Why you should invest in Real Estate investment trusts

Sick and tired of lousy interest rates from your fixed deposits? Consider Real estate investment trusts instead! It combines the best elements of investing in a property and a stock and offers investors a higher and predictive yield. Interested? Read on further ^^

Further Disclaimer: The article below is intended for informative purposes only. It is not an inducement or offer to invest in reits or securities. Interested readers should consult their financial or professional advisers for more information if in doubt.

Why Reits are a smarter way to invest in property

Written by Shade

With the launch of the first Reit, Capitamall Trust, way back in 2002 and the establishment of a regulatory framework, Reits in Singapore has been gaining popularity steadily ever since. At last count,there are 18 reits listed on SGX amounting to a total market capitalization of approximately more than 24 billion SGD.

Why the huge demand for reits? There can be many reasons for this, but the main reasons are attributed to a growing class of investors who demand a steady and predictable form of investment and property investors who favour liquidity as opposed to illiquid property investment.

There are 3 main benefits in investing in reits as opposed to direct property investment. These are liquidity and affordability, diversification and leverage, predictive distribution yields and Asset management expertise of the manager.

A reit offers the benefit of liquidity to investors as it is listed on a stock exchange, thus, this gives it access to a wide public market. This gives investors the assurance of a “ready buyer, ready seller” and minimizes the risk of investing.

Reits are also affordable to most investors as the capital required is usually within their means and there isn’t a minimum sum. You invest what you can afford and there isn’t a need to get a loan from the bank to finance your investment, simply put- it is not capital intensive.

A common huge risk undertaken by traditional direct property investors is the lack of diversification and the cost of non leverage. A direct investment in property is capital intensive and lacks leverage. Reits linked up various properties and introduce leverage while effectively managing the risk of diversification.

An example of a diversified reit would be Capitamall Trust. The reit owns a total of 9 properties in both prime and suburban areas of Singapore. Should 1 property be underperforming in terms of rent accruement, the other properties in the reit would be able to cover the shortfall.

Lastly, it has been shown that many investors, especially those in their retirement years, prefer to invest in a stable and predictive form of investment where they are guaranteed a regular payout. Typically, a reit usually pays out at least 90% of its distributable income to unitholders. The average yield of Singapore reits is approximately 4.5%. Investors would no doubt find this attractive. Reits are also known to be less volatile as compared to stocks.

However, this is not to say that reits have no downsides. As to any form of investments, reits also carries risk and are naturally exposed to the cyclical nature of the stock market and the property industry. Should the property industry take a downturn, rental yields from the property held by a reit would decline and this would have a negatve impact on the distribution to unitholders. The Net asset value of the reit could also be affected in a property downturn and this would affect unitholders who may have invested in the reit above the issue price. There may also be the issue of unitholders having to rely solely on the competency of the asset manager. And should the asset manager fail to improve returns of the reit, the value of the reits may fall.

The above risks, however, can be mitigated by effective active asset management by the reit manager. Reits are usually structured in a manner where the interest of the unitholders is closely aligned with that of the manager. Performance fees would be paid to managers should they be able to procure high returns to unitholders, and as such, they would be motivated to the best of the ability to generate high returns.

The Property industry in Singapore is peeking again and is set to grow further in the coming years. Tax free distributions of reits has also helped spurred the number of reits listing on the stock exchange. With an ageing population, the demand for reits is set to rise.

With such bullish factors for the local property sector and more new and exotic listings coming in the future, the time may just be right to make an investment in a reit.

My Two Driving Forces

A friend told me this,

"I will never give up, because the moment I do, I lose my purpose and vision why I started on this journey in the first place. And since you're on the same journey as me, I'll push you forward, as much as I know you will when I fall."

That guy was a classmate that inspired me to work extremely hard in my last year in secondary school, allowing me to rank among the top in my school.

Before I started to study, he was like far better then me in every non-linguistic subjects. Thats why he said he'll push me forward... But in the end, I surpassed even him and many many others...

His words became and embodiment of what I believe in, two things :
- competition
and
- endurance

Anybody who knows me knows that I'm exceptionally competitive... T0 the point of obsession. Everyone and everything around me is perceived as competition, be it in the creative field, auxiliary field, or in the logical field.
Ironically, because of my intense competitive spirit, I become very depressed when I'm unable to reach my sky-high goal...
(i.e Trying to get Certificate of Merit [aka. The White Letter], from Poly)

The second is something I do, or rather don't know how to do... That is once I start on something, I don't want to give up. Or I just tell myself I don't know how to...
Its crazy. Especially when I take up like tons of commitments at one time, but somehow, this mentality enables me to take up stuff lots of people would be crushed under...


I'm not smart, at least not in the exceptional way... But the thing that differentiates me from many others is that I do not want to give up, lest I fall too far back and become unable to pick myself up again...


The same goes for the army.

National Service is one part of my life's journey that is unconditionally forced onto me. I'm not complaining or anything, but I want to make sure that every single day, every single moment is well spent there...
Be it networking with people, or doing physical training, or even learning drill...

I want to be a professional at what I do. Thats why I cannot afford to take one step back, because the future is too uncertain for those who keep stopping to take a breath.

I want to be a pro - at whatever I do that will benefit me.
I want to bench press a 100kg and marvel at myself doing so.
I want to do my 20th pull up and laugh at how I struggled to do IFAH in primary school
I want to break the 10 minutes mark for my 2.4 km run and feel the exhilaration running through my body.

There is only one journey. That journey is time.

Its what makes us all human. But what separates us humans are between those who know how to make full use of "Time" at every moment, and those who would rather sit back and watch the race.







We all got a race to finish.
What would you look back upon when your race is done?

DOWN WITH ODEX!! BOYCOTT ODEX!! *grins*

Haha.. the entire End-User Internet Community are in an uproar...
Everywhere, from Fridae.com to Hardwarezone.com, to Stomp and Trevvy and Sgforums...

Everybody HATES Odex! NObody LOVES Odex!

Ta-Dah! And I gladly join in the crowd...

Already like 5 of my friends have been fined between $3000-$6000 just for downloading a few anime. Like wtf?

Odex did the right thing to strike in Singapore's "I DON'T CARE FOR HUMAN RIGHTS" society.


DOWN WITH ODEX!!
DOWN WITH ODEX!!

JOIN THE REVOLUTION AND BLACK LIST THAT COMPANY!

LET THE INTERNET COMMUNITY RISE UP AND DESTROY A COMPANY THAT THREATENS THE VERY EXISTENCE OF HUMAN FREEDOM!!

now that we know that our ISPs are not safe? what of it?
they can just sell our ISPs, reveal whatever we are doing for fun?

wow. Lets just all go and use Lan shops better and revert back to the stone age.


ODEX SHOULD DIE
ODEX SHOULD BE DESTROYED


BOYCOTT ANYTHING THAT HAS ODEX IN IT!!



haha... oh. Dear me.
Then again, he's too busy sueing people. Like what the self proclaimed god of the anime market said.
He actually posted on Sgforums that "he has no time to quarrel" and is "busy sueing people"

OOOH..

dont you hate his guts..



I really hope that ODEX burns, gets destroyed, bankrupt its director crawling between his legs only to get trampled upon by the vast internet community.
The director is seriously haughty and downright sick.



for everybody reading my blog.

do yourself a favor
do everybody a favor
do ME a favor!

haha..

BOYCOTT ODEX.
DO NOT BUY ANYTHING THAT HAS CONNECTIONS TO DO WITH ODEX.

past the word on!

*highly encouraged*


xD


oh. btw, my disclaimer still stands. So if there are any pro-odex people here... (which I think would be like a needle in a haystack), please read my lovely disclaimer!


I HATE ODEX.
hmm... probably more then Xiaxue even.

but I LOATHE ODEX.

end of story! *grins*

Lol. I'm still on the Honour's Roll... =X

My Cameron Highland Trip Photos!

In-depth Botany.

yaay. they've expended botanical gardens!
its bigger, wider, and more gargantuan then ever now!

lolz. Went to botanical gardens to run, but ended up having to jog slowly, coz my calf muscles still ached from yesterday's gym training...

It was really beautiful though, the sun wasn't scorching or blazing, and all the plants were cast in soft shadows..

I could just sit at the Eco-Garden lake for like a few hours and stare at the black swans squabbling with each other or smell the little herbs that grew in the spice garden...

Amazingly, there was almost nobody (cept the gardeners) in the entire vast Eco-Garden... As far as the eye could see, it was like just you-me-and mother nature...


I lost my strength to jog by the time I reached the end of the Eco Garden (which I think its about 3-4 km), so I walked slowly back to the Tanglin gate...

I saw something really nice on the way back... it was 2 guys... I'm not sure what school they were from, but they were definitely from secondary school, coz the senior had long pants and the junior was wearing the short version..

The senior was brooding, and quite lost in thought... then the junior muzzled (I can't find a better term to use) into his arms and poked him until he laughed and both of them were rolling on the grassy hill...
I was about to run over and stop them from rolling into the Symphony lake, coz they were like really close to the lake - when something they did stunned me..

The junior rolled on top of his senior and kissed him..

*stun*
*blink*

That was in wide-open view of the public, (mostly tourists around the area).. but nobody else really bothered...

Then the senior caught my eye and started nudging his junior, embarrassed.... The junior's face had an indescribable expression on.... (maybe embarrassment too)

... I just smiled at them and jogged away...

at the corner of my eyes I saw them laughing and poking each other again...


when I lost sight of them, somehow tears just came blurring my vision...
for a moment there, I saw myself and... my ex...


it was... quite a beautiful day at the botanical gardens..... =)



I'll prod you if you're sad
I'll poke you if you're mad
I'll squeeze you if you're happy
I'll hug you if you're gloomy
Memories return to remind, how much I can love you more...

and how much more we can love each other....