The ratio of a REIT’s equity to its debt is called its gearing, and this is capped at 35% or 60% (depending on the REITs credit rating).Gearing is one factor in evaluating the risk of a REIT. The ratio of a REIT’s equity to its debt is called its gearing, and this is capped at 35% or 60% (depending on the REITs credit rating). You can also look at the yield and price to book value ratio of the REITs for further comparison and evaluation.
REITs are run by appointed REIT managers. These people make guiding decisions for the REIT, such as which properties to add to a REIT, which assets to sell off, etc. Besides the REIT managers, REITs also employ property managers, who try to maximize rental yields. It’s the job of property managers to conduct asset enhancement initiatives, such as redesigning floors to hold more stores, finding the right mix of tenants, etc. As such, a REITs value and performance are dependent on the competence of its managers.
REITs tend to specialize in specific types of property. For example, CapitaMall Trust is a retail REIT (they manage malls) whereas Ascendas REIT handles office and industrial properties*. Besides its management, a REIT is also gauged on the quality of its assets (owning a mall in town is probably worth more than owning a few scattered shop houses). Performance patterns based on specific types of REITs (hospitality, retail, office, and industrial).