To The Moon

Many investors like to buy Singapore REITs for the comparatively resilient income stream they provide. Compared to government bond yields and fixed deposit rates, S-REITs have more attractive dividend yields.

This year is the 20th anniversary of S-REITs. The first Singapore REIT, CapitaLand Mall Trust, was listed in 2002. The S-REITs sector has since grown to 43 REITs with a total market value of more than SGD111 billion, representing about 12% of Singapore’s overall listed stocks.

WHAT IS A REIT?

REITs are funds that invest in a portfolio of income-generating real estate assets such as shopping malls, offices, hotels and industrial properties with the aim of generating incomw for unit holders of the REIT.

Assets of REITs are professionally managed and revenues generated from assets (primarily rental income) are normally distributed at regular intervals to investors. REITs allow investors to access real property assets, and share in the benefits and risks of owning a portfolio of properties.

Units of REITs are bought and sold on the stock exchange like other listed securities at market driven prices.

Do not assume that REITs are low risk and that the dividend income is recurring.

REITs can have different structures, geographical or sector focus, and some REITs may carry more risk, such as political and regulatory risk, than others.

Therefore, we have to study the fundamentals and read news about the REITs before we invest.

Two of my favourite REITS in my portfolio are as follow:

1) $ASCENDAS REAL ESTATE INV TRUST(A17U.SI)$(Dividend Yield of 5.35%, P/B Ratio of 1.17, Major Shareholder - CapitaLand Investment Ltd holding ratio of 18.04%, Weightage of 2.8% in Straits Time Index)

2) $MAPLETREE INDUSTRIAL TRUST(ME8U.SI)$(Dividend Yield of 5.27%, P/B Ratio of 1.33, Major Shareholder - Temasek Holdings holding 25.21%, Weightage of 1.6% in Straits Time Index)

All the analysts as shown below have stated “ADD/BUY” call for the above 2 REITs. The target price for Ascendas REIT is from minimum of S$3.20 to maximum of S$3.65 and the target price for Mapletree Industrial is from minimum of S$2.97 to maximum of S$3.35.