Industrial REITs averaged a 12.8% return!

I found a very good source from SGX website about Industrial REITs. It gives a detailed explaination and discussion toward industrial REITs. For those interested on REITs should read it. If you looking for the full article may go to this link to retrieve. http://sias.org.sg/files/SGXMarketUpdates/03042012-Industrial-REITs-averaged12.8return-in-March-Qtr.html

It gives an idea to reader how the REITs work. Some of the worth to read information is, its explaining the REITs raise capital to purchase real estate assets and generate income as return to those invested them. Then the REITs have to distribute at least 90% of their cash flow income to unit holders in return for tax concessions from the Singapore Government. Actually most of the REITs will do this, some even distribute 100% of their income to shareholder e.g. Cache Logistics Trust for the first few years.

Besides it also educating the reader what is gearing ratios and how it relates to the REITs. Please remember that higher gearing ratio, the REITs will more sensitive to interest rate changes. Base on the table provided by SGX, we can see that Mapletree Logistics Trust has highest gearing ratio therefore you need to watch out this stock when high interest rate comes.

Honestly i like MLT pretty much as it has higher growth potential then others because its not just investing Singapore but oversea as well. Somemore it is under mapletree group who has better bargain power toward the bank regarding the interest rate. Hence i not so worry about him.

If you say Cambridge and Sabana REITS, then they are my concerns. Why? It is because they are new to the market and have lower market capitalisation hence they are harder to get a better interest rate. They are among the REITs need to control their gearing ratio very well otherwise it is not a wise choice to go for them although they are providing better dividend yield now. At the moment i am comfortable with their gearing ratio therefore i am investing Cambridge and evaluating Sabana for my friend. They are my watch list but if their gearing ratio runs higher, i will cut them off from my watch list.

 

Industrial REITs	Assets	Gearing Ratio
AIMS AMP CAPITAL INDUSTRIAL	Singapore	31.2%
ASCENDAS REAL ESTATE INV TRT	Singapore	34.2%
CACHE LOGISTICS TRUST	Singapore & Overseas	29.1%
CAMBRIDGE INDUSTRIAL TRUST	Singapore	32.2%
MAPLETREE INDUSTRIAL TRUST	Singapore	36.1%
MAPLETREE LOGISTICS TRUST	Singapore & Overseas	41.3%
SABANA SHARIAH COMP IND REIT	Singapore	33.3%