A Real Estate Investment Trust known as REIT is a listed company where investors gain exposure to a portfolio of investment properties. REITs work the same way as a mutual fund where REIT investors contribute its fund in a pool of capital. The company uses this fund to build the properties or pay only a fraction of the real estate prices and expand its portfolio. Income earned from the properties will be distributed among its shareholders semi-annually or annually.
There are currently around 18 Real Estate Investment Trusts listed in Bursa Malaysia. There are 8 different core categories of REIT investing in, namely retail, hotels, industrial, office, healthcare, warehouse, car parks and residential.
Investing in industrial real estate can be a great way to diversify your portfolio and make good returns. Industrial Real Estate Investment Trusts are an increasingly popular option for investors looking to do just that. Malaysia is a rapidly developing country with a growing economy, and Industrial REITs have been gaining traction in the region.
Industrial Real Estate Investment Trusts provide investors with an exciting opportunity to add property to their portfolio and gain awareness of the industrial sector. There are six REITs that have industrial exposure in Malaysia.
1. Sunway REIT (SUNREIT)
Photo Source & Company Information: http://www.sunwayreit.com/
Sunway REIT is a leading retail-focused REIT with a market capitalization of RM4.93B. Its share price is trading at RM1.44, with 4.88% distribution yield. It is one of the largest diversified REITs in Malaysia. Its portfolio comprises 20 properties, including retail malls, hotels, offices, a medical centre, industrial property and a purpose-built campus. Sunway REIT has a total property value of RM9 billion with a total gross floor area (GFA) of approximately 19.5 million square feet as of 30 September 2022. Its portfolio is strategically located in Klang Valley, Perak and Penang.
2. Axis REIT (AXREIT)
Photo Source & Company Information: https://www.axis-reit.com.my/
Axis REIT is also a diversified REIT with a portfolio located in the Klang Valley, Johor, Penang, Pahang, Negeri Sembilan and Kedah. It has a market capitalization of RM2.99B; its share price is at RM1.82 with a 5.19% distribution yield. It has 62 properties and 12 mil square feet of space under management. Its portfolio is industrial-centric, where it has offices, logistics warehouses, manufacturing facilities and hypermarkets.
3. Atrium REIT (ATRIUM)
Photo Source & Company Information: https://www.isaham.my/stock/atrium
Atrium REIT is a pure industrial REIT with a market capitalization of RM333.95M. Its share price is trading at RM1.36 and has a 6.51% distribution yield. Atrium REIT owns 8 industrial properties which 6 industrial properties are situated in Selangor and 2 in Penang.
4. AmanahRaya REIT (ARRREIT)
Photo Source & Company Information: http://amanahrayareit.com.my/
AmanahRaya REIT is another diversified REIT that has exposure in the healthcare, office, retail, hospitality and industrial sectors. It has a market capitalization of RM329.65M, its share price is trading at RM0.58 and it has a 14.28% distribution yield. It has 13 properties with an asset value of RM1.47B.
5. Al-Salam REIT (ALSREIT)
Photo Source & Company Information: http://www.alsalamreit.com.my/
Al-Salam REIT is a diversified Islamic based REIT with a market capitalization of RM208.8M with its share price trading at RM0.36 and a distribution yield of 7.38%. Al-Salam REIT operations include retail, office, education, and the F&B sector, which consists of restaurant and non-restaurant outlets. Their main tenants are the famous and our all-time favourite KFC and PizzaHut.
6. AME REIT (AMEREIT)
AME REIT is a newly listed, Islamic based, and pure industrial REIT with a market capitalization of RM613.6M and a current share price of RM1.18. There is no distribution yield yet since it is still fresh. AME REIT's portfolio comprises 34 properties with 31 industrial properties and 3 industrial related properties (also known as dormitories). It has a total property value of RM500 mil and 1.68 mil square feet of space under management.
So, what are the benefits of investing in REITs?
We can enjoy a few key benefits from investing REITs in the capital market. As long as REITs in Malaysia distribute at least 90% of their current year taxable income, its income earned is exempted from income tax. With a 90% income distribution, we can get better dividend income than investing in other companies. Besides, professionals manage these REITs; thus, this is truly an excellent passive income compared to putting them in fixed deposit.
Of course, some investors may argue that REITS is not as exciting as other growth stocks as there is not much volatility in REIT. REITs performance rely on occupancy rates and vacancy rate. When the occupancy rate increases, REITS income increases. Remote working is here to stay, thus it will impact gross revenues and distribution yields.
In conclusion, it is important to do your research before investing, as not all REITs are created equal. By understanding the different types of industrial REITs available, you can make an informed decision about which one is best for your individual needs. The list of industrial real estate investment trusts in Malaysia provided here should provide a good starting point for further research into the market.
For more information about REITs in Malaysia, kindly refer to Bursa Malaysia.
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