Post by oldman on Oct 19, 2013 8:45:02 GMT 7
If you dissect my porfolio of stocks, you will find that many of these stocks do have significant property exposure as a percentage of their market capitalisation. The key benefits in investing in properties through the purchase of stocks are that one can do so gradually and there is no need to bother about collecting rental or maintaining the property ... and most important of all, one can still find very good property bargains around.... some can even be considered for free!
Going back to the examples of stocks in my portfolio, Powermatic Data Systems owns a large industrial property valued at $19 mil while its market cap at 13.4cts is 23 mil. If I were interested in industrial properties and their yields, I could have bought into a REIT. However, I would not have the freebies that came with investing in Powermatic.... which is its $25 mil of cash & financial assets and its profitable IT businesses. It also gives a dividend of 1ct which is a yield of over 7% based on its current share price, which is better than the average REIT.
The other way of looking of Powermatic is that I bought into a company whose market capiitalisation is less than its net cash and hence, I get the industrial building for free.... and of course, its businesses too. This is how I buy into properties on the cheap.... or more precisely.... without any additional capital!
Isetan is much the same. Its stake in Ngee Ann City is much more than its current market capitalisation. Moreover, its cash and financial assets together with the rest of its properties is more than its market capitalisation. In a way, its stake in Ngee Ann City is for free.
If you dwell further into General Magnetics, the company that was delisted last year, I bought into the company because of its prime industrial property in central Toa Payoh. Once again, this property is close to being free as it has cash and other properties worth at least its market capitalisation on the last day of trading. As the current management had previous backgrounds in property development, I would not be surprised that eventually, this property will be developed and whether the company is listed or not, shareholders should be able to benefit.... eventually. As always, patience is the key.
Yes, apart from the stock market, I too follow the property market closely as many of my stock investments are closely tied to the property market. Like the stock market, one has to have a gut feel for the property market in order to make money.
In early 2009, when house prices spiralled downwards towards $400 psf, I decided to buy my current property. I have been waiting almost 8 years for this to happen. Many thought that I was lucky to buy at this price but little did they know that I have been following the local property market for a long period of time. I had already calculated what I felt was the affordability level at that time and hence, I was able to commit at $400 psf. At that time, there were very few buyers around and mine was the only offer for the property that I wanted. Now, 2 years later, property prices are over $800 psf.
The key to succeeding in the property market is the same as that for stocks and shares. You need courage to buy when everyone else is selling... you need patience to wait for the right deal and most importantly, you must have done your homework as to what constitutes a good price for you to buy so that you land up with a good margin of safety. Without this ground work, you will not be able to commit as everyone else at that time will tell you that you are crazy to buy when everyone else is selling.
For me, I continue to monitor the property market as I too may be a buyer again ... not now, but when the time is right....again.
Going back to the examples of stocks in my portfolio, Powermatic Data Systems owns a large industrial property valued at $19 mil while its market cap at 13.4cts is 23 mil. If I were interested in industrial properties and their yields, I could have bought into a REIT. However, I would not have the freebies that came with investing in Powermatic.... which is its $25 mil of cash & financial assets and its profitable IT businesses. It also gives a dividend of 1ct which is a yield of over 7% based on its current share price, which is better than the average REIT.
The other way of looking of Powermatic is that I bought into a company whose market capiitalisation is less than its net cash and hence, I get the industrial building for free.... and of course, its businesses too. This is how I buy into properties on the cheap.... or more precisely.... without any additional capital!
Isetan is much the same. Its stake in Ngee Ann City is much more than its current market capitalisation. Moreover, its cash and financial assets together with the rest of its properties is more than its market capitalisation. In a way, its stake in Ngee Ann City is for free.
If you dwell further into General Magnetics, the company that was delisted last year, I bought into the company because of its prime industrial property in central Toa Payoh. Once again, this property is close to being free as it has cash and other properties worth at least its market capitalisation on the last day of trading. As the current management had previous backgrounds in property development, I would not be surprised that eventually, this property will be developed and whether the company is listed or not, shareholders should be able to benefit.... eventually. As always, patience is the key.
Yes, apart from the stock market, I too follow the property market closely as many of my stock investments are closely tied to the property market. Like the stock market, one has to have a gut feel for the property market in order to make money.
In early 2009, when house prices spiralled downwards towards $400 psf, I decided to buy my current property. I have been waiting almost 8 years for this to happen. Many thought that I was lucky to buy at this price but little did they know that I have been following the local property market for a long period of time. I had already calculated what I felt was the affordability level at that time and hence, I was able to commit at $400 psf. At that time, there were very few buyers around and mine was the only offer for the property that I wanted. Now, 2 years later, property prices are over $800 psf.
The key to succeeding in the property market is the same as that for stocks and shares. You need courage to buy when everyone else is selling... you need patience to wait for the right deal and most importantly, you must have done your homework as to what constitutes a good price for you to buy so that you land up with a good margin of safety. Without this ground work, you will not be able to commit as everyone else at that time will tell you that you are crazy to buy when everyone else is selling.
For me, I continue to monitor the property market as I too may be a buyer again ... not now, but when the time is right....again.
