Analysing REITS

[Nick]

Hi Soros,

There is no taxation on dividend income or capital gain for investors in Singapore equities.

The 2 Indonesian REITs are traded in SG$ and they pay their distribution in SG$ as. Individually, they may have their own set of currency risk. First REIT gets its rental income from Lippo in SGD so there is no forex risk to speak of in terms of rental income. LMIR on the other hand has to hedge its rental income which is paid Rupiah. The higher yield is due mainly to the Indonesia label - emerging countries have higher risk. I think we have to consider natural disaster risk as well.

Most retail and hospitality S-REITs trade at 4-6% yield. However, industrial REITs tend to trade at 8-10% due to the cyclical nature of their business. Foreign REITs also trade at a premium. There is also an HK REIT here as well. I think the REIT market in Singapore is pretty robust compared to the rest of Asia ex Japan.

Hope this helps

(Vested in First REIT)