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  • REITs Part 1 – Retail REITs 0 comments
    Apr 25, 2014 6:50 AM

    Hi friends,

    Would you like to own multiple properties and collect rental? Well REITs (Real Estate Investment Trust) is one way that we can do it. Just imagine putting aside some money every month to purchase a portion of some properties. Given time, you would have open up a pretty decent stream of rental income.

    Screen Shot 2014-04-24 at 12.48.16 PM

    As investor, we need to understand that there are different types of REITs holding onto different types of properties. In this post, I will focus on probably the simplest to understand - Retail Reits.

    I find it the simplest to understand as most of us have some form of interaction with these properties as we need to shop for our daily neccessities or would visit a shopping mall during weekends for entertainment and to relax.

    Now, in my opinion, the advantage of investing in Retail Reits is,

    1. Simple to Understand: As mentioned, it is pretty simple to understand. Hold a mall and rent it to businesses.

    2. Potential of Increase in Dividends (NYSEARCA:DPU) due to scarcity of land.

    3. Transparent: We can easily visit a mall that the REIT is managing and see if there are tenants there.

    But what are the things we need to take note of? (These can be applied to other types of REITs as well)

    1. Gearing Ratio: This is how much the REIT is borrowing. Just as if we are investing in a property, we like to have some form of leverage, but not too much.

    2. Land Lease: Personally, I will keep an eye on the time left on the lease as the land is not freehold. This will mean that when the lease is up, the REIT will have to pay a fee to extend the land lease and investors will need to prepare for that in terms of loan by REIT or share issues.

    3. Tourism Data: This applies more Urban REITs.

    4. Local Economy: This applies to Suburban REITs.

    Well, all in all, if the confidence in this data is there, and the price of the REIT is attractive (based on dividend yield and NAV), i will love to own a piece of Retail REIT.

    Specifically, these are the Retail REIT we can look into:

    REIT Name

    Description

    Lippo Malls Tr

    Retail (Indonesia)

    OUE Htrust

    Hotel (69%) + Retail (31%)

    Mapletree GCC Tr

    Retail + Office (China + HK)

    OUE COMMERCIAL REIT

    Retail + Office

    Frasers Com Tr

    Office + Retail (5)

    Frasers Cpt Tr

    Retail (5) + 31.17% of Hektar (MREIT)

    CapitaR China Tr

    Retail (China) - 10

    StarhillGbl Reit

    Retail (87.2%) + Office (12.8%) by Revenue

    Suntec Reit

    Retail + Office

    Mapletree Com Tr

    Retail + Office

    Fortune Reit HKD

    Retail (NYSE:HK)

    CapitaMall Trust

    Retail (16) + Office

    CapitaCom Trust

    Office (65%) + Retail (21%) + Hotel (14%)

    SPHREIT

    Retail (2)

    Source: reitdata.com

    We will discuss more on other REIT type and other things to look out for.

    In the meantime, do check out this research from OCBC done in 2012 for an detailed understanding of Retail REITs.

    www.ocbcresearch.com/pdf_reports/strateg...

    Cheers

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    To learn more about how to invest, join us in our Free Investing Workshop at <<valueinvestingprogramme.com>;>

    Sean Seah
    - See more at: www.investment-in-stocks.com/#sthash.w4t...

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