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 20 S-REITs that have been listed for at least 10 years, 17 of them gave a positive overall return for investors.
In this article, we are going to measure the performance of REITs that are listed in Malaysia. Just like Singapore, Malaysia REITs – especially the retail, office and hospitality sectors — were negatively affected. Retail REITs that rely on tourists such as Pavilion, KLCC, and Sunway REIT have not done well. And although pure-play office REITs such as Sentral and UOA REIT have improved, they have not recovered to pre-pandemic levels.
While REITs have been underperforming since the pandemic hit in 2020, their short-term performance is not an accurate representation of their quality. Short-term fluctuations are driven mostly by news, but long-term performance is driven by fundamentals.
In this article, we will measure the performance of Malaysia REITs that have been listed for at least 10 years. Of these, Amanah Harta Tanah (AHP) was privatised last year. And we welcome IGB REIT which now has a listing history of 10 years.
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 more money to subscribe to any rights (if any) 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) till 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. RM100,000 will turn 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%.
So after investing for more than ten years, here are the top five best-performing Malaysian REITs for Sophia. (Note: We’ve excluded brokerage costs, currency exchange gains/losses and taxes that might be applicable to foreign investors.)
5. IGB REIT (Annualised return: +6.19%)
Since 2012, every RM1,000 investment in IGB REIT would’ve turned into RM1,590. Including the dividends, every RM1,000 would cumulatively become RM1,820.
4. Atrium REIT (Annualised return: +6.50%)
Since 2005, every RM1,000 investment in Atrium REIT would’ve turned into RM1,430. Including the dividends, every RM1,000 would cumulatively become RM2,570.
3. Pavilion REIT (Annualised return: +10.68%)
Since 2011, every RM1,000 investment in PAVREIT would’ve turned into RM1,430. Including the dividends, every RM1,000 would cumulatively become RM2,260.
2. Sunway REIT (Annualised return: +7.71%)
Since 2010, every RM1,000 investment in SUNWAY REIT would’ve turned into RM1,560. Including the dividends, every RM1,000 would cumulatively become RM2,580.
1. Axis REIT (Annualised return: +10.74%)
Since 2005, every RM1,000 investment in Axis REIT would’ve turned into RM2,980. Including the dividends, every RM1,000 would cumulatively become RM5,200.
In summary, here is Sophia’s overall performance:
As you can see, the 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, Hektar REIT, AmanahRaya REIT, Tower REIT, Capitaland Malaysia Mall Trust and AmFirst REIT are currently sitting on capital losses. But when we include dividends received over the years, their overall return is still positive.
Singaporeans and foreign investors who are not comfortable with the 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: Applications for Dividend Machines are closing on Sunday, 6 Mar 2022, at 23:59 hours. If you’re looking for a way 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 only reopen in 2023. So if you miss this round, you’ll have to wait till next year before we open it to the public again.
Happy investing and we hope to see you on the inside! 🙂