Does anyone have an opinion on this new launch REIT?

chucknorris

http://www.hl.co.uk/shares/ipos-and-new-issues/aew-uk-long-lease-reit-plc-launch?utm_source=Silverpop&utm_medium=email&utm_campaign=EI263_Last%20chance%20-%20AEW%20UK%20Long%20Lease%20REIT%20plc%20launch%20closes%20tomorrow%20(1)&utm_content=button&theSource=EI263&Override=1&sp_mid=54167366&sp_rid=c3RldmV0b2RkMUB5YWhvby5jby51awS2#

I'm thinking of dipping my toe in the water, I currently don't have any commercial property investment, so I like the idea of adding diversity to my portfolio.

bigadaj

My only comment would be that you frequently see new issues quickly 'losing' money and heading to a discount, maybe more of an issue with investments trusts, like Woodford, than reits but the same principle would apply.

Whether this is an objective opinion, rather than a personal impression, and actually more rise than fall, I don't know.

chucknorris

bigadaj wrote: »

My only comment would be that you frequently see new issues quickly 'losing' money and heading to a discount, maybe more of an issue with investments trusts, like Woodford, than reits but the same principle would apply.

Whether this is an objective opinion, rather than a personal impression, and actually more rise than fall, I don't know.

That's my feeling too, I just don't know, so maybe 'when in doubt, do nowt' is the best policy in this case. The offer closes today, if I don't invest and the price goes up, I won't be too disappointed, but if I do invest and the price goes down, I will be. Maybe I should watch and wait, and if the price goes go down, then think about investing.

The attraction for me is that I like the idea of adding some diversity to my portfolio (commercial property).

bigadaj

chucknorris wrote: »

That's my feeling too, I just don't know, so maybe 'when in doubt, do nowt' is the best policy in this case. The offer closes today, if I don't invest and the price goes up, I won't be too disappointed, but if I do invest and the price goes down, I will be. Maybe I should watch and wait, and if the price goes go down, then think about investing.

The attraction for me is that I like the idea of adding some diversity to my portfolio (commercial property).

Yes, I think your logic is sound, and would also agree that I'd be tempted to see it trade for a while before diving in.

There's obviously plenty of reits and property funds available, many with long track records, and I believe a number offering significant discounts to assets and potentially high yields.

bowlhead99

chucknorris wrote: »

The attraction for me is that I like the idea of adding some diversity to my portfolio (commercial property).

Yes, an asset class like that is a sensible part of a balanced overall portfolio. Best to put in ISA or SIPP if you have the space, as property income distributions unlike dividend distributions or interest distributions are not covered by the annual personal dividend allowance or savings interest allowance.

But as bigadaj says there are a large number of property funds and REITs already in existence so the fact a new one is being added to the market doesn't really mean you should just dive in and grab it before its price moves to a discount/premium. As a new launch you are inherently buying at a small premium because as soon as the investor money comes in the door there will be ££££ spent on paying off the launch and listing costs so a £100million IPO has less than £100m assets on day one.

It's like any IPO. If you have nothing in that sector, you might buy into the company that's just coming to market, based on its prospectus. But the bigger question is why don't you already have something in the sector and what is wrong with all the other companies in the sector who have also got a prospectus plus lots of press releases and quarterly / annual reports and value track record since they came to market.

chucknorris

bowlhead99 wrote: »

Yes, an asset class like that is a sensible part of a balanced overall portfolio. Best to put in ISA or SIPP if you have the space, as property income distributions unlike dividend distributions or interest distributions are not covered by the annual personal dividend allowance or savings interest allowance.

But as bigadaj says there are a large number of property funds and REITs already in existence so the fact a new one is being added to the market doesn't really mean you should just dive in and grab it before its price moves to a discount/premium. As a new launch you are inherently buying at a small premium because as soon as the investor money comes in the door there will be ££££ spent on paying off the launch and listing costs so a £100million IPO has less than £100m assets on day one.

It's like any IPO. If you have nothing in that sector, you might buy into the company that's just coming to market, based on its prospectus. But the bigger question is why don't you already have something in the sector and what is wrong with all the other companies in the sector who have also got a prospectus plus lots of press releases and quarterly / annual reports and value track record since they came to market.

I was just saying that earlier this morning (about the tax wrappers and property income tax):

chucknorris wrote: »

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.

I see this as an opportunity to make some important much needed changes to my portfolio, and the timing co-incidentally is perfect, because all of my SIPP and ISA (£395k) are currently in cash, so I can kill 5 stones with one bird here (see my signature). They were previously in the ftse 100 (VUKE), you don't have to say it, I know, very daft, due to lack of diversity. Although luckily it worked out well as I invested at somewhere under 6,000 (I don't actually know) and sold at just under 7,400. If I switch to REITs, it will achieve 5 things:

1. Add the much needed diversity of commercial property to my portfolio.
2. Get away from the inferior ftse 100.
3. Improve my dividend income.
4. Get my SIPP and ISA re-invested before the next ex-dividend date (29 June in the case of British Land).
5. Lock in that profit from the ftse 100.

I've just been looking at British Land, it currently yields 4.59%, I really like the look of it, I'm going to look at others. I think I will probably invest the £395k over 2 or 3 REITs.

You were asking why don't I already have something in the REIT sector, I've also been asking that myself, it seems bloody obvious that I should have, especially as I am slowly selling my BTLs, it is a perfect fit for me.

Drp8713

Have you considered TR Property? Its diversified across the UK and Europe, diversified across property sectors, trading at a discount, and has been about since 1905.

chucknorris

Drp8713 wrote: »

Have you considered TR Property? Its diversified across the UK and Europe, diversified across property sectors, trading at a discount, and has been about since 1905.

I just looked it up, it only yields just over 3%, I'm not dismissing it, but I want to take my time.

I have just placed a buy order on HL for shares of British Land at 636.00 (over 7 days).

economic

chucknorris wrote: »

I just looked it up, it only yields just over 3%, I'm not dismissing it, but I want to take my time.

I have just placed a buy order on HL for shares of British Land at 636.00 (over 7 days).

i just bought 750 shares @ 639.5.

chucknorris

economic wrote: »

i just bought 750 shares @ 639.5.

I just missed the 636 price, my own fault, I don't normally buy single company shares and I forgot about the stamp duty, it took me ages to realise why it kept saying 'not enough funds'.

HarryFlatters

Would be worth looking at Regional REIT (RGL) as an alternative, plenty around, there are some healthcare specific too if we all end up in care homes......