What are the REITS to have for someone starting out on investing or should I just go for Lion-Phillip S-REITs ETF ? - Seedly

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Asked by Anonymous

Asked on 07 May 2019

What are the REITS to have for someone starting out on investing or should I just go for Lion-Phillip S-REITs ETF ?

Should I be picking on some of the REITS like FIRST , CapitaLand Trusts, Mapletree trust or I should just go for the Lion-Philips S-REITs ETF ? As I’m someone who don’t have a lot of capital and someone starting the investment journey. What are the recommended REITs I should go for if I’m picking my own ?

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Answers (3)

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  • CapitaLand Mall Trust
  • Ascendas
  • CapitaLand Commercial Trust
  • Mapletree Commercial Trust
  • Suntec REIT
  • Mapletree Logistics Trust
  • Keppel REIT
  • Mapletree Industrial Trust
  • SPH REIT
  • Ascott Residence Trust

1 comment

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Question Poster

08 May 2019

Thanks for the picks 👍🏻

Both Jonathon and Vineeta has listed down a long list of REITS, pretty sure you're slightly overwhelmed.

Perhaps instead of advising you what REIT to choose, here are various considerations when choosing one and perhaps armed with this knowledge, you are able to better make your own decision on which REIT to select!

When one purchases a REIT, in fact any stock/share, one wants 2 things.

  1. Capital Appreciation
  2. Consistent + Stable + Growing Dividends

The former is achieved through finding an asset that would constantly appreciate as well whereas the latter is through having a consistent + stable + growing Cashflow.

The points mentioned below are not exhaustive to each category and may affect the other category to a certain extent. But all in all, these are what a REIT should practise.

ASSET APPRECIATION

1) Locality

Retail | Hospitality REITs: Location with high traffic flows -- Demand brings about Supply etc.

Commercial REITs: Location that is easily accessible, CBD area / near wide range of amenities

2) Land tenure

Having a freehold land would allow one to hold the asset indefinitely until a buyer comes along with the right price.

3) Price

What's most important is the ability of REITs that are able to take the above 2 factors into account and purchase / dispose a property at an attractive price.

CASHFLOWS

1) Occupancy Rates

Given how REITs stands for Real Estate Investment Trusts, which means its revolving around Real Estate (which derives from the term Realty), take-up rate of the real estate is one of the major deciding factor in investing in REITs. What does take-up rate give you? It gives you the stability of Cash-flow.

2) Weighted Average Lease Expiry (WALE)

Aside from the Occupancy Rates, WALE is important as it shows how long does tenants have before their lease expires. This gives a rough indication to REIT holders on the stability of cashflow as well.

Did up an infographic on the various forms of REITs available in Singapore and how they rank on the Stability of Cashflows and their rental agreement terms.

Hope that now you're armed with this knowledge, you would be able to identify REITs that are the "cream of the crop" within each sector!

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 6. Master
Updated on 07 Jun 2019

I'll suggest avoiding the reit etfs. Doesn't make sense to pay management fees and get a lower dividend yield.

For me I'll look to any of the mapletree reits, capitaland issued reits, Frasers logistics and industrial, AIMS APAC. SPH reit as well as they seem to be finally looking to expand their portfolio. Unfortunately, these are currently trading above their nav now and not really a good time to enter. If you are not currently vested, look to hold cash while waiting for an opportunity. Or consider doing a small monthly dca to start getting vested. I'm currently doing this with Mapletree Logistics as I think they still have a small upside to get to. But please do your own due diligence first

2 comments

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Question Poster

08 May 2019

Is it wise to do DCA over a rota of REITs or focusing on just one ? Thanks for the insight 👍🏻
Jonathan Chia Guangrong
Jonathan Chia Guangrong

08 May 2019

Personally I'm doing dca into mapletree logistics only at the moment as I believe they still have some upside. Also have them in margin holdings. But this is me. Everyone is different. Since you mentioned you don't have a lot of capital, just start with one counter if you really want to start. Billy above gave some good insight into selecting a reit, so do give his answer some thought. It's a bit technical but it will serve you well in future when you are more experienced. Hope this helps