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International REITs: Look to Asia for Yield

Asia-Pacific REITs can be a great portfolio diversifier

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Take CapitaCommercial Trust (SGX:C61U, OTC:CMIAF). Singapore’s first — and largest — publicly traded office REIT sports a dividend yield almost 6% and trades at a 20% discount to book value.

CapitaCommercial invests primarily in office buildings, which took a beating during the global financial crisis. But with Singapore’s supply of quality office space starting to get tight, rents are expected to rise significantly over the next few years. And importantly, the REIT was able to maintain and raise its dividend throughout the hard times.

Of all the REITs discussed in this article so far, I consider CapitaCommerical Trust to be the most attractive, both as a short-term trade and as a long-term income investment.


Finally, we get to Australia. I’m a little wary of investing in Aussie property at this time, as the global commodities boom that has underpinned the country’s prosperity is, in all likelihood, dead for the foreseeable future. After more than a decade of solid gains, I expect the Aussie dollar to drift lower in the years ahead, which will eat into any would-be capital gains and dividends for foreign investors.

I’m not a doom-and-gloomer, and I’m not expecting a major crash in Australia. In fact, I’m actually very impressed with the country’s fiscal management. Virtually alone in the developed world, Australia has no sovereign debt problem. Unfortunately, it’s also a country with some of the world’s most unaffordable housing, raising the possibility of a broad-based housing crash that would weaken Australia’s banking sector.

If you’re dead-set on buying Aussie real estate, I would go for a diversified option like Stockland (ASX:SGP, OTC:STKAF), Australia’s largest and most diversified REIT. The company develops and manages retail centers, residential communities and office and industrial properties.

Stockland trades at a slight premium to book value and pays a 6.5% dividend.

Check out my take on British REITs here.

*Most of the securities covered here trade in the U.S. as ADRs, and I included the ticker symbols to help you identify them. But if you decide to try your luck on any of these, I recommend you trade the shares in the local market where the liquidity is better. Most of the ADRs listed in this article are thinly traded and will not be appropriate for most investors.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management.  As of this writing, he did not hold a position in any of the aforementioned securities. Click here to receive his FREE 8-part investing series that will not only show you which sectors will soar but also which stocks will deliver the highest returns. The series starts November 5 and includes a FREE copy of his 2014 Macro Trend Profit Report.

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