The once invincible REITs (Real Estate Investment Trusts) world has taken a beating in the past year due to the rising interest rates, with the iEdge S-REIT index, the benchmark for Singapore REITs, down 14% from its peak. As REITs are highly leveraged and have much higher debts than stocks in other sectors. The rise in interest rates means they need to pay more interest on their debts and that eats into their distributable income.
In this article, I want to share this video by Master Leong, a Singaporean YouTuber who frequently talks about investing in the China, US, HK, and SG stock markets, where he shares 5 SG REITs that he thinks are the blue-chip companies in the REITs world. They are CapitaLand Integrated Commercial Trust (CICT), Mapletree Pan Asia Commercial Trust (MPACT), Keppel REIT (KREIT), Frasers Centrepoint Trust (FCT) and Suntec REIT.
Master Leong also shared that he preferred commercial REITs over industrial REITs as industrial REITs have a very short asset lifespan, akin to an HDB flat with less than 30 years left. The metrics that he used to assess the REITs are Net Asset Value (NAV), Dividend Per Unit (DPU), Price to Book, and Dividend Yield.
Dividend Yield
The Dividend Yield is self-explanatory as it measures the percentage of dividends paid out to shareholders based on the current share price. So, the higher the better. Out of the 5 REITs, Keppel REIT offers the highest yield at 6.92%.
Net Asset Value
The Net Asset Value (NAV) measures the actual value of the REIT’s holdings by taking the market value and subtracting any debts, such as mortgage liabilities. A high NAV indicates the longevity of the fund, fund stability, and investor trust. Out of the 5 REITs, Frasers Centerpoint Trust (FCT) has the highest NAV at 2.32.
Price-To-Book Ratio
The Price-To-Book ratio determines the company’s current stock price per share divided by its book value per share. If the P/B ratio is less than 1, it suggests that the stock might be undervalued. Out of the 5 REITs, Suntec REIT has the lowest Price-To-Book ratio at 0.54.
Share Price Performance
I did a comparison of the 5 REITs based on their all-time price performances. Both MPACT and FCT performed much better than their IPO price. The other 3 REITs (CICT, Keppel, Suntec) are currently trading lower than their IPO price.
Which REITS am I buying?
Out of the 5 REITS, I like these 3 REITs, mainly because I have patronised the shopping malls under them and am impressed with the crowd volume as well as how well the malls are maintained. They are FCT which owns Nex, Northpoint City, Waterway Point, Causeway Point; CICT which owns Bugis Junction, Junction 8, Bedok Mall, Tampiness Mall; and lastly MPACT, which owns Vivocity.
I bought 500 shares of FCT, CICT, MPACT on 26 and 28 Dec 23 respectively. I have updated my purchases on my Patreon page, so if you are interested to find out more as a reference, you can follow me there. My purchase prices and breakeven prices are shown in the table below.
Why Am I Buying REITs Now?
There are 2 reasons why I am buying REITs now. The first reason is that I believe they are currently undervalued and have been through a huge correction due to the high-interest environment for the past 2 years. There is still much room to grow before they reach their all-time high. Now that the Federal Reserve has signaled a rate cut next year, I am confident these REITs will go back to their all-time high prices and create new records as they grow their profits with lower interest on loans.
I remember when I first started investing 10 years ago, REITs were very popular for dividend-chasing investors and their share prices were always increasing due to the increased dividend yield and payout every year. It would be a win-win situation to get both capital gain and high dividend yield as the REITs recover back to their all-time high prices.
The second reason for buying is that I wish to create a dividend portfolio that can pay me passive income over the years so that I have income coming in without doing much work, unlike options trading. I am inspired by investment gurus like AK47 who collected 200k in dividends in the year 2022. After my recent purchase, my dividend portfolio now makes up 0.4% of my total fund allocation.
Why Am I Using DBS Vickers That Charges A Higher Commission?
Compared to the popular low-commission brokerages, local and overseas, DBS Vicker’s commission is considerably higher, even using the Cash Upfront account. But there are 2 reasons why I chose DBS Vickers despite the higher commission rate.
The first reason is that my shares are secured in The Central Depository (CDP), transferred from DBS Vickers immediately after my purchase. If something happens to the brokerage, like the crypto exchange that went bankrupt, my shares will still be safe in CDP. This is applicable for Singapore shares only, so the bulk of my portfolio that are made up of US shares, is still parked with my brokerage, IBKR.
The second reason is to have the dividends credited back to my bank account instead of credited back into the brokerage. I liked the idea of receiving dividends in my bank account as that is a form of income that I can use to pay off my expenses. Having the dividends paid to the brokerage will result in an extra step of withdrawing from the brokerage and requires constant effort to do so over the long run.
I hope you find this sharing useful, especially if you intend to start investing for dividends or investing in REIT soon. Just remember to do your due diligence and research before you start investing in any stocks.
*** SEE MY TRADES & PORTFOLIO ON PATREON ***
If you are interested to find out more about my options trades and investment portfolio, I will be updating them on Patreon (on the same day I made the trades), so do follow me there if you need some reference or inspiration.
*** EARN FREE MONEY ***
Sign up for WeBull Securities Brokerage and sure-win free shares:
Receive Free Money When You Sign Up With WeBull Securities Platform
*** FREE BEGINNER GUIDE TO OPTIONS TRADING ***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
*** FREE MOTIVATIONAL BOOK ***
If earning more money from your investment does not excite you anymore, you may be seeking a purpose that brings fulfillment and meaning in life. I have written a motivational book that may be useful to you in some ways. You can also download a free copy here:
https://learninginvestmentwithjasoncai.com/finding-the-magical-realm-of-happiness-motivational-book
*** FOLLOW US ON SOCIAL MEDIA ***
Follow me on Facebook, LinkedIn, to get notified of my latest posts on social media. Or subscribe to my blog (scroll to the bottom of the page) to have my new posts sent directly to your mailbox.
*** BUY ME A CUP OF COFFEE ***
If my blog has benefited you in some ways and you would like to offer a token of appreciation, you may do so via this page. Thank you very much for your support!
*** MUST-READ BLOG POSTS ***
After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market.
If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You
In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey.
Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt
The precious 6 lessons I learnt after cutting more than half a million of losses in the stock market through bad investments and risky trades.
6 Lessons Learnt After Losing 551k In 10 Years Of Investing & Options Trading | What Newbies Should Know They Start Investing/ Trading
How I managed to build a 1M investment/ trading portfolio despite coming from humble beginnings.
How A Poor Kid Got To A 1M Investment Portfolio | Tips & Principles Of Building Wealth
I did these 10 side hustles while holding a full-time job, so I share them here so you can be inspired to grow your wealth through a side hustle that you enjoy.
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income
Struggling with inflation and high cost of living? Try these 10 methods to help you save money and accumulate more savings for investments or rainy days.
10 Ways To Save Money To Help You Fight Inflation & Rising Costs Of Living
Why I am building $120,000 of cash reserves in Singapore Savings Bonds (SSB) & 5 reasons why I think SSB is a worthy low or zero-risk investment that you can consider.
Why I Am Building $120,000 Of Cash Reserves In Singapore Savings Bonds (SSB)? | 5 Reasons Why SSB Is A Worthy Low-Risk Investment
Sharing why I am doing Dollar Cost Average (DCA) into SPY and QQQ ETF for long-term investments and a step-by-step guide to doing it automatically with Interactive Brokers.
Why I Am Doing DCA (Automatically) For SPY & QQQ For My Long Term Investment? (20% ~ 30% Upside Potential) | Step By Step Guide To Activating Automatic Recurring Investment On IBKR
Can options trading provide you with extra sideline income every month? In this post, I share my experience of generating income from options trading over the last 3 years.
Options Trading For Passive Income: Truth Or Myth?
Learning Investment With Jason Cai 