How to select a good Listed Property Trust???
- Thread starter JIT
- Start date
Good summary. The other thing you prob should research would be:
(a) the level of rental income from overseas (many LPTs have US buildings and derive much of their rental from there);
(b) levels of borrowing as a ratio of assets; and
(c) hedging levels for both $AUD/$USD (important if holding lots of property o/s and also hedging levels for interest rates.
Keep in mind that a lot of the funds that hold US would be borrowing at a low US interest rate, and getting high yields, so would be returning high levels of distributions, which could be affected by currency changes and also interest rate rises - which is why long term appropriate hedging would be needed.
As a whole, though, I think its a great sector (expensive over the last month or two - with a sudden approx 15% rise - but should revert back at some stage to lower levels in my (very) humble opinion.
Now the above obviously applies to individual LPTs. In terms of managed funds - I also would look at UBS Property Securities Fund (I hold this one). MER of 0.8% from memory, a great track record (imho). I will keep on adding new funds to this at appropriate times (ie. when not too expensive).
I would be interested in hearing what you find in terms of your research - pls PM me or post on here if thats ok!
Sorry it took me a while to post - been tied up.
Thanks, this will be a great resource for commercial property investing. Look forward to reading some new posts in this forum.
GSJ
why not Morningstar ratings ???
Sorry for being a "johhny come lately" to this discussion .. but it's a topic I'm interested in since I have some money in my SMSF ..but not enough for a decent resi IP !!
Why wouldn't you just look at (a) the one year performance (b) the five year p. and then (c) the Morningstar rating ... Isn't THAT what the Morningstar boys do ...sort the "good ones" (five star) from the "less than good"ones.
Happy to be educated on this one
... thanks.
LL
Sorry for being a "johhny come lately" to this discussion .. but it's a topic I'm interested in since I have some money in my SMSF ..but not enough for a decent resi IP !!
Why wouldn't you just look at (a) the one year performance (b) the five year p. and then (c) the Morningstar rating ... Isn't THAT what the Morningstar boys do ...sort the "good ones" (five star) from the "less than good"ones.
Happy to be educated on this one
... thanks. LL
As they say, 'past performance is no guarantee of future performance'.
Yes, you could use Morningstar ratings as the basis of a selection system, that will certainly narrow your options to some degree and keep things simpler.
There would still be a bit of 'guesswork' involved to further cut down your choices.
GSJ
Yes, you could use Morningstar ratings as the basis of a selection system, that will certainly narrow your options to some degree and keep things simpler.
There would still be a bit of 'guesswork' involved to further cut down your choices.
GSJ
Clarification
Actually, just read the intial posts in this thread again - I think I was referring to the difficulty in selecting funds of LPT's (with active managers, rather than indexers), and also individual LPT's too - so the title perhaps should be 'How to select a good LPT or LPT fund/fund manager?'
GSJ
Actually, just read the intial posts in this thread again - I think I was referring to the difficulty in selecting funds of LPT's (with active managers, rather than indexers), and also individual LPT's too - so the title perhaps should be 'How to select a good LPT or LPT fund/fund manager?'
GSJ
LPT Sector expensive?
After having invested various chunks in the UBS Property securities fund over the last 18 months or so - and being amazed at the return - I am now a bit annoyed.
LPTs have rallied so much that to add large chunks of money going forward to the sector seems silly.
I would assume the sector would be lucky to be yielding 5 - 6% now as an index?
What are all your views about the price of the LPT sector?
After having invested various chunks in the UBS Property securities fund over the last 18 months or so - and being amazed at the return - I am now a bit annoyed.
LPTs have rallied so much that to add large chunks of money going forward to the sector seems silly.
I would assume the sector would be lucky to be yielding 5 - 6% now as an index?
What are all your views about the price of the LPT sector?
XPJ index up 72 pionts or nearly 3% over the last three days! UBS unit price will soar I suspect.
MJK
Has so far - will go further (1 day lag).
I hold
Although i'm doing very well on unit price growth - yield on this is getting very, very low!!
Feel like the "opportunity" to buy (ie add to) a great investment is gone.Some selection criteria for individual LPT's...
Just mentioning a book I read recently called 'Super Safe Investing in Syndicates and Listed Property Trusts' by Tim Hewat.
Tim describes the following criteria for selecting individual LPT's:
(1) Diversification - choose more than one LPT
(2) Big Caps - select amongst the ASX top 150 companies - of which there may be > 20 LPT's
(3) Low P/E's - aim for LPT's with P/E ratio's of 12 or less; if so it is attractively priced from the value investor's point of view
(4) Price to Net-Asset-Backing - aim less than $1, so if it is80 cents, this is like buying a dollar for 80 cents
(5) Good Dividends - aim 10% or better
(6) Continuous Payouts - he says Benjamin Graham would eliminate shares that missed a single dividend, but he would say aim for dividends paid every year for the last 5 years, without interruption.
(7) Stop Losses - for protection
Those more familiar with the sharemarket may understand this better than I do.
A list of 'Attention Grabbing LPT's' that he thinks are worth considering (book written in 2003) - the ASX codes are:
ADP, AIP, AOP, ART, BWP, CEP, CEP, DDF, DIT, DOT, GPT, GHG, TTF, IOF, IPG, JFG, MAP, MGI, MLE, MOF, MGR, SGP, THG, WFA, WFT.
Any thoughts/comments?
GSJ
Just mentioning a book I read recently called 'Super Safe Investing in Syndicates and Listed Property Trusts' by Tim Hewat.
Tim describes the following criteria for selecting individual LPT's:
(1) Diversification - choose more than one LPT
(2) Big Caps - select amongst the ASX top 150 companies - of which there may be > 20 LPT's
(3) Low P/E's - aim for LPT's with P/E ratio's of 12 or less; if so it is attractively priced from the value investor's point of view
(4) Price to Net-Asset-Backing - aim less than $1, so if it is80 cents, this is like buying a dollar for 80 cents
(5) Good Dividends - aim 10% or better
(6) Continuous Payouts - he says Benjamin Graham would eliminate shares that missed a single dividend, but he would say aim for dividends paid every year for the last 5 years, without interruption.
(7) Stop Losses - for protection
Those more familiar with the sharemarket may understand this better than I do.
A list of 'Attention Grabbing LPT's' that he thinks are worth considering (book written in 2003) - the ASX codes are:
ADP, AIP, AOP, ART, BWP, CEP, CEP, DDF, DIT, DOT, GPT, GHG, TTF, IOF, IPG, JFG, MAP, MGI, MLE, MOF, MGR, SGP, THG, WFA, WFT.
Any thoughts/comments?
GSJ
Many of these codes won't be there any more....
Don't worry, they didn't go bust - many consolidated or changed identity...
eg. the Deutsche and Westfield ones.
Cheers,
The Y-man
Similarly - you would struggle to find these in this day and age!
(4) Price to Net-Asset-Backing - aim less than $1, so if it is80 cents, this is like buying a dollar for 80 cents
(5) Good Dividends - aim 10% or better
Yield is down, down, down, and as unit price is up price to net asset backing is > 1 usually now.
Index Funds/Exchange Traded Funds
Hi,
Yes, the book was written in 2003, so meeting some of those criteria today may be difficult.
For me, selecting an individual LPT, still seems similar to picking stocks - and something that doesn't suit my investor profile - which is very conservative.
I think for the LPT sector to come close to the stellar returns of the last 10 years, in the next 10 years, would be difficult.
Also, picking funds of LPT's/property securities funds, still seems a bit like gambling to me.
I must say that at the moment, the index fund (and ETF - exchange traded fund) market, is very appealing to me. The arguments in favour of indexing vs active funds management is to me quite overwhelming, and it would take a very convincing argument to persuade me otherwise.
Index funds/ETF's - whether they invest in property, local or overseas equities, or other sectors - I feel should form a significant part of the average investor's fund portfolio, with perhaps a smaller proportion in active funds. The market for these funds appear to be much, much bigger in the US, and only just developing in Australia.
Just my opinion!
GSJ
Hi,
Yes, the book was written in 2003, so meeting some of those criteria today may be difficult.
For me, selecting an individual LPT, still seems similar to picking stocks - and something that doesn't suit my investor profile - which is very conservative.
I think for the LPT sector to come close to the stellar returns of the last 10 years, in the next 10 years, would be difficult.
Also, picking funds of LPT's/property securities funds, still seems a bit like gambling to me.
I must say that at the moment, the index fund (and ETF - exchange traded fund) market, is very appealing to me. The arguments in favour of indexing vs active funds management is to me quite overwhelming, and it would take a very convincing argument to persuade me otherwise.
Index funds/ETF's - whether they invest in property, local or overseas equities, or other sectors - I feel should form a significant part of the average investor's fund portfolio, with perhaps a smaller proportion in active funds. The market for these funds appear to be much, much bigger in the US, and only just developing in Australia.
Just my opinion!
GSJ
Check out RAT (Rubicon America Trust) listed on ASX.
Yields right around 10%at current price of $1.15. I think it is trading at a slight discount to NTA not sure exactly.
Importantly its earnings (for about the next 6 years) are completely hedged from US/Aust dollar currency risk.
Its major tenants include the US Govt on very long leases.
And its distributions are largely tax deferred.
Disclosure: I currently own 10,500 RAT.
my cents
Jase
Yields right around 10%at current price of $1.15. I think it is trading at a slight discount to NTA not sure exactly.
Importantly its earnings (for about the next 6 years) are completely hedged from US/Aust dollar currency risk.
Its major tenants include the US Govt on very long leases.
And its distributions are largely tax deferred.
Disclosure: I currently own 10,500 RAT.
my cents
Jase
