REIT Demystified

What are the risks?

• Distribution is subject to cash availability
  If the real estates of the REITs do not generate sufficient net operating profit and cash flow, the REITs ability to make distributions will be adversely affected.

• Returns are not guaranteed
  The dividend payments from investing in REITs are not guaranteed and the total return of REITs, amongst others , is subject to the performance of the property market. Hence, the unit price of a REIT may go down if its underlying properties drop in value.

• Loss of control over investment
  Investors will not have direct control over the management company’s investment decisions like when to buy or sell certain real estates, or how they will be managed.

• Market factors
  Like other investment products, REITs are subject to the vagaries of market demand and supply. As such, market fluctuations, confidence in the economy and changes in the interest rates may affect REITs price.
  
  There are other risks associated with investments in REITs. Please read and understand these risks that are extensively highlighted in the REIT’s prospectus.

Smart tips for REIT investors:

Before you invest in REITs, observe the following:

• Read and understand the prospectus thoroughly;

• Study the list of real estates included in the REIT investment portfolio, such as the location of the real estates, tenancy mix, lease length, rental payments in arrears and other related investment information (e.g. dividend policy, and fees and charges);

• Analyse and understand the fund’s annual reports.