REITs, or Real Estate Investment Trusts, are collective investment schemes that are listed as corporate stocks. REITs investors own the property indirectly through share units which they hold and regularly gain income from the property’s portfolio.
REITs have a simple business model:
Generating income by leasing out properties. The property is managed by a professional team which actively seeks to lift the value of the property and the rent to increase potential income.
How do REITs generate income
REITs aim to deliver a source of recurrent income to investors through focused investment in a portfolio of income-generating properties such as shopping malls, offices, hotels and service apartments.
REITs by sectors
Measured by FTSE Nareit index, Asia ex-Japan REITs have registered around 14.1%1 annualised return for the period from 2009 to end of 3Q 2020 with dividend income contributing around 40%.
The average dividend yield of Asia ex-Japan REITs stands at around 4.4%1.
Fig 1. Yield comparison vs Equity/Government bond2
REITs benefit from Asset Enhancement Initiatives, which can help to further increase property values and maintain sustainable rental income.
Active tenancy management can further increase occupancy rates.
Long-term development strategies, such as mergers and acquisitions, can further drive potential returns.
Most of the REITs distribute stable dividends to investors from rental income, while real estate stocks further offer capital appreciation potential during different market and industry cycles.
For illustrative purpose only; and does not represent actual investment.
This Fund mainly invests in REITs in Singapore, Hong Kong and Australia. The dividend yields in these markets are relatively higher than other investment vehicles (see Fig 1); furthermore, given the relative maturity of these markets, they can provide investors with a relatively stable stream of income.
( The distribution amount is not guaranteed. Distribution may be paid out of capital. Refer to Important Note 3 )
Investment experience property investments, and assets and property management
USD 133+ billion4
Assets under management and administration in Asia
Professionals5 based in Asia
The Fund is authorised by the Securities and Futures Commission of Hong Kong (“SFC”). SFC’s authorisation of the fund is not made under the Code on Real Estate Investment Trust and does not imply official recommendation.