10 REITs that give you a fantastic yearly return

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REITs listed over past 5 years
REITs listed over past 5 years

According to SGX’s market summary report, these are the 10 REITs that would have given you a great return since the beginning of 2017.

  • Ascendas Hospitality trust (23.1)
  • Far East Hospitality Trust (15.5)
  • Mapletree GCT (22.1)
  • SPH REIT (8.6)
  • OUE Hospitality trust (19.1)
  • Soilbuild (19.4)
  • Viva (29.6)
  • OUE Commercial REIT (10.2)
  • Frasers hospitality (17.2)
  • IREIT (15.8)

Accordingly SGX has also listed out the REITs and Stapled Trusts that listed over the past 5 years.

REITs listed over past 5 years
REITs listed over past 5 years

REITs were first listed in Singapore in 2002 and now make up about 10% of the STI constituent stocks and three of the five STI reserve stocks.

For those who prefer ‘passive’ investing in ETFs, SGX has two REIT ETFs listed on it. They are the Philip SGX APAC Dividend Leaders REIT ETF and NikkoAM-StraitsTrading Asia ex Japan REIT ETF which listed on Oct 2016 and Mar 2017 respectively.

One great thing about investing in REITs is that the distribution or dividend yield of about 6% is twice as much as that of the STI ETF, or the average of all stocks in the STI index. This is why investors like the REIT asset class so much – for it’s passive income nature, and the fact that returns are backed by an income producing physical asset. This is unlike other stocks where the cashflow is produced by assets that are intangible.

The SGX report provides a great guide on how to calculate distribution and distribution yield for those new to investing in REITs.

Essentially, distributions are shown on an annual basis and the calculation as follows.

For example, OUE hospitality trust report 12 months of distribution

2QFY17 0.0121 cents per unit
1QFY17 0.0130 cents per unit
4QFY16 0.0136 cents per unit
3QFY16 0.0123 cents per unit
Total 0.0510 cents per unit
Distribution yield 0.0510 cents per unit divided by unit price of 0.745 cents = 6.8%

Overall

Singapore’s REIT market has come a long way since 2002, with institutional investment activity in the sector increasing. SGX reports that between April and July 2017, there was a net positive inflow of $134 million for those months.

Greater activity by institutions is likely to benefit retail investors due to better price discovery, lower bid-ask spreads, better corporate governance (as institutional investors pressure REITs to ‘behave’ themselves) and attractiveness of other companies to list their REITs on the SGX.

Check out some other articles that list 21 REITs that provide yields of between 6 to 8%, and an update of the REIT sector as of 21 August 2017.

 


If you find the above interesting and would like to get started on investing in REITs, we would love to be with you on the journey. One place you can get started on finding out more is our REIT data tracker and list of property and REIT events.

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