Contrary to what one may assume, Asian listed property trusts have a strong governance framework that essentially makes them passive ‘rent collection’ vehicles for Tier 1 commercial properties. Singaporean REITs for example have to pay 90% of their income to investors, providing a predictable income stream of around 6% pa. This sector therefore offers investors a lower volatility exposure to the massive growth tailwinds playing out in Asia. 

Key points 

• Strong governance frameworks underpin Asian REITs, with restrictions on gearing, development activities, or funds management activities, effectively making them pure ‘rent collection’ vehicles.
• Lease terms and covenants are very similar to Australia. Typical tenants would include multi-nationals, big law firms, etc. 
• Governance stipulates a 90% income payout ratio in key Asian markets like Singapore, Japan and Hong Kong. This supports a stable yield. Testament to this is that volatility of Asian REITs is lower than that seen in Australia, the US and Europe.
• Exposure to the growth tailwinds of Asia, supported by world-class governance. 

Further insights

The APN Asian REIT Fund managed by Corrine Ng is an income focused property securities fund that taps into an undiscovered region of opportunities. Find out more 

APN Property Group