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Portfolio: REITs

In the beginning of the year, I included REITs in my medium-to-long-term investment portfolio, on top of my Great Eastern Life and Health Insurance. 

Since REITs market in Singapore look rather healthy and seems to be the easiest asset to understand among the others in planning, I've taken the plunge investing into Viva Industrial Trust after shopping around. Since I've just started, there are a couple of key points I took note of and one main website I took as the first referral point before doing further research:

Sector. Since the investment horizon is 4-6 years, the sectors these REITs operate is a key consideration for me. Logistics-wise, industrial/manufacturing sector generally takes longer time to settle (transfer, setting up the equipment, or revamping the space to suit the business needs) at its new leasing space and their longer-term contracts meets my investment time horizon. Retail sector is less favorable in this regard - people come and go pretty quickly as theirs are not as asset-intensive.

Affordability. Looking for REITs which is under-valued (lower than its NAV) is another step. You'll be surprised at how many of these are sold way above their NAV. 

Client base. Of course, albeit the first 2 filters, if their client base is not diversified, this may still pose a challenge. My filter in this website was down to 2 very favorable choices, but I went along with Viva simply because the other choice's revenue comes from one large client renting 30% of its space and its lease expiring soon (2018). Imagine if that particular client decided to move out (before), what will happen? It's great if they have actually secured another huge client and disclose this but the very fact that it didn't.. led me to Viva.

These were simple consideration but fundamentally, it works for my portfolio so far. 


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