Asked on 01 Apr 2019
One reit with a good track record in revenue growth and distributable income First Real Estate Investment Trust (SGX:AW9U). First REIT is a healthcare REIT with properties located in Indonesia, Singapore and South Korea.
Over the past 10 years, Firts REIT has achieved a CAGR of 18.03% in portfolio valuation. It expanded from 4 properties worth S$257.1 million in 2007 to 20 properties worth S$1.35 billion in 2017. Additionally, the group revenue increased from S$28.1 million in 2007 to S$111.0 million in 2017 (CAGR of 13.8%). In terms of distribution per unit (DPU), First REIT grew 1.2% to 8.57 cents.
Moving forward, First REIT seems to be able to sustain growth with its favorable lease agreements and strong pipeline of properties for potential acquisitions in the future. Additionally, as of 31 Dec 2018, the REIT's gearing ratio stood at 35% which is considerably lower than the regulatory gearing ceiling of 45%. This puts First REITs in a good position to fund future acquisitions through debt.
I won't really consider going into a reit etf as suggested by Frankie. Reason being there are management fees involved and the dividend yield is lower. Not to mention you can replicate the holdings yourself since they are transparent.
For reit building, you need to decide which sector you are comfortable with. Look at the quality of the sponsors and their track record. Can they grow the dividend and stock price over time? Are the dividends stable at least? Any wonky management decisions? (OUE).
Personally I'm somewhat biased towards the industrial sector. Been holding AIMS APAC for quite a number of years. Currently leveraged into Sasseur and MLT with some good paper gain for both.
Suggest that you read up on the different reit sectors, their pros and cons before investing into any. Find an entry point when the nav and stock price are at its lowest.
Alternatively, there are some relatively affordable courses like dividend machines that are good for beginners to attend. This course only opens up once a year which is around this period I believe. Hope this helps.
Maybe You rightaway would like to consider Lion-Phillip S-REIT ETF since You want to build a passive portfolio. As the 10 year chart evidences Donald's input, AW9U depreciated lately, compared to the Lion-Phillip S-REIT ETF (CLR) and the STI (ES3):