Real Estate Stocks - REITs - CA IMMO Stock Example

Reits and Real estate stocks or Real estate investment trusts (REITs) are one way to get exposure to real estate by simply buying a stock and not having to do any painting, toilet reparation or similar. However, it isn't that easy and you need to know which are the factors to watch. It is not just about the usually high REIT dividends - there is more to watch - from FFO, revaluations, tenant quality and leverage.
We discuss CA Immo Stock which is a real estate stock owning commercial properties in Europe traded on the Austrian Stock Exchange. You can call it a European Reit. The dividend yield is 3.4% and the PE ratio just 6 because of the crazy real estate revaluations they constantly do. One of the factors to watch.

00:00 REIT stocks
02:15 Factors to watch
06:40 CA Immo Stock
09:59 Real estate stocks investing

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[Sciscaaa]

I like this company's exposure to Central Europe. This is the place to be for the next decade. You always deliver the highest quality stuff!

[anderson]

2 mins in + you are 100%. And I'm in tears laughing. REITs is buying into fair value revaluations - hehehehe! I'm looking to add REITs to protect the portfolio. I knew where to begin my research :-) First get Sven's perspective. Always a good starting point. Thanks for all your years of investment in teaching others Mr Carlin. We, the pupils are reaping the rewards. Thank you

[srems]

I always press the like Button before the Video Starts. Because Sven‘s Videos Never disappoint!

[Karma]

Sven you're absolutely great! True teacher

[gregoriomurtagian]

With his videos Sven stresses the importance of education. Reading and understanding a financial statement is a key skill needed to decide to invest on a company. There is a it of financial engineering hiding risks and bad performances on those sheets. Thanks

[dividendathlete]

In the REIT sector I tend to look a triple-net lease REITs with long leases ( Such as O, MNR, STOR etc). With the triple-net lease model the tenant pays insurance, taxes and maintenance whilst the landlord (REIT) just collects the rent payment. The long leases make the cashflows more predictable.

[leverage]

Great stuff Sven! We learned a very valuable lesson about the reevaluation!

So we should really focus on FFO 🙂

There is something near the end of the video that made me so curious..

You wrote that we can earn 10% to 15% return if we managed our own property..

I've watched a video of you where mentioned that you also invest in your own real estate properties..

Have you done something like earning 10% to 15% on your rental properties?

How did you do it? 🙂

[sfm]

Hi Sven, thx a lot for the vid. REITs are often overlooked. Don't forget to mention the 90% tax free payout ratio. The investor will be taxed, not the corporation. I own several US.REITs (only equity-REITs - no mortgage REITs): some residential REITs (IRT), healthcare REITs (MPW, OHI, PEAK, NHI) and Retail REITs (hit hard by the Corona crisis, see SPG) like Realty Income (O). REITs provide a steady income stream/ cash flow (good for retirees) with high P/E in a low interest rate environment / low P/E in an high interest rate environment.

[AndreyPictures]

I never wanted to buy any REIT's but didn't know why. Just had a feeling in my stomach that their income statements and balance sheets are sketchy. Now I know why

[jespermadsen]

Thank you Sven. Another great video from you.

[emielbonty]

Quick comment. In a normal situation, FFO I is the recurring profit, FFO II includes profit (or loss) from property disposals. CA Immo uses its metrics differently from the market standard. Further, assuming no change in market yield you will always see revaluation gains as inflation will result in higher rent (as this is inflation adjusted), which will result in a higher value at the same yield the next year. Lastly, the portfolio value is not just based on a whim but based on market transactions and dcf, though ofcourse yields (presented in the discount and cap rate) fluctuate. It is important to compare these metrics, which are usually presented in the annual reports, between companies and try to understand the reason of this difference, for example Vienna will be more attractive than lets say Linz, thus the yields will be lower as risk is lower.

[scottscriticalmass]

You should have started this video by saying "Class is in Session"... Fantastic! Thanks Sven!!

[rajeshrai]

Hi Sven been watching your videos for years. I am sure you would have been told that your content has continued to improve year over year. Would also like to add that your presentation skills have improved tremendously too. Kudos to you

[Guron]

I bought the vanguard canadian RE etf the other day. WAY down because of the malls and office space.

[pellahar]

I took a look at Entra, norweigan real estate company recently. It would be nice to see your (or other people view on it).

First, I look at currencies. Norway is a oilproducing nation, in fact their economy is largely driven by the energysector. This means that when oil prices crash the NOK takes a pounding. Since oil prices are cyclical I believe the oil and thus the NOK, will rebound.

The company Entra have two big segments. First it´s private (mostly housing), which comprise 58% of it´s revenue, the rest is public, meaning they rent to authorities such as the tax administration and many others. I believe this is a solid and steady income stream and it is largely unaffected by the Covid-19 crisis.

It´s occupancy rate is at 97, 4% now.

Financials.
When I calculate its value there is 19 billion NOK in debt and the property value adds up to 49 billion, meaning it has a NAV of 30 billion, of course its speculative with valuations but still...
The company is valued at 23, 4 billion NOK. Which is substantially lower than it´s assets minus debts. Around 21% discount.

The profit was 707 million NOK for q1 in 2019 (3, 2 billion profit for the full year) which gives it a PE of 9, 1. The profit for 2020 will likely be lower, not due to Covid-19 which has left the company largely unnaffected, but to a one time event where their financial structure was adverserly affected when rates fell globally, leaving the q1 profit at meagre 50 million. Would be great If someone was able to explain that better than me.

Other than that they have a divident of 3, 65%. Their profits have gradually improved for quite some years and their debt decreased for some years in a row.

[jamesmacris]

Commenting just for the algorithm. Thanks for all you do!

[djpuplex]

Ben Graham in the intelligent investor mention real estate "reits" I believe (I could be wrong) was a great hedge against inflation.

[تومريتشاردز]

During the big drop I opened positions in $usrt, $vwo etc. Even though the market has recovered a bit there's still a lot of beaten down REITs that I've been adding to such as $apts.

[MrEvertonian]

Would love to hear some thoughts on Iron Mountain $IRM

[jelaneytaters]

Would like to hear your opinion on Seritage Growth Properties