Friday, August 15, 2014

Uncovering Blue Chip REITs through Credit Rating?

This post is written mainly because of what B from A Path to Forever Financial Freedom has blogged about recently.

He blogged about how Credit Rating can be used to analyze REITs. That's a pretty novel way to analyze REITs that I don't think many people have talked about!

As mentioned from the book review I did of "Investing in REITs", blue chip REITs is actually quite a safe option for long-term REIT investors to put their money into if they are less adept in looking for other styles of alpha.

B, being awesome, came up with a table (which I believe he made himself) which has a host of valuable information, with the most interesting one being the credit ratings of the REITs.

http://foreverfinancialfreedom.blogspot.sg/2014/08/reits-aug-update.html

I would like to pull out and re-group some of the REITs based on credit ratings.

Moody A2
CapitaMall Trust

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Moody A3
Ascendas REIT

Moody Baa1 / S&P BBB+ / Fitch BBB+
CapitaCommercial Trust
Fraser Centrepoint Trust
Mapletree GCC Trust
Mapletree Logistics Trust
Mapletree Industrial Trust

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Moody Baa2 / S&P BBB / Fitch BBB
Fraser Hospitality Trust
Keppel REIT
Mapletree Commercial Trust
Parkway Life REIT
Starhill Global REIT
Suntec REIT

Moody Baa3 / S&P BBB- / Fitch BBB-
AIMS AMP Cap REIT
Ascott Residence Trust
Cache Logistics Trust
Cambridge Industrial Trust
CDL Hospitality Trust
Sabana Industrial REIT
Soilbuild Biz Space REIT

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S&P BB+ / Fitch BB+ (No longer investment-grade)
Fraser Comm Trust
Viva Industrial Trust

Moody B1
Saizen REIT

Not Rated
Ascendas India Trust
Ascendas Hospitality Trust
Capita Retail China Trust
Croesus Retail Trust
Far East Hospitality Trust
First REIT
Fortune REIT
Indiabulls Property Trust
Lippo Malls Indonesia Trust
Perennial China Retail Trust
Religare Health Trust
SPH REIT
Forterra Trust
OUE Hospitality Trust
OUE Commercial Trust.

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Personally, if I was being a lazy blind bat, I would just chart out all the REITs that are investment-grade and above, meaning about Baa3 or BBB-. Once I see that prices are depressed, I would just pick them up, that's all.

However, I don't think I can have my analysis to be purely that simple. I also believe that even horrible assets can be a good bargain if they are bought at an excellent price.

That being said, I would definitely be more confident of an eventual turnaround story and for steady long long-term returns in investing with the REITs of better credit rating.

1 comment:

  1. Hi

    Thanks for the compliment.

    I think you would have agreed that credit ratings are just one of the factors that cover a wider range of potential issues but as you said a good company like ascendas and CMT can be a poor investment if you are overpaying for them and vice versa.

    ReplyDelete

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