What are some good REITs that I can consider for a passive portfolio? - Seedly
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David Lim

Asked on 01 Apr 2019

What are some good REITs that I can consider for a passive portfolio?

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Sandra Teo
Sandra Teo
Level 7. Grand Master
Updated on 07 Jun 2019

Hi there!

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.

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David Lim
David Lim

02 Apr 2019

Great! Thanks for the insight comments and charts Sandra. And thanks for the recommendation too ;)
Donald Kieran Ang
Donald Kieran Ang

03 Apr 2019

But recently there was some downgrade of the sponsor that caused the price to decrease
Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 8. Wizard
Answered on 17 Feb 2020

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.

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Jonathan Chia Guangrong
Jonathan Chia Guangrong

07 May 2020

Hi Darren. You may want to look into the dividend machines programme. Though I understand that intake is only once a year. Can't recall if it's still available for this year though.
Darren
Darren

07 May 2020

Thanks!
Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Updated on 16 Feb 2020

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):

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Pat
Pat

17 Feb 2020

Between this ETF and Syfe's REIT+, which would you prefer?
Frankie Rappaport
Frankie Rappaport

17 Feb 2020

I'm generally not a friend of bonds, which are balanced into Syfe's product. So for me: Lion.