Dear readers, these days, I have been hearing about analysts seeming to tout the merits of investing in Singapore Reits, which are at their 52-weeks low.
Definitely, the analysts have some caveats but by presenting some metrics of Singapore Reits as undervalued or with some analysts projecting possible rebounds of the Reits, especially if the US Federal Reserve starts to halt interest rate hikes or even decline, it seems that investors are sold the idea that Reits are currently heavily discounted, undervalued and worth an investment now.
Investors should avoid the value trap, just that a Reit or an equity is undervalued does not guaranteed that there will bound to be capital appreciation next or in future.
I understand some investors invest in Reits for their dividends. Just to share, I do not invest in Reits because to me, only way for Reits to grow their dividends yields is to increase the assets under management (AUM). And when AUM is increased via acquisition of assets including overseas assets (especially since Singapore market is small), that is where more risks come into the picture for the Reits. And that is where capital appreciation of risks and dividend yields might be affected.
Just my humble thoughts about Reits.
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