Thinknotblink – in the current low interest rate environment, I believe we are seeing some yield firming in the REIT sector in Malaysia. Yields are still 8% plus for most REITs, there should be more medium term upside in unit prices. I’m not too worried unless yields firm to around 6.5-7.0% in which case I’d be taking profits and sidelined. Also depending on an investor’s age profile, it could be good to have a higher portion of high-yield investments in the portfolio. For a retiree, capital growth should not be as crucial as having a nice income stream to enjoy life.

To Larry, keeping REITs in your portfolio is wise provided you have bought them at attractive yields. I have invested in REITs when their yields were as high as 13% and I knew it was quite unlikely that I could obtain the same current yield in other investments in the near future. We must realise that the high yield came about a result of low unit prices, not high growth in dividends. Reinvesting the dividends into REITs is not wise at low yields, however, due to their low returns on capital. I would look at my REIT investment like a fixed income instrument like a bond. A bond doesn’t have the inherent ability to grow its coupon, unlike the business underlying a stock. When bond prices rise, yields fall and vice-versa. So when REIT yields drop to, say, 5% a 13% initial yield will have meant that the REIT unit price has risen by 160%. That’s the time to sell. REITs are good only as a place your excess fund while waiting for other investment opportunities to come along. In the meantime when nothing good comes, the yield will still compensate you for waiting.

Final distribution should be in Aug-09.