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| When it comes to dividend investing, many investors are
likely to invest in S-Reits, Non-S-Reits or Business Trusts depending on
their individual risk appetite.
What are S-Reits or Non-S-Reits? S-Reits refer to those assets in Singapore and Non-S-Reits are those assets in Foreign countries. As the S-Reits industry mature, many Reits now managed a mixture of both local and foreign assets. In layman terms, Reits are landlords of shopping malls, commercial office, industrial buildings, hotels, service apartments or even hospitals. You can view them like the shares of public listed companies. To get listed, they have to issue prospects in order to get money from investors through Initial Public Offer (IPO). With the cash collected, they can then purchase a pool of real estate properties which they will managed and collect fees for their service and then distribute the rest of the profits as dividends to investors like you and me. What are Business Trusts? Unlike Reits, business trusts can invest in any kind of assets that has a stable income profile as ports, infrastructure and telecommunications. Although business trusts tents to distribute out most of its earning as dividends, they are not required by law to do so, unlike Reits and they also does not have any gearing limitations. The lack of guaranteed dividend payments and debt levels also make business trusts much riskier than Reits. The Good about Reits Investment
For those who are interested in Reit investment and don't have the time to do research and monitoring, you can buy and sell ETF reits which are Lion Phillip S-Reit (CLR), Phil AP Div Reit S$D (BYJ) and NikkoAM-STC Asia Reit (CFA). Read here if you want to know more about Exchange Traded Fund. Branded S-Reits Singapore branded SReits refer to those managed by Mapletree, Capitaland (bought over Ascendas), Frasers, Keppel and ParkwayLife. Their dividend yields are usually lower due to the higher price tag but they give you peace of mind. Just look at Lippo Malls, First Reit, Sabana and Soilbuild, initially, they use high yields to attract investor but create long-term pain for them as their investors saw their devalue capital. How Good are the Branded S-Retis Good Reit Portfolio management are important and they are closely tied with powerful sponsor like CapitaLand, Temasek, Frasers and Keppel. The strong sponsor enable them to get better loans and more institutional funds via issuing of more share units to let them keep growing their reit portfolio. Stronger sponsor can change their Reit structure whenever they find that their portfolios have under performed. CapitaLand merge CapitaMall and CapitaCom for this reason. CapitaLand also revamp CapitaRChina from a pure mall trust to a multi-asset China trust which now can consist of asset such as industrial and data center.
Diversified We are not Warren Buffett who read the financial aspect of each companies, therefore, for majority of the individual who are working full-time, our best bet is to diversified our reit portfolio. The 2019-20 COVID-19 had taught an important lesson to reit investor. 1) The locked-down have cause the price of Malls and Commercial
reits to falls. Recovery came in as locked-down was ease.
Well Managed Reits By Sector If you are new and unsure of which Reits to invest in, then you can consider investing in these Reits which are well-managed with strong sponsor. Health Care ParkwayLife Reit (C2PU) - King of hospitals assets and health care facilities. PLife REIT is unique as one of the best managed health care reit that invests in income producing real estate used primarily for health care or health care-related purposes. Pure Data Centers Keppel DC Reit (AJBU) - SG no tech stocks but data centers are consider alternative tech investment. Keppel DC REIT is the first data centre real estate investment trust (DC REIT) listed in Asia, invests in a diversified portfolio of income-producing real estate assets used primarily for data centre purposes. Keppel DC REIT’s portfolio comprises 18 quality data centres strategically located in key data centre hubs in Europe and Asia. Data Centers and Industrial Mapletree Industrial Trust (ME8U) - MIT's property portfolio includes Data Centres, Hi-Tech Buildings, Business Park Buildings, Flatted Factories, Stack-up/Ramp-up Buildings and Light Industrial Buildings. They are strategically located in established industrial estates and business parks, which are served by good transportation infrastructure. These properties are also located near residential housing estates, providing tenants easy access to a skilled and educated workforce. Ascendas Reit (A17U) - King of Singapore business and industrial properties. A-REIT owns a portfolio of 102 properties in Singapore. As the Singapore Reits mature, A-REIT has managed to grow its external wing with 26 properties in Australia and two business park properties in China. Logistics Warehouse Mapletree
Logistics Trust (M44U) - Mapletree Logistics Trust (“MLT”) is
Singapore’s first Asia Pacific focused logistics real estate investment
trust. Listed on the Singapore Exchange Securities Trading Limited in 2005,
MLT invests in a diversified portfolio of
Logistics Warehouse and Commerical Freasers Logistics and Commerical Trust (BUOU) - FLCT has a portfolio comprising 99 logistics and commercial properties worth approximately S$6.0 billion, diversified across five major developed markets – Australia, Germany, Singapore, United Kingdom and the Netherlands. Malls and Commercial CapitaMall Trust (C38U) - King of Singapore Shopping Malls and Commercial Office (merging with CapitaLand Commerical Trust) which comprise of Bedok Mall, Clarke Quay, Tampines Mall, Junction 8, Funan DigitaLife Mall, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, The Start Vista, JCube, Raffles City Singapore, Lot One Shoppers Mall, Bukit Panjang Plaza, Rivervale Mall, ION Orchard and Westgate. CapitaLand Commerical owns 8 centrally-located quality commercial properties in Singapore and 2 properties strategically located in Frankfurt Airport Office District and Banking District. Mapletree Commercial Trust (N2IU) - Mapletree Commercial Trust (“MCT”) is a Singapore-focused real estate investment trust (“REIT”) established with the principal investment objective of investing on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets. Mapletree NAC (North Asia Commercial) Trust Management (RWOU) - Initially, its commercial asset was largely exposed to Hong Kong market and the riots had made its management reconsider its strategy. Beside China, MNACT have diversified, more assets had been acquired in Japan and South Korea. MNACT had reduces the income contribution of any single property and increases percentage of freehold assets. No single property will contribute more than 45% and 60% of MNACT’s enlarged portfolio by NPI and property value respectively. Retail Malls Frasers Centerpoint Trust (J69U) - FCT’s principal activity is to invest in income-producing properties used primarily for retail purposes, in Singapore and overseas. Its primary objectives are to deliver regular and stable distributions to unitholders and to achieve long-term capital growth. The objectives are achieved through a combination of its organic, enhancement and acquisition growth strategies. Utilities - Business Trust not Reit Keppel Infrastructure Trust (A7RU) - KIT is a listed business trust that provides investors with the opportunity to invest in a large and well-diversified portfolio of core infrastructure assets located in jurisdictions with well-developed legal frameworks that support infrastructure investment. The Trust aims to provide long-term, regular and sustainable distributions to its Unitholders. Multi-Sector India Focus Ascendas India Trust (CY6U) - A-iTrust was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. A-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. Moving forward, A-iTrust logistics and data centres, which are at a nascent growth stage are going to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.” Multi-Sector China Focus CapitaLand Retail China Trust (AU8U) - Started as the first and largest China retail shopping mall and in 2020, transform itself to become a multi-asset reits in China, Hong Kong, and Macau. It now have an expanded investable universe which will include business parks, commercial, data centres and logistics. Acquisitions in these asset classes will bring stability and “future-proof” its earnings profile against future pandemics. Bull and Bear 2002-2007 - S-Reit established with the initial listing of CMT on July 2002 and many other Reits came on board seeing the profitability of the new opportunity. Like any other boom time, Reit managers begin to leverage heavily as they get carried away by their business success. 2008 - Panic selling due to the US sub-prime crises. As Reits had borrowed heavily during the good times (many had increased their debts level to more that 50%), with the crises, it was confronted with risk of not able to service their debts. Many Reits investors got scared and start clicking the SELL button. 2009 - The selling during the crises had improve the well-managed Reits showing double digits yields which I don't think we can ever see this kind of yields again. Like any other crises, many Reits manager acted swiftly to clean up their balance sheets and reduce the business gearing via right issues and bank loans. Bear market does not last forever and Reits start to re-gain their favours as soon as the economy start to improve and the cycle restart again. Yield Calculation Your dividend receive will depend on the price you pay for your S-Reit. So the higher you pay for your Reit, the lower your dividend. Yield calculation example: Ascendas Reit (A17U) 27/Nov/2015 Multiple Dividends 0.08
Total Dividend for 2015 = 0.153 Assuming Price close at 2.35 Dividend 6.511 = (0.153 X 100) / 2350 (2.35 per 1000 shares) How To Buy/Sell Reits Reits are traded like stocks every work day from 9 am to 5 pm. You need a Central Depository Pte Limited (CDP) account and a Brokerage Trading account of your choice. To reduce the cost of reits buying, you can sign up with DBS Cash UpFront account as they charge a low commission rate of 0.18%. Conclusion Reits investment are also a form of business and like stocks, the transacted price can go higher or lower depending on the quality of assets that are managed and also the quality of the Reit management teams. Do remember that Reits are in the property acquiring and management for a fees business and their property value can goes up as well as down. Like the many millionaire dividend investor, it should only form part of your diversified dividend portfolio.
Read also; My Dividend Investing Strategy Singapore Chart Pattern Analysis STI ETF - Exchange Trade Funds How Can I Start Trading Stocks In S'pore Straits Times Index Stock Price History Credit Card That Saves You Money |
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