REITs 101: Lesson 4 Different Types of REITs
There are in general six types of REITs listed in Singapore, allowing you to choose which sector that interests you most.
Source: Parkway Life REIT homepage
Make a quick guess on the photo is taken?
It is neither a hotel nor a service apartment's lobby. The photo was taken at the lobby of Mount Elizabeth Hospital Singapore! The hospital is managed by Parkway Life REIT whose business strategy is to provide 5-Star hotel services within the healthcare industry. Today, you can be one of the owners of these hospitals!
The healthcare system in Singapore has been consistently ranked as one of the most efficient healthcare systems in the world. With the rising population and foreign demand, the infrastructure to support the medical facilities will be crucial. As the basic necessity for society, healthcare REITs are among the most conservative and defensive REITs.
Healthcare REITs invest and manage healthcare facilities, including hospitals, nursing homes and healthcare-assisted properties. In Singapore, there are two healthcare REITs, namely Parkway Life REIT and First REIT. The former owns the most extensive portfolio of private hospitals in Singapore which includes Mount Elizabeth Hospital ad Gleneagles Hospital. On the other hand, First REIT's portfolio is more concentrated in Indonesia.
Source: Capitaland Commercial Trust homepage
Commercial or office REITs manage a portfolio of office buildings. For example, Suntec REIT owns Suntec Office Towers and Suntec Convention Centre.
Examples: Capitaland Commercial Trust, Frasers Commercial Trust
Source: Ascendas REIT homepage
Industrial REITs invest and manage warehouses, manufacturing centres and business parks. The performances of the industrial REITs are driven by the manufacturing sector which could be potentially affected by the business cycle. Nonetheless, it is amongst the REITs' industries that offer the highest dividend yield.
Source: Ascott Residence Trust homepage
Hospitality REITs manage properties such as hotels and serviced apartments. Its performance much relies on the tourism industry which is greatly affected by news and economic downturns. Hospitality REITs are usually structured as stapled securities (a combination of REITs and business trusts' frameworks) for operational efficiencies purposes.
Source: Capitaland Mall Trust homepage
Retail REITs manage shopping malls or shophouses which are the most relevant for shoppers. In Singapore, most shopping centres that you visit are likely to be owned by a REIT. For example, Wisma Atria, Paragon Mall, JCube, Bugis are all owned by REITs. Retail investors can also do their site inspection by going to the respective malls and observing the operations and foot traffic.
Source: Keppel DC REIT homepage
Keppel DC REIT if the only Data Centre REIT that listed in Singapore. With the rapid development of industrial 4.0, the demand for the data centres is surging. We would foresee that there will be more Data Centre REIT coming up.