Has the market peaked?

padington

Crashy_Time wrote: »

Rents in London are falling, as you know, and interest rates have nothing to do with really "needing to sell", again as you know. The fact that many many people CAN`T sell, even with the miracle of super low rates tells us all we need to know. If you have a fixed rate, and rates go up, all that happens is that the next buyer has to pay more for their debt to buy you out, meaning they will want a price discount for the privilege.

The sale price only changes if both buyers and sellers agree. Right now there are hardly any sellers for relatively cheap homes ( and prices, surprise surprise, are still creeping up ).

If interest rates went way up forcing sales then that might change.

However, I wouldn't bank on it.

chucknorris

GreatApe wrote: »

I've not seen it before but having a quick read it would not interest me

What are they offering above and beyond say British Land or Land Securities or one of the other larger REITs? The difference seems to be a promises to try and provide 5.5% dividend (compared to 4.5 to 5% for REITS like BL and INTU) but as their own documents say

' Shares may trade at a discount to NAV per share and shareholders may be unable to realize their investments through the secondary market at NAV per share.'

This seems likely as a lot of the large UK Reits are trading at below NAT right now.
So put in £1 a share and see it fall to 80p a share within a few months is too big a risk I think just to try and obtain another 0.5-1% in dividend returns (if they happen at all)

If I was after high dividends in a REIT I think I would consider British Land and also Capital & Regional. The latter currently has a 5.8% Dividend Yield and that should be quite stable as its a company invested mostly in shopping centers and they tend to have average lease lengths of 10+ years and also some element of monopoly status in that councils typically are not interested in allowing a second shopping center in their area. It would seem less risk buying C&L at 5.8% with a history and up and running right now than to go with this new venture.

But dont take this as strong advice its just 10 minutes having a think about it

What is missing in the UK are pure geared residential REITs. If someone was offering a geared London REIT at 5% that would interest me. I would not have become a landlord if there was such a reit I would just have purchased said shares in a pension or ISA. Its silly that there are two million individual landlords owning 5 million private rentals but no company doing it on scale and publicly listed. There is clearly massive demand for it as shown by the huge scale of capital in residential rentals.

I signed up with HL a while ago to be notified of new launches, I must have dismissed/overlooked this the first time they notified me. But yesterday they sent me a reminder saying I had until noon today to invest, I am unsure what to do.

A few weeks ago I moved all my SIPP and ISA from VUKE (ftse 100 etf) into cash, currently the market is 2% higher than when I sold (oops!). So I do have £395k available, and currently earning nothing. So I am torn between:

1. Investing all the £395k.
2. Invest a small part of it (£50 to £100k), and possibly top up if the secondary market ends up cheaper.
3. Invest across a spread of REITS.
4. Do nothing and wait for the market to fall, although it feels like I have lost something, I haven't as for the last 6 moths I have been selling on highs, and buying back in at lows, but this is the first time that I might get back in before the quarterly ex-dividend date of 22 June (although the election may bring some volatility.

Overall I like the idea of investing in commercial property, my wife wants to buy one or two shops and has asked me to invest with her, but I like the idea of a passive fund, with liquidity and diversity.

Because REIT dividends are taxed at normal marginal income tax rates (40% to me, rather than 32.5% dividend rates), if I do invest, it is better for me to do so within a tax wrapper, so given that my ISA and SIPP are currently in cash, it seems like an opportunity.

The information that I lack is:

a) Is there going to be strong demand for this, and keep the secondary price high, I have no experience of this, maybe I am better off just investing a small amount, and spreading the rest in other REIT's.

b) HL don't seem to have made it clear (or I have overlooked it) what the ongoing fees/charges (from HL or the REIT itself (including the spread price) are for holding this with them, I'm going to ring them this morning.

c) I am not entirely clear what is the difference between holding a REIT compared to an ETF? Is the secondary market price more or less the same as the price of an ETF varying, i.e. simply supply and demand, or is there something about a REIT that makes it less desirable for people to invest later (after it has been launched).

GreatApe

chucknorris wrote: »

I signed up with HL a while ago to be notified of new launches, I must have dismissed/overlooked this the first time they notified me. But yesterday they sent me a reminder saying I had until noon today to invest, I am unsure what to do.

A few weeks ago I moved all my SIPP and ISA from VUKE (ftse 100 etf) into cash, currently the market is 2% higher than when I sold (oops!). So I do have £395k available, and currently earning nothing. So I am torn between:

1. Investing all the £395k.
2. Invest a small part of it (£50 to £100k), and possibly top up if the secondary market ends up cheaper.
3. Invest across a spread of REITS.
4. Do nothing and wait for the market to fall, although it feels like I have lost something, I haven't as for the last 6 moths I have been selling on highs, and buying back in at lows, but this is the first time that I might get back in before the quarterly ex-dividend date of 22 June (although the election may bring some volatility.

Overall I like the idea of investing in commercial property, my wife wants to buy one or two shops and has asked me to invest with her, but I like the idea of a passive fund, with liquidity and diversity.

Because REIT dividends are taxed at normal marginal income tax rates (40% to me, rather than 32.5% dividend rates), if I do invest, it is better for me to do so within a tax wrapper, so given that my ISA and SIPP are currently in cash, it seems like an opportunity.

The information that I lack is:

a) Is there going to be strong demand for this, and keep the secondary price high, I have no experience of this, maybe I am better off just investing a small amount, and spreading the rest in other REIT's.

b) HL don't seem to have made it clear (or I have overlooked it) what the ongoing fees/charges (from HL or the REIT itself (including the spread price) are for holding this with them, I'm going to ring them this morning.

c) I am not entirely clear what is the difference between holding a REIT compared to an ETF? Is the secondary market price more or less the same as the price of an ETF varying, i.e. simply supply and demand, or is there something about a REIT that makes it less desirable for people to invest later (after it has been launched).

First and for most I am no expert so read with that in mind.

I too have a significant sum which needs investing. My choice is pay down debt with an interest of 2.5% or buy risky or low risk shares. The risky share I am interested in is Tesla and the low risk shares are REITs

I like the UK REITs I think they are low risk good divi income. They have long lease lengths and retail isn't going to die anytime soon. The idea of online taking over is overdone or that retail is a bad sector is silly. Things like BHS going under tars the sector but that just shows BHS was a crap retailer not that all retail is doomed. Where possible I would favor the REITs with property in the south rather than the midlands or north.

Anyway I like British Land Land securities and even the smaller ones like Regional and capital (market cap about £500m). if I recall correctly they all trade below book value. So you are buying £1 worth of property for 80p. Of course as you know valuing low transaction type property is not a science so one could argue that the valuations are wrong that the property is actually worth 80p rather than the £1 book value. Either way I feel its somewhat of a safety bet. Even if the value is 90p instead of £1 and you buy for 80p its a safety margin. Something like capital and regional offers 5.8% dividend and I feel its low risk. Inside a pension or ISA its tax free income.

Regarding the new fund IPO how big a fund is it going to be? A fund of £50m is going to be Silly if they have lots of overheads with an expensive London office and expensive London staff. Their shares won't crash on the secondary market as they will be fully in cash at the start so should trade on or near par. However once they start buying property I don't see how they could trade at book valie when most the other REITs right now are trading at below book value.

Regarding your wife idea of buying commercial property directly that is fine but if you already have more money than you can spend why bother with it. Earning a 5% return instead of a 4% return still means just the same thing more money than you can spend. In your shoes I would probably want to minimise 'trading too much' you probably don't want your retirement to be a part time job reading quarterly reports and checking up on shares twice a day.

chucknorris

GreatApe wrote: »

First and for most I am no expert so read with that in mind.

I too have a significant sum which needs investing. My choice is pay down debt with an interest of 2.5% or buy risky or low risk shares. The risky share I am interested in is Tesla and the low risk shares are REITs

I like the UK REITs I think they are low risk good divi income. They have long lease lengths and retail isn't going to die anytime soon. The idea of online taking over is overdone or that retail is a bad sector is silly. Things like BHS going under tars the sector but that just shows BHS was a crap retailer not that all retail is doomed. Where possible I would favor the REITs with property in the south rather than the midlands or north.

Anyway I like British Land Land securities and even the smaller ones like Regional and capital (market cap about £500m). if I recall correctly they all trade below book value. So you are buying £1 worth of property for 80p. Of course as you know valuing low transaction type property is not a science so one could argue that the valuations are wrong that the property is actually worth 80p rather than the £1 book value. Either way I feel its somewhat of a safety bet. Even if the value is 90p instead of £1 and you buy for 80p its a safety margin. Something like capital and regional offers 5.8% dividend and I feel its low risk. Inside a pension or ISA its tax free income.

Regarding the new fund IPO how big a fund is it going to be? A fund of £50m is going to be Silly if they have lots of overheads with an expensive London office and expensive London staff. Their shares won't crash on the secondary market as they will be fully in cash at the start so should trade on or near par. However once they start buying property I don't see how they could trade at book valie when most the other REITs right now are trading at below book value.

Regarding your wife idea of buying commercial property directly that is fine but if you already have more money than you can spend why bother with it. Earning a 5% return instead of a 4% return still means just the same thing more money than you can spend. In your shoes I would probably want to minimise 'trading too much' you probably don't want your retirement to be a part time job reading quarterly reports and checking up on shares twice a day.

I've decided to put all my ISA and SIPP into British Land, I was tempted to put a little into capital and regional though.

economic

chucknorris wrote: »

I've decided to put all my ISA and SIPP into British Land, I was tempted to put a little into capital and regional though.

i think you are making a good decision and not just because i have bought. its a relatively saf ebet with a good yield.

chucknorris

economic wrote: »

i think you are making a good decision and not just because i have bought. its a relatively saf ebet with a good yield.

I've just invested all my ISA and SIPP (plus a £10k top up to my SIPP) in British Land at just under 640. I'm quite pleased, even if the price drops, the yield was/is my focus, and they have already declared June's dividend will be 7.30p.

I usually avoid single company shares, but as you say they look a safe bet. Investing in commercial property brings some much needed diversity to my portfolio.

Conrad

chucknorris wrote: »

I usually avoid single company shares, but as you say they look a safe bet. Investing in commercial property brings some much needed diversity to my portfolio.

I own a modest commercial property and it's noticeable now how incredibly short the supply of commercial is, at least within a 50 mile radius of me. So much of it here has been turned over to residential - this is why I was saying commercial was a good bet a couple of years ago when lots of people were saying the opposite.




Mind you I don't think I'd invest all in one company - remember what happened to Frank Skinners entire fortune invested in an insurance company......

chucknorris

Conrad wrote: »

I own a modest commercial property and it's noticeable now how incredibly short the supply of commercial is, at least within a 50 mile radius of me. So much of it here has been turned over to residential - this is why I was saying commercial was a good bet a couple of years ago when lots of people were saying the opposite.

My wife wants to invest in a couple shops, and she wanted me to invest with her. I know it will most likely be more profitable, but I am happier with a diversified liquid fund, being managed by someone else.

It was a lot to invest in one company, but they are very asset rich. My SIPP and ISA are less than 14% of my wealth, but my wife also has about the same as me, so it is only about 7% of our combined wealth

GreatApe

chucknorris wrote: »

I've decided to put all my ISA and SIPP into British Land, I was tempted to put a little into capital and regional though.

Out of interest why did you go for British Land rather than one of the other REITs or a mix of REITs?

Hopefully British Land will do well for you, having another quick look at their accounts it shows that the NAV is 915p which means you are buying £1 of property for 69p. Assuming the valuations are not wrong then the share price will move up else the company should start divesting properties which should reduce the gap of 69p to the £1

I am tempted myself. However I am younger than you and so I dont know if its worth investing in less stable share price companies and risking more specifically on companies such as google apple tesla with the hope that one of them will be the ones to bring out the first commercial successful self drive AI which could drive their profits sky high.

thepurplepixie

House went on the market yesterday, full asking price offer today. Agent advised me not to accept as five more viewings booked for later this week so he is expecting a bidding war.