REITs are generally perceived as investments that give slow and steady returns to investors. In other words, they are “boring.”
Yet, investing in REIT can generate significant long-term wealth for investors.
Let’s look at one of those REITs that gave investors significant return over the last decade — about 270%!
Parkway Life REIT
The REIT that we’re talking about is Parkway Life REIT (SGX: C2PU), one of the largest listed healthcare real estate investment trusts (REIT) in Asia by asset size. The REIT has ownership over three private hospital properties locally and holds stakes in 46 healthcare-related assets in Japan. It also has strata-titled units/lots in Gleneagles Intan Medical Centre in Malaysia.
How to make a fortune
There are two parts to Parkway Life REIT’s investment returns: dividends and share price appreciation.
Parkway Life REIT has consistently paid out dividends over the decade. From 2009 to 2018, distribution per unit (DPU) grew from 7.74 Singapore cents to 12.87 Singapore cents. Cumulatively, investors who held its shares during the decade would have received S$1.1034 in dividends. Based on Parkway Life REIT’s share price of about S$1.14 (as of a decade ago), investors would have received a total return of 97%.
Based on today’s price of S$3.09 (as of writing) and the price of S$1.14 at the beginning of the decade, investors who held Parkway Life REIT’s stock would have gained 171% during the period. Comparatively, the Straits Times Index (SGX: ^STI) gained less than 25% during this period.
Putting both parts together, investors would have gained roughly 268% in total returns by holding Parkway Life REIT’s stock.
It should now be quite clear how investors have made a fortune investing in Parkway Life REIT.
And the takeaway? Invest in a high-quality REIT, and hold it over a long period of time!
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended the stock of Parkway Life REIT.
Motley Fool Singapore 2019