Singapore has, over the last two decades, grown into a successful hub for REITs.
Since listing its first REIT, CapitaMall Trust, back in 2002, the Singapore Exchange has gone on to invite many more REITs with different property sub-types and from different regions to its platform.
Income-seeking investors can rely on REITs for a steady flow of dividends as they need to pay out 90% of their earnings to enjoy tax incentives.
While the variety is certainly welcome, it can be tough to pick out the quality REITs.
Attributes I would personally go for include a strong sponsor, resilience and a stable or increasing distribution per unit (DPU).
On that note, here are four REITs I would buy assuming I had S$10,000 to spare.
Keppel DC REIT (SGX: AJBU)
As of 30 June 2021, Keppel DC REIT owns a portfolio of 19 data centres across eight countries worth around S$3.1 billion.
The REIT’s sponsor is Keppel Telecommunications & Transportation Ltd, a wholly-owned subsidiary of blue-chip conglomerate Keppel Corporation Limited (SGX: BN4).
In addition, the sponsor also has a pipeline of data centre assets that can be potentially injected into the REIT.
The REIT has continued to report a strong set of financial numbers for its fiscal 2021 first half (1H2021).
Gross revenue was up 9% year on year while net property income (NPI) increased by 8.4% year on year.
DPU jumped by 12.5% year on year to S$0.04924.
Keppel DC REIT also announced its first ever data centre acquisition in China for around S$132 million.
This acquisition is poised to increase the REIT’s pro-forma DPU for the fiscal year 2020 by around 1.9%.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of commercial and industrial properties in Singapore, Australia, Germany, the UK and the Netherlands.
As of 30 June 2021, FLCT’s portfolio comprises 103 properties worth around S$6.8 billion.
The REIT’s sponsor is Frasers Property Limited (SGX: TQ5), a real estate giant with total assets worth S$39.2 billion as of 31 March 2021.
FLCT has maintained a high occupancy rate of 96.3% as of 30 June 2021 and has managed to grow its asset base from just S$1.6 billion at its IPO in June 2016 to its current size.
For its fiscal 2021 first half ended 31 March 2021, FLCT’s revenue jumped by 95.1% year on year while NPI increased by 79.3% year on year.
The increase was due to the merger with Frasers Commercial Trust in 2020.
DPU increased by 9.5% year on year to S$0.038.
The REIT is continuing to grow its asset base with the recent acquisition of six freehold logistics and industrial properties in Germany, the Netherlands and the UK for close to S$470 million.
Sasseur REIT (SGX: CRPU)
Sasseur REIT is a retail outlet mall REIT that owns four mall assets in China.
These outlet malls have witnessed a strong business recovery as the pandemic situation eases in China.
For 1H2021, rental income increased by 13.1% year on year to RMB 303.2 million.
DPU jumped by 18.5% year on year to S$0.03373.
Portfolio occupancy remained high at 92.5% for the quarter, while the four outlets stepped up promotions to actively engage customers, leading to a 5.3% quarter on quarter increase in VIP membership to 2.37 million.
Aggregate leverage stands at just 27.8%, significantly below the mandated limit of 50%, providing the REIT with ample room for acquisitions that can bolster its DPU.
Sasseur REIT has a potential pipeline of 13 properties that can be injected into the REIT from its sponsor, Sasseur Cayman Holdings Limited, of which seven are in operation.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a portfolio of logistics real estate spread across eight countries.
Its portfolio consists of 163 properties with assets under management of around S$10.7 billion.
MLT’s manager and sponsor are Mapletree Investments Pte Ltd, a unit of Temasek Holdings.
For its fiscal 2022 first quarter (1Q2022) ended 30 June 2021, MLT reported a 23.7% year on year jump in gross revenue to S$163.7 million.
NPI went up by 21.3% year on year to S$144.2 million and DPU inched up by 5.7% year on year to S$0.02161.
The REIT continues to actively acquire new assets to bolster its asset base and enhance DPU for unitholders.
Just last week, it acquired a cold storage facility in Melbourne for S$42.8 million with a long lease tenure (13 years) which will be DPU-accretive.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT and Frasers Logistics & Commercial Trust.
