16.4%? Should You Buy These High Yield U.S Office REITs?
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- เผยแพร่เมื่อ 25 ก.ค. 2024
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U.S. office REITs, listed in Singapore, are currently offering double-digit yields up to as high as 16.4%! Should income investors to have a look at them right now? Why are the yields so high, and are they sustainable? We cover this and more in our latest episode, and whether this is a great dividend opportunity or another high yield-high risk proposition...
00:00 Introduction
01:03 Dividend withholding tax?
02:00 Type of assets
06:25 Why are the yields so high?
12:15 Will U.S. office REITs recover?
17:34 Is this an opportunity to buy?
21:07 Dividend Machines
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Excellent cover of the pros and cons of the SGX US REITs. While Fed's current focus is on combating inflation through a series of interest rate hikes, there are concerns that if the hikes are overdone, the US economy will turn recessionary. As it is, earnings of major US Corporations have dropped, layoffs have started especially in the tech sector (with others following behind) albeit overall employment numbers remain strong. If recession does happen, employee layoffs will exert greater pressure on these REITs over and above the new norm of Work From Home. These REITs are in for a tough time ahead
Thanks Aloysius! Yes, they are pretty much affected by macro factors beyond their control.
love the coverage of SG reits -- especially since SG (and HK) are unique in that land is extremely scarce and hence real estate is a precious commodity. keep such coverage of SG stuff coming please!
Thanks Des! Will do!
@the Fifth person is it the time to go in to US REIT again even after the correction over past 9 month?
Should I sell all ?
Hong Kong office vacancy rate is 12% and poor resale opportunity.
Dear Fifth Person, on the point of book value, if we take liquidation value as a benchmark instead, do you think there still exists a margin of safety for REITs like Manulife?
There is a risk that asset values will also decline as rents/occupancy continue to fall.
I take a contrasting view to you guys. No matter it's of relatively high price in the past and even cheap now, the conclusion is not to buy and stay away from risk / instability. This is quite funny actually. Back to strategy side, in worst case if it takes 10 years to rollback to the pre-covid level, and assume that the yield nominator (ie, the rent) cut by another 1/3 from current say 13%, i am 87% covered by dividend payback. Let's say the prices further dive another 20% before the buttom (ie assuming another 20% further loss), i still have 67% for 10 years, ie, 6.7% p.a (WAY over the SGX T bill of below 4%!). NOT TO SAY their price could bounce back to higher level.
Live case in HK in 2009 after the US financial turnmoil - the champion reit and several others. I couldn't remember exactly the yield but it could be as low as 18%, but the real trophy in the core CBD attracted somebody (i'd prefer to say not me!) and she progressively accumulated over six months (surely no one shot deal!), and then years later they doubled the price, with 10 years of high yield locked.
However, this recent fall in HK's REIT market is beyond imagination and that the "she" had joined S-REIT several years and hold no H-REIT.
Hi Ernest, we actually have the same view which we stated in the roundtable: we're avoiding the U.S. REITs right now
@@TheFifthPersonChannel "Avoiding US REITs'? Only office REITs right? How about the SGX listed United Hampshire? Trading at double digit yield and with stable earning like Sheng Siong..... Thanks
That's why u must see the vacancy rates like a hawk.
Opportunities for hyping up back to office, probably beers and happy hours every day without fail lol
🍻
You guys should compare KepPacOak vs Alexandria Real Estate Equities, US Prime vs Boston Properties. Both pairs are similar in term of 'occupancy rate'. But both KepPacOak and US Prime yield are few times higher than US listed REIT, and tax free.
Both are bad choices. Management not up to par.
Finally no more sg stuffs. You guys are back!
Haha. Still technically discussing S-REITs here.
downvote this comment.
Do check why the dividend yield is so high? When so many tech companies are letting go staff. Post pandemic are not normal. The US Reit is not the same as in SG.
Hi Edwin, thanks for asking! We covered this in the episode: the yield is high because the unit price has come down.
I don't think that is true anymore as the US has changed their laws recently to treat loan repayment interest as dividend. Better check before buying into it.
Hi Edwin, there is no withholding tax. Relevant links below:
investor.manulifeusreit.sg/newsroom/20221018_120315_BTOU_4P2MPU4CGNUBAD9B.1.pdf
investor.primeusreit.com/newsroom/20221025_075335_OXMU_JNTPVU4UJO0GAHLC.1.pdf
links.sgx.com/FileOpen/KORE%20-%20Announcement%20on%20Qualified%20Notice.ashx?App=Announcement&FileID=740542
From the perspective of someone in a big tech MNC, I personally don’t believe anyone located in the individualistic cultures (Europe, North America, Australia New Zealand) will ever go back to working from an office. Other managers I’ve spoken to believe it will gradually come back over the next 3 years or so.
Interesting. We're actually curious to see how this plays out over the next few years among different cultures. Thanks for sharing, Darryl!
Hehe lemon brothers
Turned out to be a lemon after all! 🍋