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Jun Hao Toh asked 4 years ago

Hi Victor, Rusmin, and team,
I am currently investing in a foreign stock exchange’s real estate sector and I realised that many companies in the sector have unusually high D/E ratios (about 250 to 350) and are over-leveraged. So much so that it is pretty much the “norm” for companies in that sector from what I can deduce.
I checked with Investopedia and they mentioned that the typical D/E ratios for companies in the real estate sector on average is approximately 352. Which is pretty alarming given that you recommended going for companies with <1 D/E ratio.
Are there any cause for concern and is this really the norm?
Thanks in advance.

1 Answers
Victor Chng answered 4 years ago

Hi Jun Hao,
You may want to use debt to asset for real estate business as they required loan to purchased their properties.