Saturday 7 October 2023

REITs that have IPO since 2019 have lost money for IPO Investors

Here is an interesting insight. Since 2019, all REITs IPO reits have not made money for investors who subscribed for it. That includes even the dividends received.

Ironically all REITs IPO'd with the number "8", but it didn't turn out to be auspicious.

What Went Inauspiciously Wrong?

To be exact, it was auspicious to the sponsors such as UOB, Keppel, Lendlease, ARA which profitted from the spinoff while it is the shareholders who were left holding the bag.

2019-2021 was when global interest rates were at its lowest, this meant the risk free and capitalisation rates which valued properties were at its lowest too. Therefore, sponsors could value their assets at a high and IPO as a new REIT. The REIT could be priced at a low dividend yield as well because investors expected dividend was low.

Fast forward to 2023, interest rates are at its peak; due to it property valuations now at its low and a higher diviend yield demanded to compensate for the high risk free rate. With lower property asset prices and higher dividend yield demanded for REITs, as a result, these REIT prices have gone down miserably since its IPO days.

Lesson learnt for long term investors is to never subscribe for REIT IPOs during a low interest rate environment. Keep the money aside and wait till global interest rates reach its high before deploying your cash. In a high interest rate environment, this is when REITs are undervalued; during low interest rate environment, the ones who profit are the companies trying to offload to you like Keppel and ARA.

When companies IPO out their properties as a REIT, it is not because they are charitable, instead they find it is a good time to realise the value of their investments and are trying to offload for most of the gains for themselves.


  1. Hi Mate, always enjoy reading your posts which gives one new perspective in investing. Personally, I think tough to avoid REIT IPO like that. For example, the low interest rate environment lasted more than a decade from 2008 GFC days. It would mean waiting more than a decade to buy into a new REIT. Also, current high interest rate environment may become sticky and possibly a new norm given the rampant money printing over a decade.

    1. Cash in a low interest rate environment might turn up to be a better yield than buying IPO reits during this stage. Consider the US or Singapore treasury bills to park the gunpowder. It pays to be patient