REITs are an effective vehicle to not just grow your wealth but also generate a stream of passive income that you can tap on for your retirement.
With a wide range of REITs to choose from, it can be tough to decide on which to own.
Some attributes to watch for include having a strong sponsor, adequate diversification across regions, a track record of increasing distribution per unit (DPU), and great growth prospects.
Another aspect to watch for is the REIT’s distribution yield, as a healthy yield can ensure you beat inflation and allows you to reinvest the dividends to compound your wealth.
Here are four REITs that sport dividend yields above 5%.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, owns a total of 86 properties in Singapore and 57 in the US, with assets under management (AUM) of S$8.8 billion as of 31 March 2022.
The REIT’s sponsor is Mapletree Investments Pte Ltd, an investment firm linked to Temasek Holdings and which manages S$78.7 billion of properties.
Slightly more than half of MIT’s AUM is in data centres, with the rest spread out across business parks, flatted factories, and Hi-Tech buildings.
For its fiscal 2022 (FY2022), gross revenue jumped by 36.4% year on year to S$610.1 million while net property income (NPI) rose 34.5% year on year to S$472 million.
DPU climbed 10% year on year to S$0.138, giving the REIT’s units a trailing distribution yield of 5.3%.
As of 31 March 2022, aggregate leverage stood at 38.4% with a low cost of debt of 2.4%, allowing the REIT to tap on debt for future acquisitions.
Lendlease Global Commercial REIT (SGX: JYEU)
Lendlease Global Commercial REIT, or LREIT, owns 313 @ Somerset, a prime retail property in Singapore, and a freehold interest in Sky Complex, which comprises three grade-A office buildings in Milan, Italy.
In addition, LREIT also owns a 100% interest in Jem, an integrated office cum retail development in Singapore.
For its fiscal 2022’s first half (1H2022) ended 31 December 2021, LREIT reported a 5.8% year on year fall in gross revenue to S$39.2 million.
NPI dipped by 2.5% year on year to S$29.6 million but DPU inched up 2.6% year on year to S$0.024.
The REIT recently concluded the purchase of a remaining stake in Jem mall and has projected a rise in DPU for 1H2022 to S$0.0249 as a result.
Based on the annualised DPU of S$0.0498, units of LREIT offer a prospective distribution yield of around 6.4%.
Jem mall has also recently completed asset enhancement initiatives (AEI) to unlock further value for unitholders.
The taxi stand has been widened to improve traffic flow to the mall while an additional 1,500 square feet of retail space has been created at both level one and basement one.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 101 industrial and commercial properties spread across five countries – Singapore, Australia, the UK, Germany and the Netherlands.
AUM stood at S$6.7 billion as of 31 March 2022.
For its 1H2022 ended 31 March 2022, FLCT reported a 1.7% year on year improvement in revenue to S$253.7 million.
Adjusted NPI increased by 3.6% year on year while DPU edged up 1.3% year on year to S$0.0385.
Annualised DPU for FY2022 stands at S$0.077, giving FLCT’s units a prospective distribution yield of 5.7%.
The REIT has announced two acquisitions last month to boost its asset base.
The first is the acquisition of three fully-occupied freehold logistics and industrial properties in Victoria, Australia, for S$60.4 million.
The second involves the acquisition and development of a prime freehold land in the UK for around S$171.7 million which will be completed in the second half of next year.
Cromwell European REIT (SGX: CWBU)
Cromwell European REIT, or CEREIT, owns a portfolio of 115 properties valued at around €2.5 billion across European countries such as Italy, France, Poland, Germany and Finland, to name a few.
CEREIT reported a resilient set of earnings for fiscal 2021 (FY2021), with DPU at €0.16961.
The REIT’s historical distribution yield stood at 8.6%.
The solid performance has continued into 1Q2022, with gross revenue and NPI rising by 8.5% and 5.4% year on year, respectively.
Income available for distribution increased by 7.1% year on year to €23.3 million.
CEREIT’s portfolio occupancy remains high at 94.8% as of 31 March 2022, and the REIT also reported a positive rental reversion of 4.2% for the quarter.
Aggregate leverage stood at 38.6% and the REIT enjoyed a low cost of debt of just 1.72%, all of which are either on fixed rates or are hedged to buffer against an increase in interest rates.
Just last week, CEREIT announced the divestment of an office asset in Finland and the acquisition of its third logistics asset in the UK.
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Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust and Frasers Logistics & Commercial Trust.