Summary of "The General Theory of REIT Investment"

· Best REIT to buy is the one that can make yield accretive investments (raise DPU across time)
1. Discount to P/B
2. Sufficient cash on book so that they do not need to raise eqty to make acquisitions
3. Gearing is low so that don’t have to raise eqty to bring gearing down in order to make acquisitions
4. Able to secure low cost of debt and high leverage

· In circumstances where it is the best time to buy REITs, it is generally good for any real estate stock. So you are better off buying higher beta real estate stock in this environment.

· If you are buying REITs for yield, a REIT may be inferior to a fixed income product.

· Bond + developer stock may give a better risk/reward proposition than REIT+ developer stocks

· Angle 1: LT Hold – Buy when DPU is at a level below the average LR average level and is going up.

· Angle 2: ST Hold – Buy REITs when they are super depressed P/B wise and you buy to get an income stream while waiting for a recovery in the real estate/eqty mkt so that the share price moves up