Reits may have higher yields but Reit perps' payout more certain

WHY would investors buy perpetual bonds (perps) issued by real estate investment trusts (Reits), when the Reits themselves would deliver higher yields?

Case in point: Earlier this month Ascendas Reit, which is currently yielding 4-plus to 5 per cent, priced and sold its S$300 million green subordinated perpetual securities at an initial annual distribution rate of 3 per cent.

The eventual take-up by investors was split between institutionals at 80 per cent and high net worth individuals at 20 per cent. Yeow Kit Peng, head of capital markets & investor relations for Ascendas Reit, said this attests to the strong demand for the issuance.