Good REITS

[Piston Broke]

Value emperor, if your calculations which assumed no growth in property values, gave you a valuation of about 35 -40 cents a share

It's called "Buy & Pump!"
Or "everyone else should buy too, cause i did".

 

[whatever123]

It's called "Buy & Pump!"
Or "everyone else should buy too, cause i did".

Wouldn't that only work on a shares forum? There only seems to be a few people interested in REITs here.

I generally have no problem with other forumites suggesting stocks to look at. My best share investments have been found in this way. How else would one find undervalued companies when there are so many listed ones - Shares magazine?

What I don't pay attention to is people pretending to have insider knowledge on some speccy miner or biotech. Thats almost always false!

So far the discussions have been focussed on actual numbers and forecasts much like what you expect to see on a property forum. Probably one difference is that the discussions on this thread actually consider the effect of falling property values on the value of the investment.

 

[Intrinsic_Value]

there are BOTH risks and opportunities associated with RNY.

cant comment further sorry.

 

[Value Emperor]

there are BOTH risks and opportunities associated with RNY.

cant comment further sorry.

I think you'll find that with any share.
The value investor looks for those where the market has overestimated the risks and undervalued the opportunities.
This isn't easy to do as it requires a lot of independent thought.

When I spotted RNY , it seemed to fit that description well but knowing that I'm fallible, I wanted to get some opinions from experienced property investors who may be able to point out something I've missed.

It reminds me of when I first got into investing in Resi years ago. Hardly anyone was into it. I had found something that seemed like a good investment. The rent was paying 2x the interest and everything else stacked up. The responses from the few I asked about it were:
a) property investment is just one big hassle?
b) property values in X have not moved in years
c) better to buy shares like BHP

A few years and no hassles later, I sold for a bit more than double what I had paid and made good earnings during the holding period.
It was probably a defining moment in my independent value investor journey!

Forward to now and it feels like the same opportunities are presenting themselves in certain commercial investments.

 

[Value Emperor]

Yes I have. Its still early days but looks like things are warming up.

Then I read articles like this about whats happening and I get very excited!

http://dealbook.blogs.nytimes.com/2010/06/09/its-just-a-few-deals-but-office-market-is-stirring/

"When S. L. Green bought Reckson, the capitalization rate, or cap rate, was 3 to 4 percent, Mr. Rechler said. When investors began buying again last fall, the cap rate had climbed to 7 to 8 percent. Now, rates are generally 5 to 6 percent. The decline in cap rates means an increase in value of 35 to 50 percent, said Michael Knott, an analyst for Green Street Advisors, a research company in Newport Beach, Calif. “It has been a stunning reversal,” he said."


I doubt this news has hit the market in OZ just yet. Information flows slowly on low Vol stocks.
Value emperor, if your calculations which assumed no growth in property values, gave you a valuation of about 35 -40 cents a share ( I can't be bothered scrolling back), what would it do to your valuation if the above 35-50% valuation increases is true?
I'm guessing quite a lot, seeing that RNYs properties were last valued at a cap rate of 9, and the market has then priced them even lower still.

Nice find W123. Not sure if the 35-50% returns are being experienced over the whole tri state region. Long Island will take a fair bit longer from my understanding.
If the RNY portfolio 'could' achieve even 35% increase in its portfolio it would look good.

On a per share basis they currently have (USD): -
Assets $1.42 per share
Debt $1.03 per share

An increase of 35% would make it
Assets $1.92
Debt $1.03

You'd have to say that would make a 12 cent share price seem cheap.
Bear in mind this is completely hypothetical and it assumes reports of 35% increases are likely. The same calculation with a 35% decrease would mean RNY is underwater.

So essentially a bet on RNY is a bet that the comm property market in USA has hit bottom. So its not for everyone, but with cap rates at around their historic highs and no new supply coming, it seems a realistic assumption to make that values could be near the bottom of the cycle.

 

[Value Emperor]

Quote:
Originally Posted by Blue Card!

and if one of them is being "bought up" by a large fund, chances are, you've missed the boat.

Maybe not. If you look at the ASX annoucements for RNY.
The Intelligent investors Value fund has been accumulating a 5% shareholding of the trust at around 11.5-12.5 cents a share over the last few months.

They are known to do good thorough research.

Current price, Bid 12.5, Ask 13 cents.
NTA per share is 40-47 cents depending on whether you use the annual report or my more conservative valuation.

Looks to me like the boat has only just started boarding the passengers.

DYOR all, but I notice that the Intelligent Investor Value fund is still buying up big up to this week. They now have a 6% stake.
You can bet they are the buyer that has picked up much of the 3 million shares traded so far today.

These guys are either very smart and know a good thing when they see it, or aren't too bright at all for spending so much of their investors funds on something so "high risk".
Time will reveal.