General Bond Discussion
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General Stock Discussion
General Bond Discussion
Bond ETF analysis
Aviva Investors Secure Income REIT
edited November 2017
This is being offered with a targeted 5% return to be paid quarterly plus some capital appreciation over time
Any comments from fellow readers?
Morgleman2, a very difficult question to answer.
What one can ask one-self, is a few simple questions
1) How have other REITs performed recently? I took a very small punt on Derwent London (DLN), last March, cost price £2800, price now £2685, so not a clever move
2) How good has Aviva been at managing other Property funds (Pension & Life)?
I suspect not that great - compared to more specific Property oriented REITS
3) We may, and probably are currently at the top of an asset boom, therefore "cash" may be the best solution for anybody's money.
4) Suspect USA may increase their interest rates in December, thus causing turbulent winter storms and "Seas" to come in from the Atlantic.
5) Too many uncertainties re BREXIT
Additionally, I don't like the word "Secure", when part of the name, anything but, in particular the "capital"
Therefore suggest, placing any cash into a "Dry-bag" and forget about it until Spring arrives and once the winter storms are over?
Just my simple views from an amateur investor, who is mainly invested in Orb bonds, a few Pref Shares (which are still going up in value, surprise, surprise) and a few PIBS
edited November 2017
Thanks for the comment Shaunm
Well they don't get the money till December, and I cant see them spending it all right away so if there are some variations over the next few months that might be to their advantage.
Will still be some time before anyone gets 5% return from cash in a "drybag" and if one is in it for a 10 year old age pension supplement period, it seems worth a punt, which is what I have taken at the issue price
Suspect pension funds will also buy in
Targeting an "absolute 5% return" (ie combined income/capital) without risk is I would say nearly impossible. Short dated Orb bonds maturing 2021/23 might be a better bet, but with likely yield of around 3.5%.
eg PFP2 = 3.8%
ICG3 = 3.2%
LAD2 = 3.7% (as in the Daily Telegraph 21/11/17)
UTG1 = 3.4%
CLS1 = 3.3%
Hope this helps
Or, perhaps moving up the risk scale perhaps:
Custodian REIT (CREI) = 5.61%
New River Retail REIT (NRR) = 6.32%
Co-Op Final Repayment Notes = 5.88%
Lloyds Bank Prefs (LLPC) = 5.61%
Lloyds Bank Prefs (LLPD) = 5.36%
Raven Russia Prefs (RUSP) = 8.70%
Santander Prefs (SAN) = 5.70%
Bank of Ireland PIBS (BOI) = 6%
Natwest Bank Prefs(NWBD) = 5.88%
I hold all of them so definitiely do your own research - yields may be slightly out of date as I don't update every day.
What discount will this will go to would be my first concern
As the guys say this is a hard question and you need to consider the asset class as a whole. You are buying shares in a property company. So if the property market does well or badly this will follow. I've owned REIT and Property Investment Trusts for many years and saw some lose 90% of their value in 2008 (now recovered). The share price depends on sentiment and as alluded to above can trade above or below the net value of the underlying properties. So after the Brexit vote many immediately lost 20% in value purely on the worry about what may happen to property prices (again now recovered). Income comes from the rents so will depend on occupancy rates and how good their tenants are.
There are a lot of REITs and Property Investment Trusts (similar idea slightly different legal structure) for you to look at. Many have also issued retail bonds (Helical, CLS, Workspace, Primary Health, St Modwen, Segro, Unite) so that is another angle you can play by lending them money (they will tend to borrow to buy properties which again can lead to improved gains or magnified losses when the values of the properties go up or down.
Frugal, good comment regarding "Asset Class", as indicated many of us already have exposure re the several orb bonds which you listed, therefore further exposure to property may not be a good idea.
not looking good, revised timetable, M7 Multi-Let REIT had the same precursor before the IPO was pulled
edited December 2017
like i was saying
Indicates that perhaps this is not the time for UK investors to be entering the property market. I think a few savvy UK investors are selling to keen overseas investors, who may be buying at the top of the market. Eg, Former Bear Stearns HQ at 5 Churchill Place (Canary Wharf) was sold by Wafic Said (Said Holdings) for £270m to Cheung Kei Group (Chinese) (as per Daily Telegraph 6th Dec 2017). Perhaps time to review how much of one's % holding should be in property related assets / Bonds (BRU1, CLS1, HB20, PAG1, SMP1, UTG1, WKP1)
Outlook for sterling or sterling related assets like property doesn't appear very bright post-brexit, however sterling is often quoted as undervalued on trade weighted basis. It's hard to call this the top of the market given synchronized global growth, slow but steady. Curve is still not inverted, though getting flat everyday. No obvious excesses apart from crypto, though even that is at a moderate size of 500bn, smaller than any of the big 5 US tech
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