Last week, I updated an article about the top 10 Singapore REITs that would have made you money if you invested from their IPOs. Out of the 19 S-REITs that have been listed for at least 10 years, 16 of them gave a positive overall return for investors.
As the pandemic has fundamentally changed the way we live, the retail, office and hospitality sectors have been negatively affected. A lot of REITs listed in Malaysia with a bulk of their assets concentrated in retail have not done well. On the other hand, industrial REITs such as Axis REIT and Atrium REIT have recovered or exceeded their pre-pandemic levels.
In this article, we will not only look at the short-term performance of Malaysia REITs but also their long-term performance to get a more accurate picture as the stock market can be very volatile in the short run. With that said, we will only measure the performance of REITs that have a listing history of at least ten years. In total, there are 14 M-REITs that listed in 2011 or earlier.
We will make a similar assumption that Sophia (a fictional character) invests RM1,000 in each of these REITs from the day it listed. Since Sophia is a hard-core income investor, she doesn’t want to come out with any extra money to subscribe to any rights and is prepared for any share dilution. Let’s also assume that she neglects to sell her nil-paid rights from which she can make a profit from.
For example, if Sophia invested in Sunway REIT from its IPO in 2006, her initial investment of RM1,000 would have grown to RM1,600 (+60% in capital gains) by 15 February 2021. On top of that, she would have collected total dividends of RM970 (+97% in distributions).
From the table above, Sophia would’ve made a nice return in Sunway REIT as her initial investment of RM1,000 would have grown to RM2,560 including the dividends received over the years.
If she invested RM10,000, then her investment would’ve grown to RM25,600; and RM100,000 would’ve turned into RM256,000. Basically, the more money she invests, the more she makes. And the longer she holds, the more dividends she’s going to receive. All in all, her annualised return from Sunway REIT alone is 8.93% from 2010 to 2021. (Note: We’ve excluded brokerage costs, currency exchange gains/losses and taxes that might be applicable to foreign investors.)
So after investing for more than ten years, here are the top five best-performing Malaysian REITs for Sophia.
5. Sentral REIT (Annualised return: +6.86%)
Since 2007, every RM1,000 investment in Sentral REIT (previously known as MRCB-Quill REIT would’ve turned into RM1,100. Including dividends, every RM1,000 would cumulatively become RM2,370.
4. Amanah Harta Tanah (Annualised return: +6.57%)
Since 2005, every RM1,000 investment in AHP would’ve turned into RM1,410. Including dividends, every RM1,000 would cumulatively become RM2,770.
3. Sunway REIT (Annualised return: +8.93%)
Since 2010, every RM1,000 investment in ALAQAR REIT would’ve turned into RM1,600. Including dividends, every RM1,000 would cumulatively become RM2,560.
2. Pavilion REIT (Annualised return: +10.68%)
Since 2011, every RM1,000 investment in PAVREIT would’ve turned into RM1,550. Including dividends, every RM1,000 would cumulatively become RM2,760.
1. Axis REIT (Annualised return: +10.74%)
Since 2005, every RM1,000 investment in Axis REIT would’ve turned into RM3,070. Including dividends, every RM1,000 would cumulatively become RM5,120.
In summary, here is Sophia’s overall performance:
As you can see, Sophia’s M-REIT portfolio is a sea of green! Out of the 14 M-REITs that have been listed for at least 10 years or more, ALL of them have given consistent dividends and positive overall returns if you invested from their IPOs.
However, do note that YTL Hospitality, Atrium REIT, Hektar REIT, AmanahRaya REIT, Tower REIT and AmFirst REIT are sitting on capital losses. But when we include their dividends received over the years, their overall return is still positive.
Singaporeans and foreign investors who are not comfortable with forex risk are unlikely to be interested in M-REITs as the ringgit continues to weaken over the long run. However, Malaysians are unaffected by this as M-REITs are traded in their home currency. So if you’re a Malaysian, M-REITs are still a great option to build consistent streams of passive income.
Finally, just a quick reminder: 2021 applications for Dividend Machines are closing on Sunday, 14 March 2020, at 11:59 p.m. If you’re looking to learn how to invest in dividend stocks and REITs and build multiple streams of passive dividend income, then we urge to check out Dividend Machines before it closes. Once the deadline has passed, Dividend Machines will reopen in 2022. So if you miss this round, you’ll have to wait 12 months (or more) before we accept new members again.
Happy investing and we hope to see you on the inside! 🙂