REIT investors should be breathing a sigh of relief when the US Federal Reserve slashed the Federal Funds rate by half a percentage point earlier this month.
With lower interest rates, REITs should see some respite from persistently-high finance costs.
During uncertain times, investors tend to stick with blue-chip REITs that can offer stability and assurance.
At the same time, these REITs should also provide a decent yield with their consistent distributions.
Here are three solid Singapore blue-chip REITs with dividend yields of 5.2% and above that may go higher as interest rates continue to ease.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and one in Japan.
The REIT’s total assets under management (AUM) stood at S$9 billion as of 30 June 2024.
MIT reported an encouraging set of earnings for its first quarter of fiscal 2025 (1Q FY2025) ending 30 June 2024.
Gross revenue improved by 2.7% year on year to S$175.3 million while net property income (NPI) inched up 1.3% year on year to S$132.5 million.
The REIT’s distribution per unit (DPU) eked out a small 1.2% year-on-year increase to S$0.0343.
The industrial REIT’s trailing 12-month (TTM) DPU stood at S$0.1347, giving its shares a TTM distribution yield of 5.5%.
MIT’s borrowing costs have stabilised and managed to dip by almost 1% year on year to S$26.2 million in 1Q FY2025.
Lower interest rates and its recent acquisition of an Osaka data centre could pave the way for higher distributions in the future.
The REIT’s aggregate leverage ratio stood at 39.1% with a cost of debt of 3.2%.
It also boasts a healthy interest coverage ratio of 4.7 times for the TTM.
There is more good news in the form of an average positive rental reversion of 9.2% across MIT’s portfolio for renewal leases.
CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT, or CLAR, is Singapore’s oldest industrial REIT and has a portfolio of 229 properties across Singapore, the US, Australia, and the UK/Europe.
The industrial REIT’s AUM stood at S$16.9 billion as of 30 June 2024.
CLAR’s results for the first half of 2024 (1H 2024) were mixed.
Gross revenue rose 7.2% year on year to S$770.1 million, aided by contributions from newly-completed properties and acquisitions last year.
NPI increased by 3.9% year on year to S$528.4 million.
DPU, however, saw a 2.5% year-on-year decline to S$0.07524 for 1H 2024 because of higher finance costs (+16.3% year on year) along with a larger unit base.
CLAR’s TTM DPU stood at S$0.14965, giving its units a TTM distribution yield of 5.3%.
The industrial REIT sported a healthy portfolio occupancy rate of 93.1%.
It also reported a positive rental reversion of 13.4% which should allow rental income to enjoy organic growth.
CLAR’s cost of debt has been creeping up from 3.3% back in June last year to 3.7% as of 30 June 2024.
With interest rates heading down, the industrial REIT should see some moderation in its finance costs.
The REIT’s aggregate leverage stood at 37.8%, giving it ample debt headroom for more accretive acquisitions.
CLAR also has six ongoing asset enhancement initiatives (AEIs) worth S$572.8 million for its Singapore properties that should help to improve the returns on its portfolio.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 Singapore properties, two German properties, and three Australian properties.
CICT’s AUM stood at S$24.5 billion as of 31 December 2023.
The suburban and downtown retail and commercial REIT reported a commendable set of earnings for 1H 2024.
Gross revenue edged up 2.2% year on year to S$792 million while NPI did even better, rising 5.4% year on year to S$582.4 million.
DPU increased by 2.5% year on year to S$0.0543.
The better performance was contributed by higher rental income from existing properties along with lower operating expenses.
CICT’s TTM DPU stood at S$0.1088, giving its units a TTM distribution yield of 5.2%.
The REIT reported a stable cost of debt of 3.5% along with a high portfolio committed occupancy of 96.8% as of 30 June 2024.
Investors can expect healthy organic rental income growth as CICT’s retail and office divisions saw positive rental reversions of 9.3% and 15% for 1H 2024.
Two AEIs were also completed recently.
CQ @ Clarke Quay was officially relaunched on 26 April this year after a makeover.
101 Miller Street saw its lobby enhanced and was opened on 10 July.
CICT has two more ongoing AEIs – one at the IMM Building in Singapore and another at Gallileo in Frankfurt.
These AEIs should help to boost organic rental growth for the REIT in the coming year and raise the prospect of higher DPU by this year’s end.
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: Royston Yang owns shares of Mapletree Industrial Trust.
