How to evaluate and value REITs

REITs is a slightly different class compared to common companies as majority of the profits come from rental revenue and fair value adjustment to their properties.

As a result, we can use a slightly different method to assess REITS, and this is my simple checklist for a REIT. Note that the information is not mine solely, and some are taken and adapted from other blogs too (can't list them out as there are too many).


Attribute
Checklist
Gearing
30% to 35%
Yield
At least 5% to 8%
DPU over the years
Consistent and Increasing
Stock price
Below or near NAV
Type
Retail, office/ commercial, industrial/ logistic, healthcare
Geographic exposure
China, Singapore, Indonesia, Malaysia, Australia, etc

Most primarily invest in REITs for the dividends, so it is important to look into the checklist above to ensure that the dividends paid will be substantial and consistent.
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