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This blog post would be a little different from my other articles. The objective of this post would be to provide my opinion and personal review after attending the “REITs to Riches” workshop in January 2019. If you have read before ProButterfly’s blogs, you would be familiar that Wien, the co-founder of ProButterfly and REITScreener, organises a 2-day workshop on analysing REITs. If you have been contemplating whether to attend his workshop, this article is perfect for you. If you are searching for a REITs course on becoming a sophisticated investor, this article is also for you. Hopefully, by the end of reading this article, you would have a better idea of what to expect and decide for yourself if this workshop is worth attending.
To start off, I seldom attend such workshops as I am usually sceptical about such “Investment courses”. Usually, they would sell you with a “free preview workshop” before revealing the total cost price at the end to attend their “real” workshop. Most of the time, such preview workshops end up being a sales marketing gimmick talk as the speaker bombards you with endless testimonial reviews. Then, they would reveal how much the course is worth as they continuously add on different features and benefits on top of one another. Next, they would mention that they are offering a limited time discount and they go on and on before finally arriving at a crazy price after 20 minutes.
Appetizer Meal – “Preview Workshop”
Similarly, Wien’s 2-day’s full workshop starts off with a preview of a 3-hour workshop that he charges at $15. He claims to be the “Most value for money investment seminar in town”. I decided to go ahead and check it out. Within a short span of 15 minutes, I must say I am convinced. From the way he speaks, you can immediately tell this guy is an experienced and sophisticated investor as he frequently brings up real-life cases of REITs.
The reason is because Wien is deeply involved in the REITs industry. He has met up frequently with REITs manager, have dinners with REITs CEO and he is among the distinguished panels of judges for the REITs Asia Pacific Awards. Having a background in IT, he has also built a subscription-based software (REITScreener) which gives him an unfair competitive advantage over other retail investors. It has almost every bit of information with regards to a particular REIT and there is an array of scoring metrics, valuation system, media news etc. It is true that an investor’s quality of judgement and sharpness increases as information asymmetry decreases. The good news is you can subscribe to this REITScrenner too.
Most speakers are theoretical in their approach, but being able to apply theory into practice is what separates a sophisticated investor from an amateur investor. I believe this is what makes Wien stands out as he speaks from experience in the market, not from textbook theories.
- Understanding the basic structure of REITs
- Difference between REITs and Business Trust
- How a REIT grow organically and inorganically
- Different methods of financing (Debt & Equity)
- Characteristics of REITs in different sectors
- Relative Valuation Methodologies
At the end of his preview workshop, Wien revealed his 2-day REITs workshop that is originally priced at $488 but there is an early bird discount price of $100 if you signed up early. I thought to myself, this is where the “salesman” mode is activated. To my surprise, this is as far as his upselling goes. It can be seen that he is more focused on providing value rather than selling his course. The reason I said that is because he ends the preview workshop 45 minutes later not to promote his products, but to provide additional information on REITs related topics.
If you were to ask me if the “appetizer meal”, the $15 preview workshop is “valued for money”, my answer is a definite yes, without a doubt. There is substance in his teaching materials and I have learnt a lot. However, I would suggest having at least a basic understanding of REITs as his pace can be quite fast for beginners, especially when he dives into snippets of those case studies analysis.
Full Main Course – “Real Workshop”
I eventually signed up for the 2-day REITs workshop and I would be sharing what are the stuff he went through, what to expect from the “main course” and whether it is suited for you. When you signed up for the 2-day REITs to riches workshop, you would be given a free hard-copy of his book, REITs to Riches, (highly recommended to read) as well as a ring-binder file that contains all the material notes and presentation slides.
Day 1 – Morning
9 am: Wien started off the morning with an Introduction of what a REIT is, the structure and benefits of owning REITs, the regulatory background of REITs and how REITs differ as an asset class. Most parts of it have already been covered comprehensively during his preview workshop. I think he spent around 2 hours just to talk about all these, which I felt wasn’t that exciting to me. Nevertheless, if you are starting from ground zero, knowing all these are important and it forms the very foundation of understanding REITs.
11 am: After going through the administrative and regulatory aspects of what a REIT is he went on to talk about “financing and growing a REIT”. This is where he talks about debt-financing, equity-financing, organic growth and inorganic growth. I would say these 4 topics are the nuts and bolts of REITs operations. Again, this is also pretty much covered during the preview workshop, but in the “real course”, he went a little deeper on and describes what makes an acquisition “yield accretive”.
12 pm: Before we went for lunch, he covered on the role of sponsors and how to anticipate future acquisitions from management’s actions. I believe this lesson is particularly important to me as these are things that are not taught anywhere else. Having the foresight to anticipate future outcome allows one to get in the game early before the news media leaked it out. One example is Mapletree Commercial Trust borrowing $2 billion medium-term note loan in mid-2018 and this amount is relatively close to the valuation of MBC II. From this announcement, we can deduce a MAJOR potential acquisition coming up and take advantage of the opportunity to buy in before the mass market reacts.
Opinion: I felt the morning was kind of slow, draggy and lengthy. There was lots of repetitive information from the preview workshop. It is a good refresher course for those who are just starting out and do not have a clear understanding of REITs yet. However, if you are an intermediate investor, it might be a little dry for you. As for me personally, I already knew most of the information beforehand, so it really differs from one individual to another.
However, there are some useful lessons that I picked up along the way too. For example on the topic of “yield accretive acquisition”, I have never thought that a particular transaction can be “yield accretive” BUT also “DPU dilutive”. There is actually more to this than meets the eye and these are the valuable lessons that personally enhanced my analysis in REITs.
Actually, this is what separates a “sophisticated” investor from the “average” retail investor. A sophisticated investor is able to dissect, cross-check and make an independent calculation that differs from the managements’ assumptions. If you are able to get a good grasp of this skill, I would say you are already one notch up above the majority of the retail traders. His course really does teach you how to think beyond figures that are often presented at face value and this is what I look for in determining whether an “investment course” is good or average.
Day 1 – Afternoon
Lunch: Food was provided and there were pizzas, chicken wings, slices of garlic bread and soft drinks.
1 pm: After lunch, he covered the characteristics of different sectors in REITs. Examples include the behaviour of tenants, nature of the industry (discretionary, cyclical, necessity etc.) and lease characteristics. To be honest, I think all these are just descriptive information which is non-value adding as it can easily be found online or in some of the REITs books (Building Wealth through REITs by Bobby Jayaraman and REITs to Riches by Wien himself).
The interesting and useful part only comes next when he went on to talk about what are the lagging indicators and leading indicators to look at, where to find these source of information for each sector as well as the macro supply and demand factors and how they affect prices of properties. Knowing what economic data to follow really broadens your thinking and it helps you to analyse REITs in a more comprehensive manner. You would be more in tune with the general market condition within a particular sector and tell which stage of the cycle your portfolio of REITs are in.
1.30 pm: This is the accounting part of the money cycle in REITs. How money is raised, spent, earned and distributed back to unitholders. This is where he teaches you how to analyse the balance sheet, profit and loss statement, cash flow statement and distribution statement. I believe this is the NUMBER #1 SKILL to have in investing, whether it is REITs, stocks or a business trust. This is because all financial analysis and valuation stem from the foundation of learning how to interpret financial statements.
For example, in the workshop, he gave a few case studies of how it is important to compare free cash flow with the dividends distribution so as to evaluate the sustainability of a business trust. If you have no idea on what free cash flow is and how it is calculated, you wouldn’t be able to evaluate the sustainability of a trust’s dividend payout ratio and you might have easily fallen into the yield-trap of investing.
2 pm: After going through the basics of accounting, the next section is the financial evaluation of REITs. This is where he covers what cap rate is, what NPI yield is, what DPU is, what NAV is, what P/B is, what gearing is and what interest coverage is. Again, I believe all this information are easily found online and it’s not much of a value-adding content. However, there are some parts that are useful though (e.g. How to use P/B ratio correctly, How to consider perpetuity securities when looking at gearing ratio). If you already knew all the above metrics, you will probably be less engaged in listening. But if you have no idea what all these is, then this section would be particularly important and valuable as knowing all these metrics can help you evaluate the risk profile of a REIT, operation performance of properties as well as using them in relative valuation to check if the REIT is undervalued or overvalued.
2.30 pm: Having understood all the REITs metrics, he went on to talk about how these metrics are frequently published in management’s presentation slides and how they can be misleading or distorted through financial engineering. It is an eye-opening experience as you are really taught on how to challenge management’s assumptions, valuations and eliminate all the cognitive biases. As mentioned earlier, these are the kind of skills that you need to get your hands on and this is what separates a sophisticated investor versus someone who just looks at whatever that is presented at face value.
After this section ends, his presentation slides showed “Lunch Time” (lunch should be around 12 pm). As you can see, the time wasn’t so well-managed as I think he spent too much time explaining the introduction and structure of REITs, which I felt wasn’t that important in helping you to analyse REITs better. Furthermore, there were lots of Q&As going on in the morning too which further caused this buildup in delay.
3 pm: After having understood the basics of accounting, the basics of REITs metrics, he went on to talk about valuing a trust (absolute valuation, relative valuation, a margin of safety, etc.) This is the section that I was MOST interested in as the lessons covered teaches you how to calculate the intrinsic value of REITs as well as how to tell whether a REIT is undervalued or overvalued through various relative valuation methods. There would be case studies and hands-on experience to guide you along the way in calculating all these values and I personally use them now to analyse REITs.
I previously mentioned that Wien speaks from experience in the market, not theories from the textbooks. This is a good example as he has back-tested assumptions used in valuation such that it gives the closest approximation of fair value. I made the mistake of doing valuation based on finance textbook models but the lesson that I have learnt is that one should always back-test a theory and see if that applies in practice in the market. Good stuff right here.
4 pm: He dived into assessing risks before investing and there are a couple of risks in the list (Interest rate risk, sentiment risk, capital management risk, exchange rate risk, concentration risk, occupancy and renewal risk, income support agreements and creative structuring).
He started off talking about the cyclic nature of REITs such as how long they rally and how long they correct. He also talked about the cyclic nature of the economy through observing yield curve spreads and compression between short-term bond yields versus long-term bond yields. Understanding REITs on the micro-level is not sufficient, it is also equally, if not more, important to look at the macro trends and direction of where the REIT cycle is in. I am not going to write at length about other risks as this section is content-heavy. But the course covers a comprehensive list of risk factors to look at and these are things that are not commonly found online or in books and they are often overlooked as an investor.
5.30 pm: In the last section, it’s about how to assess the management of REITs, probably one of the more subtle and qualitative evaluation, but yet an important piece to consider. He gave all the examples & case studies of how some REITs managers are aligned with unitholders while others are not. Other topics covered include how to use insider trading information to your advantage, how to evaluate the track record of management as well as property pipeline and acquisition history.
6.30 pm: Finally, before the first day of the workshop ends, he concluded to teach us how to construct our portfolio, the 3 money bag strategy and layout the common pitfall traps that investors fall into. I would say this is more of the psychological and mindset aspect of investing. This is where we learn how to diversify our risks, how to create a watchlist, what to look out for, how to allocate capital strategically into different funds as well as the strategies in buying-in or selling-out. He laid out 5 common traps which are (DPU-yield, Income support arrangements, getting in at a wrong price, overlooking concentration/currency risks and confusing REITs with Trusts).
I liked the part about his “3 money bag strategy” as he allocates available cash for investments into 3 classes: Strategic, Tactical and Opportunity. The proportion of capital allocation can be adjusted based on individual’s risk appetite (aggressive, growth, balanced and conservative) and financial circumstances.
7 pm (Dinner): When the workshop ends, we went to a nearby bar to have our dinner together with Wien as it was raining heavily outside. You can network with him, talk to him about anything, ask him questions and just make friends with the other attendees from the workshop.
Opinion: In conclusion, what I like about the workshop on day 1 is that every discussion point is backed by real-life case studies, real transactions and real REIT companies. It is more of an application-based approach rather than the traditional education system where only theory is taught. The learning experience is slightly different and there are a lot of hands-on activities in calculations. You are being taught to look at real management presentation slides, disclosures and make interpretations from this information. Not only that, you would also learn how to separate the wheat from the chaff and challenge assumptions made by management by coming up with your independent calculations. (traits of a sophisticated investor).
Another thing I like is that this workshop is not only specific to REITs, but it also covers the macro aspects of REITs. Knowing both macro and micro kind of completes the full picture of REITs investing and it really enhances your understanding of REITs in a more comprehensive way. You will know how to zoom in to REITs valuations and zoom out to analyse supply/demand factors within a sector. Day 1 pretty much covered the A-Z information of REITs investing and you would DEFINITELY gain a deeper understanding of REITs operations.
Day 2: Afternoon
I was unable to make it for the 2nd day of the Jan workshop. So I requested to postpone to the 2nd day of the March workshop. Wien mentioned that his workshops dates are strategically planned such that the attendees have a time period to make investment decisions right before the earning results are released. He will share his personal view on some of his favourite REITs counter, what to expect and how he makes his analysis.
How it works is that after having understood all the basic metrics of REITs, how to calculate relative and absolute valuation, how to assess management’s competency and risk profile, how to read the financial statements and etc, 2nd day is about putting EVERYTHING that has been learnt into PRACTICE. There will be 10 case studies or rather 10 REIT companies that Wien refers to it as “gem REITs”. The surprising thing is that almost half of them are International REITs from HK, Australia and the US. There were attendees from earlier batch intakes who recouped their “course fees” by investing in the REITs that were recommended in the case studies.
The sad thing about his 2-day workshop is that the 2nd day is mostly focused on case analysis only. Instead of 9 am-7 pm on day 1 of the workshop, the 2nd day starts from noon at 2 pm-7 pm. So technically it’s actually a 1.5-day workshop.
2 pm: When I attended the 2nd day of the workshop, he immediately started off with case study #3. So I think the presentation format of the march batch workshop is slightly different from that of the Jan workshop. I would not reveal the 10 REITs that he has specifically filtered out but these are really solid excellent REIT counters and some attendees have made back their course fee by investing in these REITs.
The way Wien analyses REITs is very different from what we usually see on analysts’ reports. He extracts information from management disclosures and makes certain deductions on the REIT’s next course of action. To give an example, a typical analyst report would talk most about financial ratios and growth factors. But Wien would go deeper to analyse who the substantial shareholder is, what is the behaviour of their transaction activities, what is the strategic objectives and what are the opportunities that lie ahead for unitholders. He would piece the puzzles together, find the connecting links, connect the dots and form a story of what the REIT management is doing. That’s why the saying goes “People lie but actions NEVER lie”, ignore the market noise and just look at what are the actions undertaken. His approach of analysing REITs is rather unique and its definitely not found anywhere online.
For some of the REITs, he even goes to the extent of meeting up with the CEOs to understand about the future growth prospects and strategies better. That’s the reason why I earlier said that he is deeply involved in the REITs industry. It reminded me of the “scuttlebutt strategy”, a term coined by legendary Phil Fisher. It refers to the approach of conducting due diligence by talking to all kinds of people (CEOs, employees, competitors, suppliers, vendors, etc.) on the ground. This is also the trait that separates a mediocre analyst from an exceptional analyst in a brokerage firm. The latter has ground knowledge.
Break: There are some biscuits, tea and coffee provided at the pantry.
4 pm: Next, he went on to talk about international REITs and it really opened up my eyes to the world of REITs. There are all kinds of creative business ideas from childcare centres to cell towers. These international REITs have gearing ratios and triple-net-lease structure that was NEVER seen before in local S-REITs. Some lease expiry profile even extends up to 2040 while others have a gearing ratio of only 10%! Their revenue, net profit and DPU of these REITs are growing very consistently and the risk profile of these REITs are relatively low.
However, the REITs he has filtered out are mostly capital play REITs. He is going in for the capital appreciation and the dividend yield of these REITs are < 5%. If your investment philosophy or strategy is geared towards dividend-investing and yields, you would have filtered out these REITs from your watch list. Another reason is that these REITs are the cream of the crop and their yield seldom goes above 5%. It’s equivalent to our Parkway Life REIT where the average 5-year dividend yield is around 4.5%.
In every case study, he would do a walk-through of his analysis process based on everything that is covered on day 1 of the workshop. This means we are taught how to calculate absolute valuation, relative valuation, how to analyse macro supply/demand factors, how to analyse future growth factors (organic or inorganic growth) and how to evaluate risk profile. (gearing ratio, interest coverage, currency risks etc.)
6 pm: There was another short break after he presented all the 10 case studies. After we returned from the break, he asked if there were any questions and the next thing I know is that a 40-minute Q&A session ensued. As you have guessed, the workshop didn’t end at 7 pm, it ended 45 minutes later and a lot of attendees started leaving the room missing out on sections such as “Building your portfolio, assessing management risks and common traps investors fall into.”
Opinion: His case analysis is really eye-opening, engaging, filled with substance and it really broadened my outlook in REITs investing beyond the borders of Singapore. If you are new to REITs, it would be recommended that you go through the materials that are presented on day 1 of the workshop so that you are familiar with all the metrics, methodologies and financial ratios. This is because the pace on day 2 of the workshop is much faster, deeper and analytical. He would speak to the class with the assumption that we already know the A-Z of REITs investing which is covered on day 1 of his workshop.
My belief is that in any field, the risk of whatever you are doing decreases when knowledge increases. What you want to do for yourself is to accumulate as much knowledge as possible. In the case of REITs, you should learn the ins-and-outs of REITs, how they operate, how they finance, how they grow, what are the risks, what is the valuation, what is the market condition etc. Knowing what information to look out for as well as how to interpret the information would really help accelerate your investment journey in REITs.
If you are unfamiliar with the above questions and is new to REITs investing, this workshop can be thought of as equipping you with the proper armour and weapons to help you survive through and win the war. Don’t make the mistake of not buying any gears and stepping out naked in the battlefield. As Warren Buffet always quotes, “Risk comes from not knowing what you are doing”. So make sure that you know and understand REITs FIRST before plunging in the first dollar in the market.
You would learn almost everything about REITs investing from Wien and I do believe he is the RIGHT guy to teach REITs based on his industry experience and REITscreener software. He has a very unique way of analysing REITs and he constantly challenges you to think deeper. It’s better and safer to pay the “school fees” on learning rather than pay the “school fees” from making mistakes in investing. Hence, for new REITs beginners, this course is highly recommended for you.
However, if you are an intermediate investor and you have been investing in REITs for a couple of years, then the marginal benefit would not be as high as someone who is new to REITs. I would say 50% of the information on day 1 of the workshop would be like a refresher course and the only thing that adds value is the analysis and interpretation sections of the workshop. If 50% of the information is stuff you already knew, then technically you would be paying $388 for a 1-day workshop instead of a 1.5-day workshop.
Hence, for intermediate REITs investors, I would suggest that the money is better off spent on REITScrenner, which I would be covering on in a later post. BUT, if you have the budget, you are looking for avenues to bring your analysis skills in REITs up to the sophisticated level, by all means, go ahead. I would say that 20% of this course is introductory, 30% is descriptive and 50% is analytical. There is DEFINITELY still substance to be absorbed and learning is a never-ending journey, so why not?
Either way, the preview workshop that he charges at $15 is definitely worth it. You don’t have to think too much for this and if you are unsure whether to sign up for the full course, you can always check out the preview workshop to evaluate the speaker’s substance for yourself. In fact, this is what I would probably do. The tickets to the preview workshop can be found here by clicking this link. (*Exclusive discount: Retail price is $15, after promo from The Babylonians is $12)
The last thing to point out is that I felt the time management of the workshop wasn’t very well managed. During both times when I attended the workshop, he would allow Q&As to overrun on what is supposed to be presented based on the material notes. If you have no commitments during the day, it would be advantageous to you as you are absorbing more information from him through the questions asked. But if you have commitments and have to leave on the dot at 7 pm to fetch the kids, you would probably felt short-changed that you paid for the full course but missed out certain sections of the material notes. Therefore, my recommendation is to keep your day FREE for the whole day as there is a possibility that the time might overrun. (Depending on class size, learning pace etc.)
*IMPORTANT UPDATE # 1: I previously mentioned that his workshop is technically a 1.5-day workshop as the 2nd day is just solely focused on case analysis for 5 hours from 2 pm – 7 pm. However, Wien has extended his workshop timing to 10 am – 5 pm on the 2nd day of the workshop. (might be 10 am – 6 pm or 9 am – 5 pm, depending on class size and learning pace). There would be more case studies, more examples and elaborations would be more in-depth to further reinforce the concepts and ideas in his material notes. So its good news for you.
*IMPORTANT UPDATE # 2: The time when I signed up was in Jan 2019 and back then the cost of his workshop was $488. However, due to the demand coming in and the extension of timing for his classes, he has increased the course fees to $588 for the June intake and $688 for the July intake.
*IMPORTANT UPDATE #3: Initially when the prices increased, there is an early bird discount of $100. However, this course is now officially approved by SkillsFuture, which means discounts are not allowed anymore based on the government’s policy guidelines. Prices will be now be standardized at $688 retail, BUT its eligible for a credit claim of up to $500 from SkillsFuture. This means that if you have $500 from your SkillsFuture account, the price would be reduced from $688 to $188. If you have $300 from SkillsFuture, the price would be $388 and so on. You just need to pay for the balance of whatever amount that is deducted from SkillsFuture.
If you are interested in joining the upcoming full workshop, simply click on the link here to enjoy the SkillsFuture discount. The slots would be closed off when the seating capacity has been maxed out. If you are really keen on attending the course, do sign up ASAP as the seats do go out fast. I am not sure when the next intake is and who knows whether the course fees will increase or not.
My personal review is not so important. More importantly, you can gauge the quality of his workshop by looking at what the market thinks. The first time when I attended his workshop, it was a smaller class of around 30+ attendees. 2 months later when I attended his workshop for the 2nd day, the location has shifted to a bigger space and it was a much bigger class of around 50 attendees. Not only that, he also increased the listing price for his workshop and it’s a tell-tale sign that the sign-ups demand far exceeds the maximum seating capacity of his workshop. They really do sell out fast.
To close off, if none of the above information is relevant to you, the one thing to take away from this post is that risks decrease as knowledge increases. If you want to become really good at something, you must be relentless in your pursuit of learning and always invest in yourself first. Spend the time and resources to build up your foundational knowledge, business acumen, investment judgment and analytical thinking skills. It will definitely serve you well in your investing journey in the long-run.