Potential returns from two key sources: capital appreciation and dividend income
REITs are a hybrid security. Although REITs are traded like equities, they also offer investors a regular income payout.
The income feature of REITs gives this asset class its defensive properties, providing a buffer when markets move lower and potentially enhancing total return for investors when markets appreciate.
Source: Bloomberg as of 31 December 2021
Asia ex-Japan REITs are represented by FTSE EPRA/NAREIT Asia ex-Japan REITs Index (capped). Performance in USD. The above information may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations. There is no assurance that such events will occur, and the future course may be significantly different from that shown here.
The dividend component of REITs has historically offered attractive and sustainable sources of income for investors. Also, the stable income streams provide a buffer to cushion overall losses during down markets, and to augment total returns during market rallies. The price appreciation, meanwhile, could offer capital gains throughout the reference period.
Over the past 10 years (as of 31 December 2021), AP REITs have delivered an annualised return of 9.17% p.a., of which 4.71% represents capital appreciation and 4.46% is from dividend income.
Source: Bloomberg, as of 31 December 2021.
Total return of AP REITs performance is the FTSE EPRA Nareit Asia ex-Japan REITs Total Return USD Index, while price return is taken from the FTSE EPRA Nareit Asia ex-Japan REITs Index. Dividend returns are calculated as the difference between the two indices. Indices are rebased to 100 as of 31 December 2011. Past performance is not indicative of future performance.
The above information may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations. There is no assurance that such events will occur, and the future course may be significantly different from that shown here.
Inflation that is a result of economic growth tends to translate into greater demand for real estate and subsequent higher occupancy rates, supporting growth in REIT cash flow and dividends.
A property lease may include rental increases that are tied to the Consumer Price Index (CPI). As a result, real estate is generally seen as a good hedge against inflation. The dividend return of Asia REITs has mostly exceeded the inflation of major REIT markets (as measured by CPI) in the past 10 years.