Data Centers Play in S-REIT Space

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With wider adoption of e-commerce, Artificial Intelligence and Cloud Computing, this technology disruption will change the way how we work, how we spend and how business do business in future. The adoption of 5G will accelerate the rise of digital economy and the consumption of data. Thus, we are going to see the huge growth in Data Centers in the REIT space moving forward.

The REITs who have the data centers in the current / future portfolio:

(1) Keppel DC REIT (AJBU.SI) – 100% (AUM$2.9B) . 18 Assets across 8 countries.

(2) Mapletree Industrial Trust (ME8U.SI) – 38.7%. 28 Assets (mainly in US)

(3) Ascendas REIT (A17U.SI) = 5.2%.

(4) Capitaland Retail China Trust (AU8U.SI) – Expanded Mandates to include Data Centers in China.

(5) Cromwell European REIT (CNNU.SI) – Have announced an acquisition of Data Centers in Europe in 2021.

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The following table is extracted from https://stocks.cafe/kenny/comprehensive

As we can see from the above comparison table, there is a high correlation between the Price/NAV valuation vs Percentage of Data Centers in the portfolio. This is a strong evidence that Data Centers are trading at a premium to other property classes. Below regression analysis (unfortunately there are only 3 data points) proves a very strong correlation with R-Square of 0.9983!

My Reasons of doing this analysis

(1) To Spot Investing Opportunities in S-REIT (which REIT to buy and the entry level)

(2) To Identify the Valuation Gap (Price/NAV) of REITs with and without Data Centers

(3) To Identify the upside potential (capital gain) if any REITs to acquire Data Centers

(4) To model the “Should Price/NAV” with the % Data Center in the portfolio (Price/NAV = 1.0676 * %DC + 1.2639)

Let’s see whether my modelling works after Capitaland Retail China Trust and Cromwell European REIT acquire the data centers into the portfolio.

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Kenny Loh is a Senior Consultant and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Sympsosium and Invest Fair. 

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The 8 Best Ways to Invest In Gold in 2021

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The Covid-19 pandemic has brought about lots of volatility, dividend cuts, and uncertainty in the stock market. However, there is one asset that is considered a safe-haven: Gold. It is also highly liquid, and can be easily converted back to cash.

Gold holds its value well, and is an inflation hedge. However, unlike gold, fiat currencies are subject to many factors, which can include inflation. For example, in 1975, the price of gold is about US$5000/kg. Today, it ranges USD60,000/kg. However, the purchasing power of a USD5000 bill would have dropped significantly.

Therefore, gold prices always spike in periods of uncertainty and recession, for example, in the current pandemic. Many investors place their money in gold as a safe haven.

8 Ways To Invest In Gold

8 Ways to Invest in Gold

  • Gold Jewelry

Easiest to obtain, however most gold jewelry do not hold their value well, with the exception of collector items. They can either be sold and melted down for scrap, or it can be sold as a collector’s item. For example, gold bracelets from luxury brands, gold watches etc.

  • Gold Bars

Gold bars are highly liquid, and are relatively easy to obtain. Prices can vary depending on purity, size and weight, and whether they are certified as investment-grade.

  • Gold Coins

Similar to jewelry, gold coins are also collector items. Its value depends on rarity, metal quality, and the artwork on the coin. Depending on these attributes, its value can skyrocket into the millions.

  • Gold ETFs

Gold ETFs are exchange-traded funds (ETFs). They are convenient, low cost, and highly liquid, and instead of a investor physically holding onto gold, they are traded on the stock market, and are backed by physical gold stored in a bank vault.

Gold Etfs

  • Gold Mining Stocks and Mutual Funds
  • Gold Futures
  • Gold Royalty Mineral Interests and Royalty Trusts 
  • Gold Certificates 

Gold certificates are issued for a quantity of gold stored in a bank vault.

There are many ways to invest in gold with different instruments with Pro/Cons in each of them.  Investors is advised to choose a suitable instrument according to their preference and risk appetite.

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Money and Me: An overview of S-REITS, value rotations and REITS paying out higher dividends

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23 November 2020 

Money and Me: An overview of S-REITS, value rotations and REITS paying out higher dividends

Michelle Martin speaks to Kenny Loh, REIT Specialist and Independent Financial Advisor to discuss an overview of the REIT sector,  value rotations, SGX Reg Co statement that REITS must do all they can to boost investor confidence, whether Ascendas REIT is a good buy and REITS that are paying out more dividends.

  • Ascendas REIT’s preferential offering
  • Why Hospitality and Retail REITs are rallying
  • Why some REITs are at all-time high prices despite Covid-19
 

Listen to his previous market outlook interviews here:

Kenny Loh is a Senior Consultant and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Sympsosium and Invest Fair. 
 
You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
Continue ReadingMoney and Me: An overview of S-REITS, value rotations and REITS paying out higher dividends