The share prices of the Real Estate Investment Trusts (REIT) are now about 20% below its recent peaks. The yields on many REITS now range from an an attractive level, from 5% to 8%. Rentals on the properties owned by the REITS are expected to remain strong over the next few years, giving support to the high yield. This is an attractive class of investment.
I dont think REITS can be analyzed on current yield alone.
ReplyDeleteFactors to considered
- future assets income
- financing (borrowings and shares)
- future purchase/sell of assets
Currently, REITs are suffering because lack of financing available or expensive financing.
This affects their ability to refinance or make new purchases.
The rental income received by REITs assets may go down if global economy turns for worse. This may affects tenants' ability to pay rentals.
Unless you know what assets and financing are in REITs, better off not buying.
In
Hi Mr Tan
ReplyDeleteWhat REITs do you personally favour?
Some reit buildings remind me of some
ReplyDeleteChina town shopping centres where every space is rented out. More like pasar malan now.I believe this is to boost up the yield to look good. but be careful you have also to look at capital gain. Unfortunately,it is trading below net asset value.
Personally, I also favour REITs, which hand out attractive dividends, with some twice a year. There are many kinds of REITs, so one has to do some homework before purchasing the REITs. They have assets on hand, and if should they decide to sell, their EPS will rise. I think it is good to have some REITs in one's portfolio.
ReplyDelete