The aim of investing in REITs is to obtain a steady, consistent flow of dividend income.
Many REITs have performed this task admirably over the years, churning out a stream of passive income through good times and bad.
The sector also came under the spotlight recently after various analysts upgraded it.
Of note, industrial REITs have emerged as the most resilient property sub-class within the REIT space.
The expectation of more interest rate increases has depressed the unit prices of a wide swath of industrial REITs, pushing up their distribution yields.
Here are four industrial REITs that sport a dividend yield exceeding five per cent.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns a portfolio of 21 data centres across nine countries.
Assets under management (AUM) stood at S$3.5 billion as of 31 March 2022.
The REIT enjoys a high portfolio occupancy of 98.7% and also has a long weighted average lease expiry (WALE) of 7.7 years.
For its fiscal 2022 first quarter (1Q2022) business update, the data centre REIT reported a 0.9% year on year dip in gross revenue to S$66.1 million.
Net property income (NPI) slipped 1.4% year on year to S$60.1 million but distribution per unit (DPU) inched up 0.2% year on year to S$0.02466.
Annualised DPU stood at S$0.09864, giving its units a forward distribution yield of 5.1%.
Keppel DC REIT acquired its second London data centre recently at around S$105.5 million which will add to its DPU.
Demand for data centres remains strong with mobile data traffic expected to grow at 40% per annum between 2022 and 2025, according to Ericsson.
Increased cloud computing adoption and cloud migration should also keep demand buoyant.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, is an industrial and commercial REIT that owns a portfolio of 101 properties worth S$6.7 billion as of 31 March 2022.
These properties are spread out across five countries – Singapore, the UK, Australia, Germany, and the Netherlands.
FLCT reported a respectable set of earnings for its fiscal 2022’s first half (1H2022) ended 31 March 2022.
Revenue inched up 1.7% year on year to S$235.7 million while adjusted NPI rose 3.6% year on year to S$180.1 million.
DPU edged up 1.3% year on year to S$0.0385, bringing annualised DPU to S$0.077.
At a unit price of S$1.30, units of FLCT provide a 5.9% distribution yield.
The REIT enjoys a high occupancy rate of 96.1% along with aggregate leverage of 29.5% (post-repayment of borrowings in April).
FLCT has a debt headroom of around S$3 billion to conduct yield-accretive acquisitions.
The REIT recently purchased three freehold logistics and industrial properties for S$60.4 million as well as a suburban commercial property for S$58.4 million, both in Australia.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MINT, is an industrial REIT that owns 143 properties valued at S$8.8 billion as of 31 March 2022.
Around 51% of its AUM is in the US while the remainder is in Singapore.
MINT recently reported a sparkling set of earnings for its fiscal 2022 (FY2022) ended 31 March 2022.
Gross revenue jumped 36.4% year on year to S$610 million, boosted by the acquisition of data centres in the US.
NPI climbed 34.5% year on year to S$472 million while DPU rose 10% year on year to S$0.138.
MINT’s historical distribution yield came in at 5.6%.
The REIT is currently redeveloping three properties at the Kolam Ayer 2 cluster that will increase the gross floor area to 865,600 square feet by the first half of 2023.
MINT also has a right-of-first-refusal over a 50% stake in Mapletree Rosewood Data Centre Trust from its sponsor, Mapletree Investments Pte Ltd.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics-focused REIT that owns a portfolio of 183 properties worth S$13.1 billion as of 31 March 2022.
For FY2022, MLT reported a 20.9% year on year jump in gross revenue and an 18.6% year on year increase in NPI to S$592.1 million.
DPU rose 5.5% year on year to S$0.08787, giving its units a trailing distribution yield of 5.4%.
Portfolio occupancy remained healthy at 96.7% and the REIT reported a positive average rental reversion of 2.9% for the quarter ended 31 March 2022.
Aggregate leverage stood at 36.8% for the REIT along with a cost of debt of 2.2%, giving the REIT ample debt headroom for further yield-accretive acquisitions.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT, Mapletree Industrial Trust and Frasers Logistics & Commercial Trust.