What are the risks of investing in REITs?

REITs investments are mainly for dividends. SG reits give around 4-8% p.a currently. They pay quarterly mostly, some bi-annually. They are mandated to give out 90% of net profits.

risks. There are definitely more. These are main ones.

1) the mgmt underperforms; eg poor occupancy, lower rental reversions, no AEIs. The plunge in price may not be covered by various rounds of yield payouts. Beware of ”high yield” reits, it is Becos the price has dropped resulting in an attractive yield.

2) Forex risk; some invest in overseas assets. It is double-edged, the FX conversion may wipe out the yields. May be mitigated by FX contracts.

3) Asset sponsor financial stability ; they usually provide assets into the reits. Ie guarantee customer base. A sponsor downgrade may affect performance.

Hello!

Some risks include

1) Market risks ; Since REITs are traded on the stock exchange the prices are subject to demand and supply conditions. The prices of REITs usually reflects the investors' confidence in the economy thus the prices of reits are subjected to the markets.

2) Lack of diversification; this will likely happen if a large portion of the REIT's value is from one or a few properties, thus if something were to happen to one of them, there would be a greater risk of loss.

3) Leverage risk ; should the REI uses their debt to finance the acquistion of the properties, there is levergae risk. If the REIT were to be wound up, its assets will be used to pay off creditors first thus any remaining value will then be distributed to unit holders.

hope this helps!