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112 pages

English

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A decade has passed since the launch of Singapore's first REIT, Capita Mall trust in July 2002. Despite that, REITs are not as popular as they deserve to be and continue to be plagued with misperceptions. Singapore REITs are one of the few businesses that offer a direct play on the domestic economy and have proven their resilience through market cycles. This book takes a deep and fundamental look at this asset class and explains why every investor should take a serious look at REITs. Building Wealth Through REITs simplifies REIT investing without sacrificing depth of knowledge. It discusses common perceptions about REITs and why many of them don't hold up to scrutiny. The book contains in-depth interviews with CEOs of major S-REITs that will stimulate your thinking and further your knowledge of various REITs. The book targeted at both novice and sophisticated investors will help you master the fundamentals of REITs and deepen your understanding of this asset class. It provides practical guidance on building a strong and high performing REIT portfolio, one that can set you on the path to financial freedom much earlier than you thought possible.

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Publié par	MarshallCavendishM
Date de parution	01 août 2012
Nombre de lectures	0
EAN13	9789814408752
Langue	English

Informations légales : prix de location à la page 0,0480€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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BUILDING WEALTH THROUGH REITS
BUILDING WEALTH THROUGH REITS
BOBBY JAYARAMAN
2012 Marshall Cavendish International (Asia) Private Limited
Published by Marshall Cavendish Business
An imprint of Marshall Cavendish International
1 New Industrial Road, Singapore 536196
All rights reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. Request for permission should be addressed to the Publisher, Marshall Cavendish International (Asia) Private Limited, 1 New Industrial Road, Singapore 536196. Tel: (65) 6213 9300, Fax: (65) 6285 4871. E-mail: genref@sg.marshallcavendish.com
The publisher makes no representation or warranties with respect to the contents of this book, and specifically disclaims any implied warranties or merchantability or fitness for any particular purpose, and shall in no events be liable for any loss of profit or any other commercial damage, including but not limited to special, incidental, consequential, or other damages.
Other Marshall Cavendish Offices:
Marshall Cavendish Corporation. 99 White Plains Road, Tarrytown NY 10591-9001, USA Marshall Cavendish International (Thailand) Co Ltd. 253 Asoke, 12th Flr, Sukhumvit 21 Road, Klongtoey Nua, Wattana, Bangkok 10110, Thailand Marshall Cavendish (Malaysia) Sdn Bhd, Times Subang, Lot 46, Subang Hi-Tech Industrial Park, Batu Tiga, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia.
Marshall Cavendish is a trademark of Times Publishing Limited
National Library Board, Singapore Cataloguing-in-Publication Data
Jayaraman, Bobby.
Building wealth through REITS / Bobby Jayaraman. - Singapore : Marshall
Cavendish Business, c2012.
p. cm.
eISBN : 978 981 4408 75 2
1. Real estate investment trusts. I. Title.
HG5095
332.63247-dc23 OCN801366381
Cover image by Marty Windle/Getty Images
Book designed by Adithi Khandadai Shankar
Printed in Singapore by Chung Printing Pte Ltd
For Elena and Mark
CONTENTS
Acknowledgements
Introduction
CHAPTER 1
An overview of Real Estate Investment Trusts (REITs)
What is a REIT?
Singapore REIT regulations
The structure of a REIT
How is a REIT managed?
How do REITs grow?
The Singapore REIT cycle: where are we today?
CHAPTER 2
REITs versus other yield investments
Property
High dividend stocks
Bonds
Perpetual securities
Business trusts
CHAPTER 3
Perception versus reality
Seven common misperceptions
CHAPTER 4
Different types of REITs
Retail REITs
Hospitality REITs
Office REITs
Health care REITs
Industrial REITs
Cross-border REITs
CHAPTER 5
The health of a REIT
How to read the financial statements
Balance sheet and financing strategy
Future performance
CHAPTER 6
How much is a REIT worth?
Valuing REITs
Value of management
CHAPTER 7
Building a strong REIT portfolio
REIT investing: slow and steady
Risks and challenges
The best days are ahead
CHAPTER 8
Interviews with S-REITs CEOs

Appendix: list of REITs in Singapore
Glossary
About the author
ACKNOWLEDGEMENTS
I have always been interested in investing and sharing my thoughts about investments from the perspective of a practising investor. My first articles on REITs were published in Pulses , a finance magazine (now defunct), and Singapore s The Business Times newspaper in 2010. I wish to thank Ms Teh Hooi Ling for giving me that opportunity. It was the positive feedback from many investors on the articles that inspired me to write this book.
I wish to express my appreciation to the management of several REITs who not only took time from their busy schedules to have in-depth discussions with me on REITs for this book but who have always been very co-operative in openly discussing the many aspects of REITs whenever I had questions. They have been instrumental to me in deepening my understanding of how REITs really work.
Special thanks to Simon Ho and Jeanette Pang from CapitaMall Trust; Dr Ronnie Tan, Victor Tan, Jacky Chan and Hao Wee Lee from First REIT; Ho Siang Twang and Vincent Yeo from CDL Hospitality Trusts; Lynette Leong and Ho Mei Peng from CapitaCommercial Trust; Dr Chew Tuan Chiong and Chen Fung Leng from Frasers Centrepoint Trust; Raymond Wong, Arnold Ip, Chang Sean Pey and Joey Goh from SaizenREIT and Viven Sitiabudi and Alvin Cheng from LMIR Trust.
I am grateful to Mr Mohammed Salleh, founder and CEO of Second Chance Properties, for his feedback on the book and for sharing with me his philosophy and insights about property investing and business in general. I have learned to appreciate the many details of running a retail business and the impact on retail REITs through these conversations.
Many thanks to my fellow investment enthusiasts-too numerous to mention, regrettably-with whom I have frequently exchanged ideas and who have encouraged me to write this book and provided valuable feedback.
Thanks to Lee Mei Lin from Marshall Cavendish, the publishers of this book, and Violet Phoon for her patience in editing it.
Finally, allow me to express my gratitude to my wife Elena and son Mark who put up with regular late nights as I tackled the volatile markets and wrote the book.
INTRODUCTION
The fact that other people agree or disagree with you makes you neither right nor wrong. You will be right if your facts and reasoning are correct.
-Benjamin Graham
Real estate investment trusts (REITs) allow you to become part owner of some of the best commercial properties in Singapore and other countries, and earn a regular income stream. The first Singapore REIT (S-REIT) was launched by CapitaMall Trust in July 2002. As of December 2011, there are 27 REITs listed on the Singapore Exchange (SGX) with a market capitalisation of close to S 40 billion. They cover malls, offices, hotels, industrial assets and residential homes.
Although in Singapore REITs have been around for a decade, many investors still seem unsure as to what to make of this asset class. Yes, it is similar to property in that it owns physical assets and earns rentals from tenants but its stock prices seem to act like that of any other stock, making it very volatile and, in the eyes of many investors, risky. Yet many would know of friends and acquaintances who have achieved capital gains and earn a regular income from strong REITs they have been holding for years.
My goal in writing this book is to help readers understand how REITs really work-in plain language. It is not meant to be an academic treatise or to give readers a superficial treatment of the different aspects of REITs. Instead, the approach I have used is a fundamental and intuitive one which a businessman would take before making any investment-be it in property, stocks or any operating business. The book does not recommend any specific REITs for investment but gives you the tools to pick a good REIT.
A deep understanding of REITs will increase your conviction in your investments and allow you to sleep peacefully during bouts of periodic market volatility. It will allow you to pounce quickly on undervalued REITs and realise strong returns. Some investors may well find that just by investing solely in a few REITs which they understand well, they will have outperformed the vast majority of stock market investors who jump in and out of stocks they know little about.
The biggest attraction about REITs is that it is a very simple business to understand: a few properties managed by a team of people. Unlike many stocks, virtually all the information needed to understand REITs is publicly available. This book will provide guidance to investors on the key areas to look for when evaluating REITs.
As a REITs investor I attend annual general meetings (AGMs), speak to REITs managers and other investors and follow on-line forums on this subject. I remain amazed by the many myths and misconceptions about REITs that continue to be held even by experienced investors. It is hoped that this book will help to clarify some of these issues. Also included in the book are several in-depth interviews with REITs senior management which I hope you will find insightful.
This book is meant for anyone considering to invest in REITs and interested in understanding all about this asset class-that could be a young college graduate just stepping into the world of investing, a retiree wishing to increase his dividend income or someone who is already a seasoned investor and keen on deepening his knowledge. You may not agree with everything I have written but if this book deepens your understanding of REITs and helps you to become a more knowledgeable REITs investor, I will consider it a success.
I personally have benefitted enormously from investing in REITs and want to share the knowledge I have gained. I don t claim that this book (or any book for that matter) will make you an instant millionaire. But I firmly believe that a steady approach to investing and learning more about REITs as you progress will help you build your wealth with minimum downside risk and provide you with a sustainable source of passive income.
Unlike the message preached in business schools and finance textbooks-that high risk is required for high returns-I believe you can earn good returns over time with low risk if you are prepared to do your homework. Reducing risk in investments is not about reducing beta and volatility and jumping from one asset class to another. It is about increasing your level of knowledge and conviction in your investments. As Warren Buffett has pointed out many times, risk comes from not knowing what you are doing .
Some of the most successful investors I know are income investors be it from stocks, REITs, property, farmland or their operating business. They have identified a good, safe and sustainable source of cash flow and have put a significant portion of their capital in it, giving