4 Pains of Investing in REITs, and How to Get Rid of Them

Contributed by Kenny Loh, Senior Consultant & REITs Specialist, Financial Alliance Pte Ltd
(The contributor can be contacted at kennyloh@fapl.sg)

A real estate investment trust (“REIT”) is a popular asset class among income seeking investors due to its regular dividend payouts. However, there are pains unknown to most investors that are seldom shared by speakers in public seminars.

The following 4 pains are the common issues constantly faced by REITs investors throughout their whole REIT investing journey.

Pain #1: Dealing with Rights Issues

REITs in Singapore have to distribute a minimum of 90% of the net income to enjoy the tax concession. As such, it is very common for a REIT to raise funds to acquire more properties or refinance the debt due to the limited cash on hand. When a REIT offers rights to existing unitholders, most of the time, the rights will be offered at a discount from the prevailing market price. The share price will most likely be adjusted downwards immediately after the announcement. There is no way retail investors could sell their current holdings immediately after the announcement is made. The investors are then left with no choice but to subscribe to the rights by injecting more cash or be forced to sell the rights at unfavourable prices. If the investors do not have enough ready cash or forget to subscribe to the rights for any reason, they will suffer losses from their invested capital.

Pain #2: Unable to Participate in Private Placement

A private placement is a capital-raising event that involves the sale of securities to a relatively small number of select investors. Usually, there is a discounted price offered to private investors during the private placement exercise. With the injection of the additional shares into the stock market, there may be a dilution effect on the distribution yield. Retail investors may be worse off as their current holdings are diluted without a chance to acquire additional shares at a discount. Similar to the rights issue, the share price will normally trade downwards after such an announcement is made, and investors may suffer capital losses on paper.

Pain #3: Getting Odd lot when do Dividend Reinvestment Plan (DRP)

Usually REITs pay dividend in cash every quarter or semi-annually. However, some REITs offer a Dividend Reinvestment Plan (“DRP”) to investors as an option to reinvest the dividend in discounted shares instead of receiving it in cash. It sounds good at the first look, but most of the retail investors will end up with odd lots as the investment holdings are normally small. Odd lots are considered to be anything less than the standard 100 shares. Odd lots are usually difficult to sell at a good price due to illiquidity and the wide bid-ask spread. Trading commissions for odd lots are generally higher on a percentage basis than those for standard lots, since most brokerage firms have a fixed minimum commission level for undertaking such transactions.

Pain #4: Unable to do Regular Saving Plan (RSP) with small amount

Dollar Cost Averaging strategy is an excellent way to accumulate REITs over the long term without resorting to timing the stock market. However, there are two major limitations for investors who contribute a fixed amount of salary to build the REIT portfolio every month. First, the investor who contributes $1,000 per month is unlikely to allocate into different REITs for diversification purposes – and most probably end up with odd lots per REIT. In addition, the transaction cost per order is high – this will erode the returns of the portfolio. These limitations make monthly RSP investing for REITs not a very viable solution financially and operationally.

The only way to overcome the above four pains is to pool the monies together to do bulk purchases by leveraging on the lower commission structure of a brokerage firm who can buy and sell in bulk. A discretionary REIT Managed Account is set up to address the above pains investors face. This Managed Account has an investment mandate to invest in global REITs for diversification purposes. Investors who wish to find out more about this REIT Managed Account may write to kennyloh@fapl.sg)

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Loh Kok Keong Kenny

Arrange for a non-obligatory one-to-one free consultation here!


Contact Me

What type of services are you looking for? 请问您需要咨询哪些方面的服务?(Please select all that applies)


By submitting this form, I confirm that


  • I have read and understood FAPL’s Personal Data Policy, and hereby give my acknowledgement and consent to FAPL to use my personal data in accordance with FAPL’s Personal Data Policy.
  • 我已阅读并理解鑫盟理财私人有限公司的个人数据保护政策,并同意鑫盟理财私人有限公司根据个人数据保护政策所阐述的用途使用我的个人资料。
  • I have read and understood the disclaimers above and hereby affirm my acceptance of these terms.
  • 我已阅读并理解了上述免责声明,特此声明接受这些条款。
  • I have not been directly contacted or approached by any representative or employee of FAPL with an offer or solicitation to apply for any financial products not offered in my home country.
  • 鑫盟理财私人有限公司的代表或员工并未直接与我联系或提出要约或招揽购买我原居住国境内所不提供的任何金融产品.
  • Financial Alliance Pte Ltd ( “FAPL”) is licensed by the Monetary Authority of Singapore (“MAS”) and allowed to conduct financial advisory activities in accordance with the Financial Advisers Act (Cap. 110) (“FAA”) and the Securities & Futures Act (Cap. 289) (“SFA”) within the jurisdiction of the Republic of Singapore and in accordance with the licenses granted by MAS
  • 鑫盟理财私人有限公司( “鑫盟理财”)持有由新加坡金融管理局(“MAS”)所颁发的牌照,并许可在新加坡共和国境内依据财务顾问法(第110章)和证券与期货交易法(第289章)进行财务咨询等相关业务
  • Any services provided by FAPL to persons not ordinarily resident in Singapore are provided solely on an offshore basis from Singapore, resulting from direct enquiry on the part of the foreign residents.
  • 鑫盟理财为非新加坡居民所提供的任何服务仅限于直接向鑫盟理财发出咨询请求的国外居民。
  • As an integral part of the provision of such services, FAPL may from time to time make available to such residents, documents and information making reference to capital markets products (for example, in connection with the provision of fund management or investment advisory services outside of the foreign jurisdiction).
  • 作为提供此类服务的一部分,鑫盟理财会不时向此类咨询者提供有关产品的参考文件和信息(例如,关于海外司法管辖区以外的资金管理或投资咨询服务等信息)。
  • Such documents and information are provided by Financial Alliance Pte Ltd (“FAPL”) is for general information only and is not intended for anyone other than the recipient.
  • 此类由鑫盟理财所提供的文件和信息仅供收件人做一般信息参考。
  • It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.
  • 此类文件和信息不会把-个人投资目标,财务状况或其特定需求等考虑在内。
  • It does not constitute the making available of, or an offer or solicitation by FAPL to buy or sell or subscribe for any such capital markets product or to enter into a transaction or to participate in any particular trading or investment strategy nor an advice or a recommendation with respect to such financial products.
  • 鑫盟理财向该人士提供此类文件和信息将不构成要约或招揽购买或出售或认购任何此类资本市场产品,或达成交易或参与任何特定的投资策略,也不构成有关此类金融产品的建议或推荐。
  • These documents may not be published, circulated, reproduced or distributed in whole or in part to any other person without FAPL’s prior written consent.
  • 未经鑫盟理财的事先书面同意,不得将这些文件全文或部分发布,传播,复制或分发给其他人。
  • This document is not intended for distribution to, publication or use by any person in any jurisdiction, where such distribution, publication or use would be contrary to applicable law or would subject FAPL and its related corporations, connected persons, associated persons and/or affiliates to any registration, licensing or other requirements within such jurisdiction.
  • 鑫盟理财无意在分发,出版或使用此类文件可能违反当地法律,或本公司及关联公司或关联人士需要注册,获得许可或符合规定的司法权区向当地人士分发、出版此类文件或供其使用。
  • You shall ensure that you have and will continue to be fully compliant with all applicable laws in your home country when entering into discussion or contracts with FAPL.
  • 在与鑫盟理财进行讨论或签订合约时,您应确保您已完全遵守并将继续遵守您所在原居住国的所有适用法律及条规。

In compliance with the Personal Data Protection Act, Financial Alliance Pte Ltd (“FAPL”) seek your consent to collect and use your personal data (e.g. name, NRIC, contact numbers, mailing addresses, email addresses and photograph) for the purposes of and in accordance with FAPL’s Data Protection Policy, which can be found on FAPL’s website at https://fa.com.sg/data-protection-policy/.

根据《个人数据保护法》,鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料(例如姓名,证件号码,联系电话,邮寄地址,电邮地址和照片)。 该政策可在本公司网站上查寻,网址为 https://fa.com.sg/data-protection-policy/.

By submitting this form, you are deemed to have read and understood FAPL’s Personal Data Policy.


Scan for Contact Details

Join our newsletter

Subscribe to our newsletter to receive updates on our latest content!

By providing the info below, I confirm that I am the user and/or subscriber of the telephone number(s) and email address provided by me and I consent to receive from Financial Alliance and/or its financial adviser representatives, any marketing, advertising and promotional information organise by Financial Alliance via voice calls, SMS/MMS (text messages) or faxes to my telephone number(s) provided below. I understand I may withdraw any consent I have given at any time by writing in to Financial Alliance Pte Ltd.

Scan for WeChat QR

Retirement Planning

Will I be able to retire comfortably?