Interestingly, Hoe is reluctant to invest in REITs even though they are widely seen to be low risk instruments. The way he sees it, REITs are designed to deliver most of their returns through regular dividend payouts, but they still expose investors to the vagaries of the property sector. “No matter what, whether a REIT does well depends on the outlook. REITs do well when the outlook for the property market does well. If the outlook turns weak, there will be pressure on REITs.” Indeed, REITs came under tremendous pressure during the recent financial crisis. “In 2008, I had a handful of REIT managers who visited me, and I could sense they were in pain, wondering how to service their debt,” Hoe says. At the time, the REITs were facing difficulty refinancing their maturing debt, because credit ...