Types Of REITs
Real Estate Investment Trusts (REITs) refers to a company that owns and operates income-producing real estate. The key features of REITs include:
- They are traded on the Singapore Exchange like a stock.
- REITs have to distribute at least 90% of their profit to their investors.
- High Dividend: At least 90% of profit is distributed back to investors. This is done on a regular basis, be it every quarterly or semi-annual. Dividends from REITs investing is all yours to keep. It will not be subjected to taxation.
- Convenient: Given that REITs are traded on the Singapore Stock Exchange, investing in it is just a few clicks away on your brokerage platform.
- Low Barriers Of Entry: REITs offer investors who believe in the value of the property market to be part of the growth without having to purchase a physical property on his own. Hence, it cost less to invest in REITs compared to investing a huge sum of money on a physical property.
- Liquidity: One can easily buy and sell their REIT shares, given that it is on the stocks exchange.
- Portfolio Diversification: Investing in REITs can help diversify one’s investment portfolio given that real estate prices may not be correlated to the stock prices in one’s portfolio. On top of that, within the REITs itself, the risk is diversified across multiple properties too.
- Slow Growth: Given that REITs have to distribute 90% of their profits as dividends, they are left with only 10% or less of their profit to grow. This hinders their growth, as compared to the other companies in the market.
- Investment Risk: There is no denying the risk involved whenever one invests. For REITs investing, it will be the factors which affect the real estate market such as property prices, debt, geographical location and interest rates.
read more
