The thing about Penang properties: the rentals are (relatively) cheap compared to their (speculative?heh) values. Absolutely absurd when it comes to the soaring properties price for the past 3 years. Bear in mind properties investment is illiquid, and huge upfront capital is required. And there's always hassle of managing your properties unless you are full time into properties investment. Another rule of thumb is a return of at least 6 percent per annum rental yield, else experts say it is just not worth the trouble.
So I recently started to invest in Real Estate Properties Trust (REIT). Capital Malls Malaysia Trust (CMMT) to be exact. Consider REITs as the unit trust in commercial/residential properties which trade on the stock exchange. Here are the top 10 reasons why I see potential in Malaysia's largest pure-play shopping mall REIT for long term holdings and dividend income. I thought it as a good way to balance the risk and return with regard to my US stocks portfolio.
1. Three iconic shopping malls
Its main portfolio includes Gurney Plaza, largest mall in the northern region. The other two are The Mines Seri Kembangan and Sungai Wang Plaza Kuala Lumpur.
2. High occupancy rate
Average occupancy rate of 98.7% for all malls as of 3Q 2011 financial results. Rule of thumb, minimum 70%.
3. Above average tenancy lease
More than 60% of the total tenancy leases will only expire in 2 years or more as of 30 Sept 2011. (longer the better).
4. I shop there (Gurney Plaza)
Like at least once every month. So I know from first hand experience if the shoppers or vehicular traffic is increasing or decreasing. Okay, pretty dumb statement. Reminder to self again : leave early before 10 pm if it's Saturday night to avoid the absolutely ridiculous congestion.
5. Gurney Plaza extensive expansion
Subway. Mommy Wang. Old Town White coffee. Etude House. Don't we have enough of these already?
Apparently not. New wing 5th and 6th floor expansion; coming soon to you with more ways you can part with your money. :)
Also other AEI (Asset Enhancement Initiatives) this year on the parking lots. Each lot has this nifty LED lights on top which let you spot empty (green) or occupied (red) parking from afar. Uber convenient!
6. Acquisition of East Coast Mall at Kuantan
Another addition to the portfolio. Supposedly the biggest mall for people living in the East coast of Peninsular. The deal is expected to be completed before year end.
7. Gearing ratio of 33%
Simply put, a ratio of debt to capital. The lower, the better as the fund borrows less money to invest. Rule of thumb is 30%. This figure is just nice.
8. Defensiveness nature of retail REIT
You still go for "retail therapy" or movies and meals at malls during economic recession, right?
9. Stock price breaking resistance
A bit of technical analysis here. What do you think?
10. Reputable developer
One of the major stakeholder behind CMMT, CapitaMalls Asia is the largest shopping mall developer in this region.
More info on REIT types - by Calvin Passive Income
Disclaimer: The above opinion is not a recommendation to buy or sell. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this blog is ultimately your responsibility.
So I recently started to invest in Real Estate Properties Trust (REIT). Capital Malls Malaysia Trust (CMMT) to be exact. Consider REITs as the unit trust in commercial/residential properties which trade on the stock exchange. Here are the top 10 reasons why I see potential in Malaysia's largest pure-play shopping mall REIT for long term holdings and dividend income. I thought it as a good way to balance the risk and return with regard to my US stocks portfolio.
1. Three iconic shopping malls
Its main portfolio includes Gurney Plaza, largest mall in the northern region. The other two are The Mines Seri Kembangan and Sungai Wang Plaza Kuala Lumpur.
2. High occupancy rate
Average occupancy rate of 98.7% for all malls as of 3Q 2011 financial results. Rule of thumb, minimum 70%.
3. Above average tenancy lease
More than 60% of the total tenancy leases will only expire in 2 years or more as of 30 Sept 2011. (longer the better).
4. I shop there (Gurney Plaza)
Like at least once every month. So I know from first hand experience if the shoppers or vehicular traffic is increasing or decreasing. Okay, pretty dumb statement. Reminder to self again : leave early before 10 pm if it's Saturday night to avoid the absolutely ridiculous congestion.
5. Gurney Plaza extensive expansion
Subway. Mommy Wang. Old Town White coffee. Etude House. Don't we have enough of these already?
Apparently not. New wing 5th and 6th floor expansion; coming soon to you with more ways you can part with your money. :)
Also other AEI (Asset Enhancement Initiatives) this year on the parking lots. Each lot has this nifty LED lights on top which let you spot empty (green) or occupied (red) parking from afar. Uber convenient!
6. Acquisition of East Coast Mall at Kuantan
Another addition to the portfolio. Supposedly the biggest mall for people living in the East coast of Peninsular. The deal is expected to be completed before year end.
7. Gearing ratio of 33%
Simply put, a ratio of debt to capital. The lower, the better as the fund borrows less money to invest. Rule of thumb is 30%. This figure is just nice.
8. Defensiveness nature of retail REIT
You still go for "retail therapy" or movies and meals at malls during economic recession, right?
9. Stock price breaking resistance
A bit of technical analysis here. What do you think?
10. Reputable developer
One of the major stakeholder behind CMMT, CapitaMalls Asia is the largest shopping mall developer in this region.
More info on REIT types - by Calvin Passive Income
Disclaimer: The above opinion is not a recommendation to buy or sell. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this blog is ultimately your responsibility.
Good post, I am also thinking of investing in CMMT. I am confident about Gurney Plaza and Sungei Wang, just a bit sketchy about Mines. Maybe I will make a trip to the Mines mall again to see if the place has improved significantly.
ReplyDeleteCalvin
http://www.investinpassiveincome.com
Let me know after your visit too :). It's been ages since I was there though; but I agree w/ you - the Mines probably ranks bottom of the three. Only the Venice canal concept makes it stand out aye?
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