Singapore’s Central Provident Fund (CPF) system offers locals a good way to save for retirement.
If you are below 55 years old, the Ordinary Account (OA) carries an interest rate of 2.5%.
But for your first S$20,000, you get 3.5%.
For those who are 55 and above, the OA accounts offer 4.5% on the first S$20,000 and 2.5% for the rest.
These returns are as safe as you can get.
For some, the returns from the OA are sufficient for their savings. However, other investors may be seeking higher returns for their OA accounts.
What options do you have?
For starters, REITs offer an opportunity to get a better dividend yield.
Let’s take a look at three REITs for your CPF Investment Account (IA) which are also part of Singapore’s Straits Times Index (SGX: ^STI)
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, debuted in July 2002 as CapitaLand Mall Trust. In November 2020, CapitaLand Mall Trust merged with CapitaLand Commercial Trust to form CICT.
Today, CICT is Singapore’s largest REIT, with a portfolio of 21 retail and commercial properties in Singapore together and five commercial properties in Germany and Australia.
The REIT’s assets were valued at S$24.5 billion as of 31 December 2023.
CICT is managed by a wholly-owned subsidiary of CapitaLand Investment Limited (SGX: 9CI), or CLI, which is also its sponsor.
CLI is a real estate behemoth with S$134 billion in assets under management and S$100 billion of funds under management as of 31 March 2024.
In summary, CICT offers a diversified portfolio of assets, backed by a large sponsor.
So, how has the REIT fared recently?
For 2024’s first half, CICT’s gross revenue rose 2.2% year on year to almost S$792 million.
The REIT’s net property income (NPI) increased by 5.4% year on year to over S$582 million.
CICT’s solid performance makes it one of the few REITs that have managed to raise its distribution per unit (DPU) for 1H’24.
The REIT’s DPU climbed 2.5% year on year, to S$0.0543.
At a unit price of S$2.13, CICT offers a trailing distribution yield of 5.1%, higher than what your CPF OA offers.
On Tuesday, the REIT made a move to acquire 50% of ION Orchard at an agreed property value of around S$1.85 billion from its sponsor, CLI.
The other half of the popular mall is owned by Hong Kong-based Sun Hung Kai Properties (SEHK: 0016).
CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT, or CLAR, was listed in November 2002, making it one of Singapore’s oldest industrial REITs.
Currently, the REIT is the largest listed business space and industrial REIT.
As its name suggests, CLAR shares the same sponsor as CICT.
Like CICT, CLAR also boasts a diversified set of properties.
CLAR is home to 229 properties, spanning business spaces and life sciences, industrial and data centres, and logistics, located in Singapore, the United States, Australia, the UK and Europe.
As of 30 June 2024, the assets are worth around S$16.9 billion.
In recent times, CLAR reported a 7.2% year-on-year increase in gross revenue to over S$770 million for 2024’s first half (1H’24).
Over the same period, NPI climbed by 3.9% year on year to S$528.4 million.
Unfortunately, the gains in NPI did not flow through into its DPU which fell 2.5% year on year to S$0.07524. The culprit behind the DPU decline was its enlarged unit base, which increased by 3.7% compared to a year ago.
Nevertheless, CLAR has six ongoing redevelopment and asset enhancement initiatives in the works, totalling almost S$573 million.
We will have to see if these efforts lead to DPU accretion in the future.
Frasers Centrepoint Trust (SGX: J69U)
Fraser’s Centrepoint Trust, or FCT, is one of the newest members to join the Straits Times Index (SGX: ^STI) back in March 2024.
The REIT is predominantly a suburban retail REIT with a portfolio of nine retail malls and an office building all located in Singapore.
These assets are valued at S$7.1 billion as of 31 March 2024.
Like the two CapitaLand cousins above, FCT has its own sponsor in Frasers Property Limited (SGX: TQ5), or FPL.
FPL is an investor, developer, and manager of real estate worth about S$40.1 billion as of 31 March 2024.
Going back to FCT, the REIT is facing headwinds but is limiting the impact.
For the first half of the fiscal year ending 30 September 2024 (1H’FY24), the REIT’s revenue decreased by 7.2% year on year to around S$172 million while NPI fell 8.4% year on year to S$124.6 million.
The decline was largely due to the divestment of Changi City Point and the ongoing asset enhancement initiative at Tampine 1. Excluding these factors, gross revenue and NPI would have been up 2.9% and 2.1% year on year, respectively.
FCT’s DPU slipped by 1.8% year on year to S$0.06022.
Based on its trailing 12-month DPU of S$0.12042, shares offer a 5.2% yield.
In our latest report, we dive into five standout Singapore REITs offering distribution yields exceeding 5.5%. Why settle for less? Get more dividends hitting your bank account with our REITs guide. Click here to download for free now.
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Disclosure: Chin Hui Leong owns shares in all the companies mentioned.
