What happened?
Singapore Real Estate Investment Trusts (REITs) often come up when investors think about earning passive income. Unlike buying a physical property, investing in a REIT allows investors to gain exposure to a portfolio of properties such as malls, offices, logistics warehouses, data centres, hotels and industrial buildings, without having to manage tenants, maintenance or leases directly. However, not every REIT with a high distribution yield is a good income investment. A high yield may sometimes reflect falling unit prices, weaker rental demand, rising borrowing costs, short lease expiries or concerns that distributions may not be sustainable. That is why I think investors need to look at more than just the distribution yield when searching for the best Singapore REITs for a sustainable stream of passive income. Within
Beansprout's four pots of wealth framework, REITs would usually sit within the
Income Pot, where we look for investments that can...