeline might help to make sense of it all!
I bought into the very first property unit trust and loan stock all those years ago so I feel I have a fairly good understanding of property.
At the moment I hold Capital Unit Trust which has a return of 15% per annum interest.
As well as the Redefine loan stock and the RPL overseas share(I think), as I am uncertain if it has shed its loan stock status.
THE NEW REIT(REAL ESTATE INVESTMENT TRUST) LIST. Not all are in yet so some more might be added in the months ahead. As PUTS and PLS still within the REIT structure have different mandates read below for info.
In time I hope to list the new REITEs within their types.
SOME INFORMATION ABOUT LISTED PROPERTY.
1.SOUTH AFRICA HAS INSTITUTED ITS OWN REIT(REAL ESTATE INVESTMENT TRUST) REGULATIONS SOME YEARS AGO.THEY WILL SOON UPGRADE TO OVERSEAS STANDARDS.THIS WILL THEN PLACE THE LARGEST PROPERTY TRUSTS ON OVERSEAS INDEXES,WHICH MEANS FOREIGN INDEX FUNDS WILL THEN BUY OUR TRUSTS.THIS WILL THEN BE A GOOD WAY FOR THEIR MEMBERS TO OBTAIN PRIME PROPERTY IN OUR COUNTRY WITH OUT RAISING THE IRE OF THE GOVERNMENT,THAT WANTS TO RESTRICT FOREIGN OWNERS AS THEY FEEL THEY PUSH THE PRICE OF LOCAL PROPERTY TOO HIGH ,PUTTING IT OUT OF THE REACH OF LOCALS.
2.THESE PLS AND PUTS ARE UNITS AND NOT SHARES AND USUALLY PAY OUT ALL THE RENTAL INCOME WITH OUT HOLDING TAX.
3.PUTS AND PLS (PROPERTY UNIT TRUSTS AND PROPERTY LOAN STOCK) PRODUCES INTEREST INCOME ,WHICH IS FULLY TAXED IN THE HANDS OF THE OWNER OF THE UNITS.NOT IN THE HANDS OF THE COMPANY.USUALLY AN INDIVIDUAL PAYS TAX AT A LOWER RATE THAN A COMPANY ,WHICH IS A GREAT ADVANTAGE FOR RETIREES.
FOR THE LATEST FIGURES SEE BELOW:-we take no responsibility for errors or omissions,do your own research before trading
UPDATE JANUARY 2014
PROPERTY UNIT TRUSTS are now coming into their own. Very safe and with some good interest income should be looked at now. The government only favours those that have strong BEE credentials. At this time Captal(CPL) and some others, have used this to their advantage selling off parts that don't meet their objectives, but help add to their capital needs, with out raising more capital the traditional ways (see units prices below comment)
When shares performed poorly, bonds and real estate were in vogue ,ratcheting up some spectacular gains, but now shares are coming into their own and the tenuous connection between bonds and property capital gains are supposedly causing them to retreat in price! This is true of bonds, but property should never be bought for the reason of capital gain,but rather the increasing stream of income that can be obtained which out performs fixed deposits and any other income producing item. The capital gain should be purely incidental! Yes they have retreated quite rapidly as the recession is ending, but are now fairly cheap with yeilds between 7 and 14 percent being the norm. Usually the income stream decreases but usually only by no more than a couple percent. This happened after the last couple of recessions. Always go for the more established older companies as their managers know just what to do.
PROPERTY UNIT TRUSTS 20/1/2014
PAYED PER ANNUM
NOTE INTEREST IS FULLY TAXABLE IN THE HANDS OF THE OWNER OF THE UNITS ,WHICH IS USUALLY AT A LOWER RATE THAN THE COMPANY RATE,ANOTHER ADVANTAGE.
NO FURTHER UPDATES WILL BE MADE BELOW AS REITS WILL NOW REPLACE THESE LISTS.USE THE LISTS BELOW FOR COMPARISONS ONLY.
PROPERTY LOAN STOCK CAPITAL GAINS 6 Feb 2012 to 20/8/2013
ACP + 5%
GRT+ 14%(On Top 40)
IPF + 30%
Newer Property Loan Stock
1/1/2013 TO 20/8/2013
AIB + 7 %
ANP - 3 %
DIA - 2 %
DIB - 5 %
DLT - 6%
REB + 2%
VIF - 9%
HISTORIC PROPERTY GAINS
In about this same four year period almost half of the TOP 40 showed a negative capital growth,the rest showed an average of around 20% and about a handful showed reasonable growth.
9/July 2008 to 16/Aug 2012
ACP + 116 %
CPL + 142 %
EMI + 58 %
FPT + 75 %
GRT+ 124 %
HPA+ 39 %
HPB- 79 %
OCT+ 52 %
PTXSPY (PROP TRUST) +98%
For more information on REAL ESTATE go to part A ;