Which REIT will you buy?? Maybe can follow insider ASIA.
For prudence’s sake, our model portfolio tends to hold quite a significant amount of cash, for which no interest is imputed. Of late, our cash holdings have risen further, in part, due to proceeds from the privatisation exercise for Tanjong plc.
We are monitoring the market for buying opportunities. However, valuations for the broader market have risen following strong gains in the past months. And with the global economic outlook still somewhat uncertain, we are taking a more cautious stance, for now.
As such, we have decided to move some funds into real estate investment trusts (REITS), which offer fairly good yields on relatively low risks. We acquired 20,000 units each in AmFIRST REIT, Al-Aqar KPJ REIT and Quill Capita Trust for a total consideration of RM66,600.
AmFIRST owns and manages assets totalling just over RM1 billion and is currently trading below its net assets value (NAV) of RM1.35 per unit. We estimate a gross yield of about 8%.
Al-Aqar is the first Islamic healthcare REIT in the world. Its investments are primarily hospital buildings, worth a collective RM1.1 billion, which are leased to KPJ Healthcare under long-term agreements. Yields are estimated at 6.3% at the current unit price of RM1.15.
Quill is among the cheaper valued Malaysian-listed REITs, in terms of price to net assets value — currently trading at only 0.8 times its NAV of RM1.22. The unit trust has been a laggard, under-performing the benchmark index, and is a candidate for re-rating. We estimate income distribution to total about 7.9 sen per unit for the current year, which would give a gross yield of 7.9% at the prevailing price.