Yong: ‘We are more interested in asset classes like data centres, which is a sector that we think would see greater demand going forward with the intensification of Internet use.

As reported in The Star Online, AmInvest’s diversification into non-conventional real estate investment trusts (REITs) has paid off as the investments with assets such as childcare centres, energy, healthcare, large scale logistics and data centres are showing good growth.

The fund has high holdings of these non-conventional REITs in countries like Japan, Australia and Singapore.

According to AmInvest equities fund manager Selina Yong, they are more interested in asset classes like data centres, which is a sector that we think would see greater demand going forward with the intensification of Internet use. They also focus on service-related REITs which previously were not considered investable asset classes, but are becoming more institutionalised today, therefore being more investable and liquid.

In Australia, investors seek alternative asset classes outside traditional segments such as office, retail, and industrial-based REITs. Examples of these alternative asset classes include childcare centre REITs, premium offices in Sydney and Melbourne, as well as retail properties with non-discretionary tenants.

As for Japan, sustained decline in vacancy rates have supported rental rate growth for office REITs while inbound tourist arrivals continue to support demand for accomodation, boosting hospitality REITs.

In Singapore, the oversupply in segments such as hotels and offices, combined with a sluggish economy, will be a drag on most segments.

The asset management househas an “underweight” view on Malaysian REITs, as the property sector in Malaysia remains soft and occupancy rates continue to be low.

AmInvest’s has a 10% porfolio exposure to Malaysian REITs with high occupancy rates.

The fund remains wary of the oversupply situation in Malaysia’s property market, but will hold on to its positions because the yield spreads continue to be comfortable.

AmInvest equities chief investment officer Andrew Wong does not expect Malaysia’s interest rates to rise in the near term.

In order to be protected from interest rate volatility, REITs have substantially hedged their interest rates.

Yong explained that the fixed debt ratio rate for REITs in Singapore was in the range of 70% to 90%, while Australia and Japan was about 50% to 60%, due to decreasing interest rates.

This is to protect the REITs from short term volatility and interest rates, where there will not be any impacts to the bottomline and distribution.

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