Best Property Stock with Good Yield In Aus

[steve fleming]

New listing Arena Childcare Fund (ARF)

Owns 172 childcare centre properties

low gearing (10%)

Good yield (8%)

[steve fleming]

Where did you find that?

http://stocknessmonster.com/news-ite...E=ASX&N=390875

Arena REIT was admitted to the Official List of ASX Limited on Thursday, 13 June 2013.
Official Quotation of the following securities will commence at 12:00 pm A.E.S.T. on Thursday,13 June 2013 on a deferred settlement basis.

[NZSilver]

Anymore thoughts on Arena REIT? Looks quite good.

I have never invested in a REIT.

Do property stocks have imputation on divs? What are your thoughts regarding divs and tax with aus property stock?

Thanks

[baller18]

Picked up some of these for my dividend portfolio. It will be interesting to see what their future plans are - whether they remain a rock steady REIT like AEU with a good dividend yield, or they go on the acquisition/development path like GEM in which case some good capital gains should follow.

Where can I locate the prospectus? been trying to find it online, nothing coming up...

[baller18]

Got it! thanks!

[baller18]

Don't you guys think ARF has a quite a substantial risk as more than half of their portfolio is tenanted by Goodstart?
67.8% is from Goodstart... close to 70%...

[baller18]

Picked up some of these for my dividend portfolio. It will be interesting to see what their future plans are - whether they remain a rock steady REIT like AEU with a good dividend yield, or they go on the acquisition/development path like GEM in which case some good capital gains should follow.

Hey guys, im still quite new to investing, so some of my questions might seem silly.
If the gearing ratio increases to 35% to 40% doesnt it mean they will be increasing their debt as well?

[baller18]

Yes. Debt can be good - if you borrow at 6% to buy something that returns 10% you are ahead of the game. In commercial real estate this is the norm, its only idiots in the residential market who borrow at 6% to buy something that returns 3%.

Thanks so much for the reply, yes i was looking through their prospectus and it sounds promising.
They have assets of 243 million and a market cap 212million which means just the asset value will give a value of each share at $1.14 without taking account into profits. Which means at the current price, it is definitely worth buying.
Is this a right calculation ive done?
Thanks heaps in adnvace!

[fungus pudding]

Yes. Debt can be good - if you borrow at 6% to buy something that returns 10% you are ahead of the game. In commercial real estate this is the norm, its only idiots in the residential market who borrow at 6% to buy something that returns 3%.

And it's not just return/yield. Borrowing gives leverage to buy more expensive property. Better to own a million dollar property which doubles in value to 2 million, than a half million dollar one that doubles to a million. The downside being it also amplifies any drop in value, but it's the borrowing that makes investors wealthy - not the yield on their input. The spectacular crashes and bankruptcies are when someone became a little over-enthusiastic about borrowing.

[baller18]

And it's not just return/yield. Borrowing gives leverage to buy more expensive property. Better to own a million dollar property which doubles in value to 2 million, than a half million dollar one that doubles to a million. The downside being it also amplifies any drop in value, but it's the borrowing that makes investors wealthy - not the yield on their input. The spectacular crashes and bankruptcies are when someone became a little over-enthusiastic about borrowing.

Thanks heaps,
They have assets of 243 million and a market cap 212million which means just the asset value will give a value of each share at $1.14 without taking account into profits. Which means at the current price, it is definitely worth buying.
Is this a right calculation to assess the assets in correlation to the share price?