Real Estate Investment Trusts (REITs)

Real estate or property is a key asset class in an investment portfolio. Typically, before REITs were introduced, an investor may invest in property stocks and/or physical (landed) property to get exposure in the real estate sector.

Investors now have an option to invest in REITs by paying only a fraction of the real estate prices. In other words, REITs provide a way to invest in quality large-scale commercial real estate without having to buy the properties directly. REITs typically offer you a stable income stream and attractive distribution yields.

What are the benefits of investing in listed REITs?

Affordability:

Investments in REITs cost a fraction of the cost of direct investment in real estate. You can start off with minimal investment outlay.

Liquidity:

REITs are more liquid compared to physical properties. Units of listed REITs are readily converted to cash as they are traded on the stock exchange.

Stable income stream:

REITs tend to pay out steady incomes (similar to dividends), which are derived from existing rents paid by tenants who occupy the REITs’ properties.

Exposure to large-scale real estate:

You can derive the benefits of the real estate on a pro-rated basis through a REIT, a quality investment which is affordable.

Professional management:

You benefit from having the REIT and its underlying assets managed by professionals who will add value for a higher yield.

REITs must comply with the requirements of the Guidelines on Listed Real Estate Investment Trusts (REITs) by the Capital Markets and Services Act 2007, for listing on Bursa Malaysia.

All REITs seeking listing on Bursa Malaysia will require Securities Commission's approval, under Section 212 of the Capital Market Services Act 2007.

You may click on the respective REITs company profile for further details.

https://www.bursamalaysia.com/trade/our_products_services/equities/real_estate_investment_trusts

Real Estate Investment Trusts (REITs) in Malaysia are investment vehicles that own and manage income-producing real estate, such as shopping malls, offices, hotels, and hospitals. They allow investors to invest in a diversified portfolio of properties with a smaller capital outlay than physically buying property, offering stable income streams through dividends.

Key Aspects of Malaysian REITs:

Regulation:

Malaysian REITs are regulated by the Securities Commission Malaysia (SC) and listed on Bursa Malaysia.

Income Distribution:

To maintain tax-exempt status, Malaysian REITs are required to distribute at least 90% of their total annual income to unitholders, resulting in high dividend payouts.

Shariah-Compliant Options:

Islamic REITs, or i-REITs, are available and must comply with Shariah principles, ensuring investments and operations avoid non-halal activities and interest-based financing.

Benefits:

Key benefits include affordability, high liquidity (as units are traded on the stock exchange), professional property management, and potential capital appreciation.

Risks:

Investments are subject to property market performance, interest rate changes, and market demand/supply fluctuations.

Examples of Listed Malaysian REITs:

Some examples of REITs listed on the Bursa Malaysia include Sunway REIT, Axis REIT, IGB REIT, Pavilion REIT, KLCCP Stapled Group, and Al-Aqar Healthcare REIT, each with differing property focuses.

How to Invest in Malaysian REITs:

Investing in Malaysian REITs follows a process similar to stock trading: you need to open a CDS and trading account with a brokerage, fund it, and then buy or sell REIT units on Bursa Malaysia during trading hours.

https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/assets/5bb57e215f36ca0c38d98ed0/products_services_brochure_securities_REITs_list_291215.pdf