Analysis of REITs Listed on SGX (office, industrial)

Abstract

In this paper, the Gordon Growth Model (GGM) is used with Monte Carlo simulation for analysing office and industrial REITs listed on the Singapore Exchange (SGX). By comparing and providing ranking of the selected REITs expected return of investment, equity cost of capital and future dividend growth rate to determine whether the REIT in Singapore is good to invest as an investor prospective. Monte Carlo simulation make it possible to incorporate the uncertainty of the components in this analysis where normal distribution, random distribution and lognormal distribution are used in this simulation. The Gordon Growth Model is used to calculate the future dividend growth rate base on the earning per share, cost of capital equity and stock price. The results show that overall ESR-REIT, Pacific Oak US REIT, and ARA LOGOS Logistics trust outperform in the group of 19 REITs listed in SGX based on the models and assumption used in this study.