Reits

[Ridin-High]

Heheh well don't hold out who's the lender? =D

This rate because over a certain amount tho? Wether it be 100k, 250k, 500k, 750k etc.

Had a quick surf around, couldn't find the lending ratio's for that period from CBA.
So you saying during GFC the lendering ratio's dropped dramatically? So a double wammy of sorts, Eg Share price dropped So LVR went up, but then margin lender goes "well we are changing the LVR we allow on those stocks you are holding from 70 to 50%"??

 

[Value Emperor]

IV , you will be interested to hear I have sold my CWT.

In hindsight it was a fairly rushed purchase as I didn't think it would hang around 22 cents for long. When I reflected on some of the posts on here and ran some of the numbers through my 'analyser' I just couldn't justify holding.

My expectation is that it will trade in the range of 18-28 cents for some time.

So there was insufficient upside to give me a buffer in case I'm wrong hence I'm not interested in holding. If it gets down to 18 cents I may review.

I was lucky to pull out a 10% profit from it.

 

[steveadl]

Thanks for the feedback.

I'll address each person.

Stevedl - Yes i agree the yields on EFT's are much lower then other single stocks and reits that i have had a look at. I've had a look at some LIC's which have a slightly higher yield.

Leverage and compounding after a 10-20yr period makes what seems a high short fall to cover now relatively small down the track.

I was doing some numbers the other night, a case study to speak.

A share that was valued in early 90's in a LIC was around 1.50 per share, now is currently 4.80 (did reach high 6's before gfc)

say purchase 100k of them @ 1.50 = 66666 shares
Current Value = 66666 x 4.80 = $320,000

Interest on 100k loan over 20 yrs (using 9% I/R) = $180000
Minus tax rebates on my tax bracket = $126,000

Profit from shares (not taking into consideration the interest) = 220,000

$126,000 divided by 20yrs = $6300
Profit 220,000 divided by 20yrs = $11,000

So im giving $6300 to get $11,000

6300 in the bank paying 8% interest = 6804
LOL wow alot of numbers their for anyone interested in having a bo peep

That's how im looking at it Steve, The same theory i use for residential property investment.

The figures do look good RH. Sounds like you're looking at investing along similar lines to what I am. The difference for me (at the moment anyway) is I'm choosing shares with higher yields as until this GFC is 'more over' I'm still expecting slower growth rates in business, so to compensate don't want as large a shortfall in the stocks I'm holding. If on the other hand I'm being too cautious and growth returns stronger than I believe, then I'm open to the increased upside. In the mean time though, the portfolio I've been accumulating over last couple months is CF+ from the start.

Also bare in mind with your figures above the growth rate you're assuming. Granted you left out dividends, which with LIC's would be a substantial extra ROI over 20yrs, but here's another example to do your calcs. on. ARG - had these back in 1997 from memory at $4.50 - today they're $6. Ok 13yrs, not 20 - but run those figures through the same as you did above. Yield was about 5% back then (someone feel free to correct me - I'm just going by memory), but then perhaps ML rates were lower as well.

Also bare in mind, you mentioned in your first post that you wanted to get into shares for cashflow to compensate property holding costs. If you're experiencing negative cashflow over the first (?) 5yrs as above (but coming out ahead in CG), that's fine - but is that your intention?

Enjoying this conversation by the way.

 

[Ridin-High]

Hi Steve,

I'll add more to reply later, just about to goto training. I'll do the quick numbers

Say Interest rate: 8% average over the 13yrs you had it?
Yield: 5%

We'll use $100,000 worth

Now worth: $133,333

Holding costs after tax (assuming on 30c tax bracket): $27,300

Profit P.A: $2564
Cost P.A: $2100

Profit: $464

22% profit on your cash invested after tax benefits, this profit would be higher if you was on a higher tax bracket and does not consider the yield to increase @ all over 13yrs.

But yeah i really should be focusing on cash flow lol and admit that property would have out done that fund by a tad

talk soon,

Regards,

RH

 

[Ridin-High]

Hey Steve did a quick search on ARG during 1997

The highest they reached in 1997 was $3.77, they did trade at the high 2 dollar mark at the start of 1997

Just before the GFC they reached $9.02
So 100k worth of them if you purchased @ peak in 97 would be 159.5k now
Their peak value if you purchased @ 3.77 would be $239,257


If you purchased them @ 4.50 that from the chart shows a purchase date around july 2003.

Have you looked @ MLT its a LIC, they look alrite.

Regards,

RH

 

[steveadl]

Hey Steve did a quick search on ARG during 1997

The highest they reached in 1997 was $3.77, they did trade at the high 2 dollar mark at the start of 1997

Just before the GFC they reached $9.02
So 100k worth of them if you purchased @ peak in 97 would be 159.5k now
Their peak value if you purchased @ 3.77 would be $239,257


If you purchased them @ 4.50 that from the chart shows a purchase date around july 2003.

Have you looked @ MLT its a LIC, they look alrite.

Regards,

RH

Yeah you're right RH, looked at the ARG chart. As I said my memory may be off, I must have had them at the time in the mid $3's as opposed to mid $4's like I thought earlier (the year is right as I was still in high school). Though the chart is a good example of a long term increase in value since '82.

Looks like MLT's return is superior to ARG over the long term chart. I'm not really into LIC's, though I do hold some ARG in my wife's portfolio. I stick more to stocks with good businesses, at the moment a lot of defensives and a few turn around plays that have been whacked by current business woes.

 

[Player]

There may be more sell-offs in the pipeline as banks force some owners (REIT's included) to offload Commercial buildings to clean up under-performing assets.

Can't proivde a link to the article, as it was in today's Fin Review. These won't affect REIT's in isolation, I dare say it will implicate private Co's and some syndicators.

Then in the same edition, an article appears that declares A-REIT's are kicking goals. ...............go figure

Plent of DD and stay nimble with your stops I reckon.

 

[Value Emperor]

IV , you will be interested to hear I have sold my CWT.

In hindsight it was a fairly rushed purchase as I didn't think it would hang around 22 cents for long. When I reflected on some of the posts on here and ran some of the numbers through my 'analyser' I just couldn't justify holding.

My expectation is that it will trade in the range of 18-28 cents for some time.

So there was insufficient upside to give me a buffer in case I'm wrong hence I'm not interested in holding. If it gets down to 18 cents I may review.

I was lucky to pull out a 10% profit from it.

Wow. Noticed yesterday CWT had hit the lower end of my buying range. Picked up what I had sold for 24 cents a few weeks back for 16 cents today. A 33% discount. My fair valuation (incorporating a lot of the bad news) is still in the 18-28 cent range, but I have a 3 year price target of 50+ cents.

This one is not for the faint hearted, but as nobody rings a bell at the bottom of a companies share price, you need to rely on your own valuation methods, which is what I have done. To some extent I am relying on that there will be a turnaround in the wine industry at some point in the next few years.

I expect a capital raising to pay down some debt. It should have been done sooner.

 

[Intrinsic_Value]

Not anymore, investment thesis ceased to hold upon release of the half year distribution. Position exited at 24c and will wait for the annual report later this year before deciding what to do.

still waiting on the sidelines, strong AU$ wont be helping this REIT.

 

[Ridin-High]

Ohhh update, i don't hold any reits directly. Have some units in SLF which tracks reits in asx 200