By Calvin Yeo (reproduced with permission from his blog www.investinpassiveincome.com)

Before we begin, let’s start with the definition of REITs. REITs are corporate entities which invest primarily in real estate and have various tax benefits. To qualify for the tax benefits, a REIT is required to distribute at least 90% of their taxable income to unit holders. This rule is very important as since most of the profits are paid out as dividends, REITs do not retain much of the profits for debt redemptions, asset enhancement initiatives (AEIs) or acquisitions.

The first thing to understand about Singapore REITs (SREITs) is that they invest in different types of properties. The classes of properties include office, retail, office/retail hybrids, industrial, healthcare, hospitality and residential.  Each class is very different from one another, and have varying rental yields, defensiveness of rentals, prospects for rental increases, Weighted Average Lease Expiry (WALE) ...