| Does a higher dividend yield mean a better Reit? |
| Not exactly. Dividend yields are based on current market prices. Changes occur when market prices move. A higher dividend yield may be attributed to the Reit falling in prices. For example, if you bought a Reit which had dropped to $1.50, and it pays out around $0.10 per share last year, then the dividend yield that you are getting is around $0.10/$1.50 = 6.66% pa. |
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| Before buying, ask yourself the following questions: |
| 1. Where is the location of most of its assets? |
| Although many of the Reits have assets located in Singapore, some have diversified portfolios in other countries. For example, Ascott Reit owns service residences in Asia-Pacific and the Europe region. Mapletree GCC Trust owns malls in China, while Lippo Malls own malls in Indonesia. Are the assets located in a politcally and geographically stable environment? |
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| 2. Imagine you are the owner of the assets, do you think the assets can generate good income? |
| Things you can look out for is the type of tenants, quality of the assets, industry it is in. For example, Fraser Centrepoint Trusts operates suburban malls such as Northpoint, Causeway Point and Bedok Point. These malls can be more robust due to having a steady crowd of shoppers, and tenants that meet the daily demands of the people in that area. |
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| 3. Who is the sponsor (aka "Ah-Gong") behind the Reit? |
| Many of Singapore's listed Reits are sponsor-backed, meaning that they are supported by a sponsor (usually a company) that injects its own properties into the initial portfolio of the reit at listing. For example, SPH is the sponsor of SPH Reit. Is the sponsor a strong one? What is its background, experience and reputation? |
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| 4. What is the general trend of the Reit? |
| Do check if the Reit is on a long term down trend, which you want to avoid as it may take awhile before the trend changes to return to your breakeven point. Having said that, most Reits are not volatile. |
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